The Complexity of N-Level Cloud Management

December 22 2015 | by Vittaly Tavor

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The first self-serving days of the cloud with simple payment plans have evolved into something much more intricate. This intricacy was triggered by enterprise IT and CFOs who expressed the need for cloud investments to be centrally managed across business units and overall financial optimization. The introduction of cloud MSPs/resellers also had a great impact on the cloud business chain. To adapt to these changes and requests, cloud vendors introduced multi-level accounts and subscription structures in which cloud deployments are now organized.

In this article, I will cover the evolution of cloud levels within businesses and cloud MSP/reseller systems. I will also discuss management challenges in such an intricate environment.

The N-Level Cloud

The public cloud pioneer, Amazon, introduced the Consolidated Billing feature for enterprises that have multiple cloud accounts that run various resources. This created a two-level structure, with individual accounts on one level and consolidated accounts that offer visibility into all individual account costs on another. However, an enterprise’s cost structure is much more complex than these two levels alone, and is comprised of many divisions that leverage the cloud depending on their needs. Each division includes many business units that host projects comprised of their own applications.

More cloud vendors are running partner programs to support the fast emerging layer of MSPs, who resell and manage cloud services to multiple enterprises. A good example of this is Enterprise Enrollment for Microsoft Azure (EWA), which further distributes individual cloud deployment credentials. In Azure, such deployments are referred to as ‘enterprise accounts’, where each account holds multiple subscriptions. In AWS, these cloud deployments are called consolidate billing, which are made up of multiple linked accounts.

As I mentioned in the beginning of this article, additional entities continue to shape the multi-level accounts that exist today, including enterprises, MSPs/resellers, and cloud distributors. Distributors are new, evolving players in the cloud and add another level of complexity into the mix. They resell cloud services to resellers and manage resellers for cloud providers that don’t need to have a presence in a specific region or that don’t wish to invest too much effort in dealing with smaller IT system integrators.

The N-Level Cloud
learn more about the n-level cloud

Complexities of N-Level Cloud Management

Other than the organizational structures mentioned above that create a need for better cost visibility and control, cloud providers impose their own level of complexity because of their deployment structure. If we take a look at the distributor-MSP structure, we know that a distributor may have an AWS Consolidated Billing account from which a linked account is distributed to its MSP. The MSP then, in turn, resells these linked accounts to its own enterprises. Additionally, MSPs might have their own Consolidated Billing account with Amazon and enterprises can have linked accounts comprised of both distributors and MSPs. The cost for each needs to be calculated separately and, at the same time, should be seen on a single pane of glass for full visibility.

Custom Pricing and Discounts

While managing partners require custom prices and discounts, enterprises require the ability to perform cost allocation, as well as chargeback and showback for lower levels. Cloud providers typically offer custom discounts that are tailored for large enterprises and these discounts may be passed on through rebates or credits that are received in the middle of the month. Unfortunately, not all of these discounts are reflected in the bills that enterprises receive.

Large MSPs might also get a unique reseller discount that’s negotiated between each MSP and cloud provider. End-users need to see their costs before discounts while MSPs need to view discounts and the amount that they earn from each customer. This may be further complicated by all types of credits or discounts received for volume usage. For example, resellers or MSPs that hold an AWS Consolidated Billing account can receive volume discounts. If they pass these discounts on to their customers, they’ll also need a system to reflect that.

5 Helpful Tips

Considering all of the intricacies in n-level cloud management, we recommend that you review the following tips to help ensure full cost visibility and control:

  1. Define your structure and map cloud resources accordingly
  2. Offer customers showback and chargeback
  3. Offer custom pricing and discount management
  4. Manage your reselling and add values margin
  5. Control and track efficiency on each level

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