Tag Archives: uc6

Cisco ROI Tool Doesn’t Really Help the IaaS Shopper

So Cisco just released it new flashy ROI calculator for cloud service providers looking to buy kit and get into the game. Check it out here:  http://www.cisco.com/assets/sol/sp/iaas/flash/roi_calculator/index.html

While the movement to create easy to use tools to help simplify purchasing decisions should be applauded, Cisco’s online tool doesn’t really help the customer out. Here’s why:

  • Comparing Cisco with other vendors just multiplied the volume of evaluation work necessary to actually make a decision – this of course goes against the assumption by Cisco that anyone would even entertain another vendor!
  • There is no way to bench mark ROI performance per compute resource and drill down into bloated cost centers.
  • There is no way to address customers that use IaaS in anomalistic usage patterns. What happens to my ROI if I have a handful of I/O hogs that drown out others?
  • The tool makes the assumption that IaaS must be delivered the way Cisco sees it, which removes most of the wiggle room to create customized services

The Cisco tool highlights the problem when big iron vendors operate in a vacuum, which only underscores why raw material supply in the cloud business must be abstracted entirely from service delivery. I don’t doubt that Cisco has a great infrastructure product set – but what would truly be useful is a system that allows the buyer to really compare apples to apples and make a purchase decision on true ROI analysis.


Cleaning Up the Cloud Computing Pricing Mess

Cloud Computing is the next great land rush  and it is happening now.   All the major technology companies have their offerings.  And it seems like everyone is entering the market – even the hosting companies want in on the land rush.

In theory, migration to the Cloud makes business sense; you’re enabling companies to rent computing power that would cost them too much to buy.  I won’t bore you with yet another blog post on the ‘what is it’ topic.  There is a great synopsis of Cloud Computing published by Mache Creeger and I recommend checking it out.  In our model, we’re allowing companies to pool their resources on the supply side of Cloud Computing and leverage a much bigger, better shared infrastructure on the demand side of the equation.

Cloud Computing is about lower costs and greater use of resources.  Greater flexibility, more options and overall, more computing power.  It’s a shared cost.  And it’s based on what you use.  Or is it?

One of the areas of Cloud Computing that still needs to be addressed is the issue of pricing.  Pricing the Cloud has gone beyond complex and confusing and entered the realm of ridiculous on some levels.  We’ve met with countless service providers in the past year and the basic message is clear:  Come back when you can give me something that doesn’t need a PhD from MIT to decipher.  This message was also pretty clear at last month’s Interop Las Vegas event.

The odd thing is that everyone agrees that Cloud Computing pricing needs to be standardized.  Many companies want this to be an industry group that develops standardization. Industry groups and alliances have been throwing this topic around for a long time now – we’ve seen this question come up for more than two years.  But why is it that nothing has happened?  As a company that has what I would call truly transparent pricing, I’ve been confused about this for a while.

I was recently on a conference call with a potential data center partner when I got insight into what I truly believe is the answer.

Standardized pricing and corresponding tools that allow end user customers to peer into the rack and seriously drill down into the granular cost of the Cloud are simply bad for business.

In fact, the parties on the supply side of Cloud Computing – elastic computing providers, managed hosting companies, platform-as-a-service shops, big iron manufacturers, etc. – don’t have much incentive at all to strive toward pricing transparency and standardization.  Why would magic quadrant hosting providers or heavily vested IaaS providers effectively even the playing field by adopting a standard pricing metric when it is their brand that is ultimately buttering their bread today?  Is a company like Amazon or Google really going to adopt the same pricing standard as every other company getting into the race?  Maybe, but don’t hold your breath in hopes to see them at the front of the line.

I think the work of Cloud standards advocates like Reuven Cohen of Enomoly has been really great for cracking the nut of Cloud interoperability.  But it may be a stretch when they dream of Cloud interoperability extending beyond the technical exchange and integration of systems and data.   Here is a reality check:  All the big Cloud Computing providers in the market are profiting from preventing the very process of commoditization they allegedly support.  And even if you aren’t part of that group, pricing is an integral part of the profit picture and thus cannot be decoupled from the discussion.  Just because you get together and document some sort of standard or benchmark doesn’t mean you’ve solved the problem for the stakeholder that matters most (the customer).  In fact, I think these types of standards groups may only serve to muddy the waters further on the subject because they don’t pay enough attention to  the connection with the bottom line for a Cloud operator.

Understanding the profit motivations of the Cloud providers and then dissecting the current modus operandi for pricing exposes a huge gap that I think will shape a big part of cloud development initiatives in the next few years.

Let me give you an example to prove my point:

Cloud Computing service providers seem to believe that they can and should charge for the Cloud on an hourly basis.  On the surface that sounds great, because it’s better than paying for a machine for the whole month, isn’t it?  But underneath there is a lot more to it.  Think about it.  If you use a server for one minute of an hour, you’re charged for the whole hour.  That’s crazy.  One sixtieth of an hour costs you the whole hour?  Sure the pricing is reduced, but what are you really getting?  I think Allan Leinwand captures broader implications of this silliness quite well when analyzing the state of Cloud pricing.  He said, “CPU hours: that’s not something I go buy. I buy a blade server, and the hours are infinite, they’re mine.” Leinwand has a big point and it has a direct impact on the future capability of Cloud Providers to achieve mainstream relevance to the average enterprise.  6fusion’s CEO and co-founder John Cowan analyzes the implications of pricing on the buying community here in a separate post.

And if it were really just as simple as clocking CPU hours and sending out a bill, maybe we could alleviate this pain point in the Cloud and move on.  But it doesn’t end there.  Invariably, Cloud Vendors have to “tack on” all sorts of ancillary charges and fees to make money.  Everything from RAM to storage to bandwidth and even Support get thrown in as separate line items.  The pricing becomes convoluted and difficult to predict.  It’s a huge mess, but there is no incentive to solve the problem, given there is a lot of money to be made from the confusion.

I have no problem with the supply side making money.  After all, that’s what a company is in business to do.  What I have a problem with is the lack of transparency or ability to leverage these systems for anything more than just the technical accomplishment of elastic computing (don’t get me wrong, that is a biggie!).  When Cloud providers don’t give you proper insight into what you are using, and if you can’t make the mental jump between what you do today (ex, buy more blades) and what the Cloud represents, the advancement of the industry suffers.

Herein lies the gap.

Service Providers must deliver more insight and transparency into the Cloud, not fog the pricing just to earn more margins for a brief time.  Customers are far too smart for this to work long term.  Ultimately, we believe that in order for the Cloud to succeed, the industry needs to help customers understand their true usage and the true value they are getting before and after they make the decision to use Cloud Computing to run critical IT systems.  A granular metering and billing technology that transcends the politics of brand and vertical silos, while satisfying the need to be a ‘profitable’ service provider, will go a long way to helping to clean up the mess that is Cloud pricing today.

So What Does It Cost?

It sounds like the simplest of questions:  So, what does it cost?  Yet, for an immature industry like cloud computing, it’s a doozy.  

For 5 years my cohorts and I poured our energy into the singular quest of trying to make complex computing available and affordable to the SMB and mid market customer.  Unlike a lot of purveyors of the cloud, we got our start as a blood sweat and tears IT service shop, which means we only have time for stuff customers are willing and able to buy!   (Incidentally, I truly believe there is a huge source of untapped innovation sitting idle in what the IT Service market calls “The Channel”, but I’ll save that for another day).  

Like most innovators our early inventiveness was driven by a lot of trial and error exercises.  We found no shortage of willing lab rats within our base of existing customers, but each time we thought we cracked the code we came back to the drawing board with something inevitably missing from the puzzle.   Being very, very early adopters of virtualization technologies, it was easy for us to grasp and produce cloud computing deployment.   From the get go we succeeded in putting customer applications into our cloud.  That part was easy.  What was not so easy was what invariable came next in the selling process:  Pricing.

On the surface, it sounds like a simple problem.  Heck, if you already have customers wanting your solution, just ‘givem’ a price’ already!  Right? 


Herein lies the difference between a company that has build a cloud computing platform and a company that has actually tried to get a customer (and I real, tried and true SMB) to pay for it.  There is a big difference.  Cloud computing is something of a Pandora’s Box, you see.  By unleashing elastic computing with the promise (at least in our case) to a customer that they could run WHATEVER they wanted, you effectively let the lightning out of the bottle.  It is uncontrollable, yet the possibilities are fascinatingly endless.

We quickly (well, 2 years of trial and error quick) realized that what this pony needed was a saddle. 

The power of cloud computing is the stuff of techno-economic paradigms, for sure.  But it needs an effective pricing model and here’s the kicker: It has to be simple.  I mean no offence here to our counterparts that operate public clouds, but pricing is WAY too complex. I know I’m not the smartest guy on the planet, but here is what I also know:  The buying public is not made up of MIT laureates, nor do they really care how many all-nighters you pulled to develop your system.

Let me give you some insight into 6fusion R&D culture and mentality when it comes to pricing, which I think a lot of other companies that take themselves and their technology way too serious should consider: 

1) If you need a whiteboard to explain pricing, you will only sell cloud computing to yourself. 

2) If the customer doesn’t know the cost of cloud computing before giving the P.O, chances are they won’t.  

3) If, when you talk about your pricing model, you ever say “that depends…”, don’t call the Marketing Dept just yet.

I don’t want to sound overly dramatic, but we believe the pace at which cloud computing moves from ‘technological revolution’ to ‘technology paradigm’ hinges on the subject of universal costing.  Put another way, the point at which cloud computing is truly ready for mainstream business is the point at which the customer says “So, what does it cost?” and the cloud computing purveyor says, “I’m so glad you asked!”

6fusion’s John Cowan to Present at Third Annual Ingram Micro Seismic Partner Conference

Dallas, TX May 3, 2009 — 6fusion, a pioneer in the development of pure-play utility computing systems and software for the IT Channel, announced today that Managing Director and company founder, John Cowan, will present at the 2009 Ingram Micro Seismic Partner Conference, which takes place May 4th through May 6th in Dallas, TX.

Cowan’s keynote presentation, “Get Plugged Into Your Future,” will explore how Managed Service Providers (MSPs) and IT solution providers can use utility computing to build a profitable and innovative IT services business in the cloud, and how this technology can deliver more robust solutions at a lower cost to their customers. In addition, Cowan will discuss the impact and evolution of cloud computing and how utility computing will fundamentally change the way IT services are delivered and consumed in the business world.

“Utility computing is defining the future of IT services and changing how businesses and consumers market, sell, support and use IT computing power,” says Cowan. “The cloud computing innovations we are seeing today represent the tip of the iceberg for delivering an easier and more cost effective solution. The innovation behind utility computing will take the cloud to a new level of sophistication and scalability, bringing a more simplified, secure and affordable means of deploying new technologies and applications to market.”

Cowan’s presentation will also outline the key success factors for using utility computing, as well as operational best practices for MSPs to consider as more IT solutions migrate off premise and into the cloud.

The Ingram Micro 2009 Seismic Partner Conference, “Make Your Mark,” brings together more than 300 MSPs, leaders and influencers within the IT industry to engage in candid business discussions, share best practices and explore high-impact IT service trends. As a presenter, 6fusion will lend its expertise on how IT channel partners can successfully navigate and deploy the hundreds of cloud-based computing solutions emerging, such as Infrastructure-as-a-Service (IaaS), Platform-as-a-Service (PaaS), and Software-as-a-Service (SaaS) – all of which promise compelling value propositions and business benefits.

Launched in the US market in Jan. 2009, 6fusion’s technology federates independent data centers and makes the collective available compute power available for use by traditional IT service providers, MSPs and ISV’s and their customers. Using 6fusion’s software, called UC6, channel partners can track computing consumption in real time and perform historical reporting functions. In addition, UC6 agents can be deployed to physical or virtual servers located on premise with no overhead to instantly determine the projected cloud computing costs.
In support of its channel partners’ success, 6fusion has also developed training and support exclusively for the IT channel. These resources work to eliminate the risk and uncertainty of utility computing and enable a viable new business alternative for MSPs to adopt and use in today’s challenging marketplace.

“We have made the cost of complex computing as easy to predict and understand as an everyday electricity bill, which means we are uniquely positioned to enable channel partners to help their clients realize the true benefits of cloud computing,” concludes Cowan. “We’re thrilled to share our insight with Ingram Micro’s Seismic Partners and look forward to a great event.”