BMC Infuses Cost Accounting into Clouds

Everyone knows a principle tenant of cloud computing value is cost reduction and scalable resources. Cloud management software vendors are fielding more sophisticated tools to facilitate smoother, automated application deployments and administration. What remains tricky is accounting for the cost of those applications on a business unit level.

BMC Software Inc. believes it has the answer to this accounting problem: New capabilities in its BMC Cloud Lifecycle Management and Cloud Operations Management packages include the ability to trace back costs for development, deployment and administration of applications in private clouds to their originating departments. In other words, it calculates the shared costs for budgeting and accounting purposes.

The offering is an extension of BMC’s existing ability to create service catalogs, or the collection of pre-built applications that can be easily configured and deployed in a private or hybrid cloud infrastructure. Network Computing, of UBM TechWeb, does a good job of explaining the particulars of the BMC products and their relevance to private cloud management.

Service catalogs are not new to public or private cloud infrastructure. In addition to BMC, CA Technologies and IBM have enterprise-class service catalog offerings. Arguably, control panel applications by companies such as VMware and Parallels are service catalogs, of sorts, since they help manage prepositioned assets.

Public cloud and hosting providers have often talked about consumption-based pricing, but charging for actual consumption never gets to true utilization. Going to that level is difficult to track and charge for, and would disrupt revenue predictability that cloud providers rely upon for their fiscal health.

For internal accounting purposes, BMC’s offering is an indicator that the displacement of traditional infrastructure in private, hybrid or public clouds is becoming a numbers problem. Businesses – particularly CFOs – want to know who is responsible for driving up costs in one area and where contributions from where expenses should come. Cost savings is good, but cloud does a business little good if it obscures the true costs of a line of business while inflating the costs of the IT department.

Today, this is an enterprise and private cloud problem. In the near future, cloud accounts will become total cloud and IT problems as adoption increases and more assets are placed in hosted environments. Cloud brokering – or the facilitation of near-real-time selection and switching of cloud services based on price, quality of service and capacity needs – will make cloud accounting an imperative. Businesses will want to know who to credit for cost savings and operational efficiencies. All of this cloud accounting will ultimately fall on the shoulders of service providers, solution providers and a new generation of cloud managers.

Cloud computing makes it easy to be enamored by the technology capabilities, while the financial benefits are often assumed. The day is coming when everyone in the cloud chain will have to account for their costs, contributions and value. Cloud vendors and solution providers that enable this will have a competitive advantage over those simply offering capacity and management.

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