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Embotics Cloud Management Blog

Three Approaches to Cost Modeling for the Enterprise

It doesn’t matter if you’re doing chargeback, showback or cost accountability, there are three methodologies that I see being used. The most important factor when choosing a cost model is your motivation for doing so. So much so that when working with customers, this is the first question I ask:

What do you wish to accomplish by putting the cost model in place?

Is it to recover costs, name and shame resource abusers or justify the relevance of your IT Department? This dictates the approach taken to determine the model. In my experience, a cost model is required if you want to change how people behave when consuming virtualized resources. Just because they are virtual doesn’t mean they are free.

Here are the pros and cons to each approach:

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 It can be a political battle implementing chargeback and showback, but no matter which approach you take it is important to drive home the fact that VMs are not free.

Topics: Cost Management Chargeback & Showback Best Practices vCommander