Our chargeback policy for virtual machines was not clearly defined. To encourage adoption, the provisioning fee for a virtual machine was $500 regardless of system requirements. In lieu of a host being added and other considerable investments being made hardware, the chargeback policy needed to be revised. Virtual Machines within our matured Virtual Infrastructure cost more to provide but add a considerable amount of value.
After a bit of reading at vmMBA and watching BM15 Managing Chargeback with VMware Infrastructure 3 from VMworld 2007 we decided to go with a tiered chargeback method. The chargeback method has three tiers – low, middle, and high. The lowest tier is designed to be cheapest by far to encourage adoption on a larger scale. Our goal is to instill the confidence we have in our virtual infrastructure to our users.
Feature
Physical System
Virtual Machine
Redundant Power
Standard in higher-tier servers, lower-tier servers ~$100
Standard on hosts
Redundant CPU
Duplicate hardware required
Through multiple hosts and high availability
Redundant RAM
Duplicate hardware required
Through multiple hosts and high availability
Redundant Storage
Not required; additional costs for RAID levels or multiple storage adapters (HBAs)
Standard through multiple HBAs, SAN switch redundancy, SAN RAID levels
Redundant Network
Standard in higher-tier servers; switch redundancy not always implemented
Through multiple hosts, multiple NICs, & multiple switches
Warranty
Optional – increases total cost between $350-$1500
Standard on hosts
System Lifetime
Server MTBF, then reordered, and moved (With an outage)
N/A
Testability
Risky, requires downtime or “test” hardware
Live servers can be placed into snapshot mode; Local copies can also be downloaded for extensive tests
Hardware Maintenance
Outage/Maintenance Windows Required
Transparent to users via vMotion
Recoverability
File level only, requires OS & application reloads
File level and Image level
Illustration of added value with virtual machines
Let’s take this a step further with a Dell server. Quotes generated with the using Dell Higher Education website.
The server I will be using is the PowerEdge 2970. Base cost: $5,330.
Feature
Physical System
Virtual Machine
Redundant Power
Added Cost: $0
Included.
Redundant CPU
Duplicate hardware required. Added Cost: $5,330
Included.
Redundant RAM
Included in the above duplicate hardware. Requires downtime to replace.
Included.
Redundant Storage
RAID 5 Standard
Cost: 0
Included.
Redundant Network
Standard; must instruct staff to use different switches
Added Cost: $0
Included.
Warranty
3 year warranty standard
Added Cost: $0
Included.
Total
($5,330 + $5,330) = $10,660
This is probably a mid to high tier VM, which would depend on disk IO rates and load. I could see charging anywhere from $3,000-$4,500 for this VM. I will eventually post the details on how that number was derived.
Total value added: ($10,660 – $4,500) = $6,160. That’s the high estimate on what would be charged. That’s not even including the depreciation that the server would incur each year. Or the value added from faster recovery times with VMware Consolidated Backup or SAN based snapshots. Or the value added from being able to deploy a virtual machine much faster than acquire physical equipment. Or the zero downtime VMware hosts can have with hardware maintenance via vMotion. Or the downtime that was not incurred because virtual machines have ability to be placed in snapshot mode, protecting from potentially disruptive changes.
Of course, this is all just talk unless you to have an SLA to back the value added claims up. In your SLA it is important to note that high availability with CPU/RAM is not fault tolerance. That’s coming soon, but VMware Fault Tolerance has not hit the market yet. While the SLA cannot guarantee zero downtime, an SLA backed by VMware HA can guarantee much less downtime than a non clustered physical system.