Cloud Service Provider Billing Models Explained

I read an article recently on Deconstructing your AWS cloud bill and how it is so complicated because billing is broken down by five major service types, which are compute and networking, storage and content delivery, databases, deployment and management, and application services as well as options and features. If you then consider that these can be consumed per hour, on a discounted rate based on upfront commitment, or even spot priced basis, you can see why cloud billing can get complicated and AWS is not alone.

Cloud Billing

Some companies are solving these challenges such as NewVem, which helps to better optimize AWS and realize time and cost savings; Cloudability, which offers cloud cost management tools; and PlanForCloud, which enables sophisticated modeling of the components of cloud deployments.

Today though I want to offer a detailed explanation of the different billing models we are seeing in the market. As service providers move to provide cloud services, all billing models have different pros and cons depending on each customer, its usage model and internal budgeting requirements.  The key though is for service providers to realize that a number of different models do exist and to understand the benefits and revenue growth that the different models can provide.

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Cloud Billing Quirks

Cloud billing is a widely accepted challenge in the industry – mostly because there are many business models, complexities around infrastructure and customers and resellers to support. Here I look at some cloud billing quirks.

Metering & Billing


Many service providers are using their own home grown or cobbled together billing system as a direct result of quirky business models. And as a result, most of the time, the business model doesn’t fit into off the shelf billing solutions. The problem is that a quirky billing model does not support growth, complex business models or reseller programs. So what’s the solution?


Well for starters, cloud providers need a way to customize billing capabilities without becoming software engineers. They need to avoid creating billing capabilities that are unsupported so that changes in the business plan cause more investment in billing software development. They also need to ensure the billing solution is easily extended, integrated and modified to suit individual customers without creating additional unsupported systems.

Let’s consider some use cases:

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9 Requirements You Need to Offer Public Cloud

Providing a successful cloud service requires several capabilities to be successful. Without these, you may well be dressing your existing infrastructure up as cloud, without actually providing a true cloud (and the associated benefits) to your customers.

Here are nine requirements a service provider needs to address to offer public cloud services.


1. Self-Service Portal or Service Catalogue

A service provider needs the functionality of a self-service portal with an intuitive and highly configurable user interface to give the end user the individualised experience that ensures increased efficiency, productivity and adoption. This capability will allow provisioning of services, configuration from the portal, reporting on the infrastructure and alerts all via a centralised dashboard.

Some service providers will want to enforce ‘delegation control’ where others will offer customers the ability to provision servers on-demand, while others will want customers to still be required to request their service needs. Independent of the type of delegation control used, the ability to do this can offer a competitive advantage.

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The Problem Flexiant Solves

Last week we submitted an award entry on the problem our technology solves. I thought it was an interesting question as sometimes companies forget the simple explanation of what they solve. As such, today’s blog post shows how we answered this question.

Image of Tools

What Problem Does Your Technology Solve?

No enterprise is predicting internal IT growth, instead enterprises are turning to service providers to provide private, hybrid and public cloud based IT.  With a $30 billion market opportunity, and exponential growth predicted, we firmly believe this is the decade of the cloud service provider as enterprises turn to them to provide their cloud infrastructure.

The challenge here is that many service providers have not yet created their cloud business. Instead, many have dressed up their existing infrastructure to appear as cloud. Our software helps these service providers to build their cloud services business by providing on-demand, fully automated provisioning. But it does more than that; it helps organisations seize the business opportunity by providing a path to adapt and capture the market opportunity, offers competitive differentiated services, provides new revenue streams, achieve productivity gains and to move to higher margin offers.

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6 Services a Cloud Billing System Needs

We’ve said it before and I’ll say it again: cloud billing is not a sexy subject. But it is fundamental to any hoster, cloud service provider or telco’s business. You need to bill for what you are delivering. A truly cloud-centric billing system needs to support the following services:


Complex products – cloud computing products can be as simple or as complex as the customer requires. Cloud service providers need a system that can support as much complexity as they choose to provide.

Scalability – the sheer volume of individual items that a cloud service provider needs to bill is significant. It will also continue to grow rapidly as each new service is brought to market and the customer base expands.

Real-time – if the cloud can provision new services in seconds, then the billing system needs to keep up. And with new products, prices, cross-product promotions, introductory offers or new packages to consider, the billing system needs to maintain real-time data on all prices at the time of billing. One way to ensure an unhappy customer (and consequently unhappy support staff) is to generate an invoice that doesn’t reflect the promotion the customer thought they were taking advantage of.

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