Foggy it costs? Move them into the Cloud.

Cloud computing keeps getting bigger, as more and more organizations move their IT systems to virtualized self-service platforms, whether in-house or at a service provider. Flexible costs, agility, and security continue to be the main motivating factors, but another significant advantage all cloud users enjoy is more transparent IT costs.

In the distant past, IT systems were built for a single purpose, so it was easy to identify who they benefited. Then came the era of centralized IT departments with shared IT systems that simultaneously serve anyone and everyone over the network. With distinctions between resources used by individual services now foggy at best, allocating IT costs to specific business functions or products suddenly became very difficult – even in organizations where IT constitutes a large chunk of overall expenditure. Companies have a solid history of skillfully allocating overhead costs. They typically identify organization activities and assign the cost of each activity with resources to all products and services according to the actual consumption by each. Allocating centralized IT services to individual activities, however, is a different matter. It isn’t easy to look deep into the usage of those big shared servers, which compute this, that, and everything in between without much regard for divisional classifications.

How clouds have dissipated the fog
Billing systems that help with allocating computing resources have been around for some time, but it is only now, in the cloud, that they have reached a satisfactory level of precision and simplicity. The cloud, be it private or public, makes it easy to identify which IT assets are used by a particular IT service. Billing allocated or consumed computing, storage, or networking resources to a specific service is absolutely essential to the way the cloud works. Rates that are calculated by the hour, or even by the minute or second, now provide precise cost inputs by default. There’s more, too: While accounting only analyzes the history of costs, the cloud also controls their present, or even future state. It makes it easy to set various limits to different resource parameters in a self-service user portal. Not only can you now predict future expenditure on individual IT services, you can actually preset it.

Cloud-powered financial controlling is the future
This eliminates one of the major shortcomings of existing managerial accounting systems: that they deliver the information too late for a remedy to take place. Financial figures are often reported with a delay of several weeks, which, in this dynamic age, may not be soon enough to allow a prompt reaction. The cloud, by contrast, can report immediate costs and make predictions, thus enabling accounting controllers to become active players in an ongoing game instead of the passive statisticians they may have been until now. Better control of IT costs is hardly the primary reason why organizations choose to enter the cloud. Those who do need crystal-clear insights into their IT department’s spending, however, will find that the cloud can calculate it down to the cent.