private cloud Private Cloud Funding Model and its ChallengesProject-based funding is being blamed for the problems arising in the jumbled mixture of operating systems, tools, and equipment in the conventional datacenter. According to Steve Kaplan’s post in By The Bell, the budgeting error is understandable when there are physical servers involved. However, with virtualization, it can cause a lot of problems to private clouds. According to him, the shift to a private cloud doesn’t need a project-based funding but a chargeback funding model. This is because chargeback adjusts with the movement of shared resources and expedites planning, budgeting, and resource consumption efficiency.

Entities who move to private clouds often start with virtualized services and move up to Tier 1 machines. With mixed virtual and physical infrastructure, IT people still taps equipment, processes, tools, and architecture of the traditional datacenter with the company’s virtual infrastructure. Security processes, backup products, and traditional servers may not necessarily be the best for a virtualized environment but they do work. With this strategy, project-based funding which includes a yearly budget makes it possible for IT services to meet the projected growth. New technology projects or applications requested by business units offer extra money. However, these units want their own particular equipment which may be best for their requirements. Interoperation within the datacenter infrastructure isn’t taken into consideration.

Because of this, the virtualized environment has redundant or overlapping equipment which can be very difficult and expensive to efficiently manage. According to Kaplan, 70% of the conventional IT budget is spent on keeping idle servers turned on. In the traditional datacenter, project-based budgeting is used even when it has its disadvantages because every business unit has to have its own servers and usually uses its own dedicated storage. What these organizations fail to realize is that virtualization doesn’t require each business unit to have its own resources. Virtual machines are not assigned to a particular department and that every resource is shared within the organization. A virtualized datacenter is able to minimize technology costs and yet maximize demand. When resources attain full capacity, there is a need for expansion.

Private cloud is able to adjust to a more cost-effective and flexible capability by paving the way for business objectives to be met. It also solves the inefficiencies of virtualization. According to “The State of IT Automation” by CA Technologies, 47% of companies implementing virtualized infrastructure admit that it usually takes at least a week to request a virtualized server. In some cases, departments often resort to buying their own cheap servers. It takes a long time to provision the server because the request must go through the proper channels for approvals after which the IT team must configure the virtual machine. With a private cloud, provisioning of virtualized machine can only take minutes instead of days.

By using the chargeback funding model, a private cloud makes it effortless for departments to analyze internal costs and compare them with the off-premise alternatives. The IT department can be instrumental in the evaluation process in order to ascertain the best venues to host the different tasks while making sure that disaster recovery, compliance, security, and performance are up to par with corporate standards.

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