Friday, May 18, 2012

Follow IT's Money: A Survey of IT Financial Management Vendors

With all the talk of Cloud Computing and the transformation of IT, conversations mostly center on technology. But core to real IT transformation is the financial transformation of IT as well.

I've recently written about IT's need for financial metrics and financial transparency (a recent blog of mine has a great set of resource pointers on this very topic) but haven't done a deep dive into the companies - and products - that enable this change. In the course of researching I've found that the market is getting increasingly crowded with players... and indicator to me that this segment is beginning to become more important to IT leaders.

At its core, IT finances are based on capturing and monitoring fixed vs. variable costs, use and utilization of assets, and then blending-in operational costs. Other more sophisticated IT finance tools then allocate those costs to projects and/or organizations across the enterprise, and some even integrate that data into other finance applications (See this Blog by Paulo Prazeres on the topic). Still other tools extend out into the public cloud, monitoring usage and cost - even making recommendations regarding other pricing options and even other cloud providers.

Overall, in my opinion, these tools should be used with one goal in mind: Running IT more like a business. To do so, you need to know your sources of fixed and variable costs, costs of alternative sourcing, per-unit service costs, and who costs are allocated to. (Note: knowing costs is a requirement, actually charging-back is not).  So, when choosing tools, consider what you might need for your basic here-and-now requirements, also consider where you want to be in a few years, and what vendors are likely to offer those features as well.

Disclaimer - I may have unintentionally omitted some vendors... if so, please let me know so I can add them in. ~ KO

Subscription Billing
This class of players provide approaches to manage online subscription services, be they recurring SaaS or perhaps even other cloud-based infrastructure services. Many have flexible policy engines to support a variety of recurring revenue models.  This group of vendors isn't necessarily core to providing IT financial transparency, but may provide important services for specific IT business models.
Aria Systems - (San Francisco, CA) SaaS based service providing subscription billing and recurring revenue management; flexible billing/metering on any metric within the data center. Multiple connectors into many types of accounting systems

Monexa -  (Vancouver, BC) A very comprehensive suite of tools for billing automation for the entire subscription lifecycle of the business from initial offer to revenue to renewals.

Zuora - (Redwood City, CA) With an impressive set of customers, they provide enterprise-class, cloud-based tools to launch and scale any subscription service, quickly and affordably.
IT Accounting, Charge-back, Show-back
This next set of companies is by far the broadest, with all vendors providing at least basic products for monitoring, allocating and (most of the time) charging-back variable IT costs. This is all a foundation for providing basic IT cost transparency.
Cloudability - (Portland, OR) The platform aggregates our customers’ cloud costs into accessible and comprehensive reports to help manage spending, reduce waste, and identify opportunities for cost savings.

CloudRows - (Israel) Provides cost control for Amazon Web Services (AWS) accounts; enables you to be sure you are operating within your IT budget, and notifies you before a budget exception is about to occur. Works by constantly monitoring AWS activity logs in the background, and producing cost analytic reports for budget tracking.

Cloudyn - (Israel) Yields a deep view of application use of cloud resources, and actionable solutions for cost optimization; continually collects utilization, consumption, availability, capacity, and cost metrics for monitored cloud resources i.e. Compute (e.g, AWS EC2), Database (e.g, AWS RDS) etc.
Costnomics - (Fremont, CA)  SaaS based tool providing IT Financial Management; Service Cost Management; IT Investment Management; IT Charge Management. The resulting value is to provide Cost Transparency, optimized IT Spend, and better business alignment.
Newvem - (Israel) Newvem tracks and analyzes cloud resources usage, especially as they sprawl, identifying sub-optimal and vulnerable use of cloud resources with regards to security, availability, utilization, cost effectiveness and more. Then, recommends what needs to be done. Newvem does this by combining powerful data analytics of cloud usage data and curating crowd-sourcing knowledge and expertise from active cloud users, the community and experts for each specific issue that arises.
Nicus Software - (Salem, VA) Provides enterprise-wide IT financial management application used for IT chargeback, cost visibility, budgeting and forecasting. Suite is a comprehensive set of chargeback functions to support many different chargeback methodologies including resource-based, subscription-based, fixed cost, distributions, allocations, pass-thru and adjustments.

Pace Applied Technology - (Warrenton, VA) Offers accounting for IT resources, user chargeback, financial analysis and reporting. Provides the means to identify resource use, determine the cost of utilization, and charge the appropriate system users and/or business activities.
uptimeCloud -  (Toronto, ON) a cloud cost monitoring service that will help you measure, monitor and manage the cost of all your cloud based infrastructure in AWS (Amazon Web Services). Provides Cloud cost monitoring, Cloud cost forecasting, and Cloud cost showback. From Uptime Software.
IT Finance and Technology Business Management
I've chosen to break this out from the section above due to the more comprehensive features that appear to be provided by the vendors. These products play a more strategic role to manage and forecast costs, evaluate overall value, and assist in IT/business decision-making.
Apptio - (Bellevue, WA) Enables IT leaders to manage the cost, quality and value of IT Services by providing deep visibility into the total cost of IT services, communicating the value of IT to the business through an interactive "Bill of IT"; strategically aligns the planning, budgeting and forecasting processes
BMC - (Houston, TX)  Business Service Management Delivers comprehensive transparency into resources and associated costs required to provide IT services to the business; process for capturing demand, as well as a means by which it can be prioritized and managed based on business goals and objectives;  Enables IT to budget and forecast expenses from the perspective of IT resources, activities, and their associated costs.
Claritia - (Fort Worth, TX) Provides solutions aimed at delivering complete transparency into the total cost of IT ownership and delivery so executives can easily optimize and forecast their budgets. Products for IT cost transparency, IT financial management and IT cost optimization.
CloudCruiser - (Roseville, CA) Provides cost visibility and optimization across heterogeneous internal/external cloud environments. Offers a comprehensive suite of applications to map and measure resource usage independent of computing environment, allocating costs based on IT-defined criteria, and providing flexible and in-depth reporting of that usage.
Comsci - (Iselin, NJ) Establishes product and unit costing metrics for benchmarking and/or chargeback; quantifies and presents the TCO for all IT applications and solution; provides actionable metrics and analytics for cost reduction opportunities and comparison to alternative solutions
Cube Billing (Dallas, TX)- a cloud-based application with two service offerings: An Internal Billing/Chargeback System and an External Billing System. ability to easily understand cost information via a cost allocation and chargeback application. We help make financial data transparent across sales, delivery, account teams, and external clients.

Other Resources & References


Market Analysis said...

Global Hosting Infrastructure Service market to grow at a CAGR of 8.17 percent over the period 2011–2015. One of the key factors contributing to this market growth is the growing need to reduce IT service costs. The Global Hosting Infrastructure Service market has also been witnessing increasing adoption of cloud-based services. However, the inability to comply with service level agreements could pose a challenge to the growth of this market.

data center said...

My Company Use Claritia

Ken Oestreich said...

Thanks! I will add-in Claritia. I'm also planning on elaborating on each of these spaces soon.

indianist said...

Can someone suggest me some best Finance Management apps for android mobile phone to carry out and manage all my financial management activities? Lots of free apps are available on Google playstore but I'm hesitant to choose the best for my android mobile. Suggest me on good financial management apps..pleaseee

opportunist said...

It feels so nice to find somebody with some original thoughts on this subject. Really thankful to you for starting this.

financial management

CleanTech Patent News said...

I don't suppose Ive read anything like this before. So nice to find somebody with some original thoughts on this subject.

Brian McCallion said...

Great post. I've long considered the gap in accounting for IT costs a incongruity given how technology budgets increase continuously yet real insight into an individual firm's spend remains elusive. One missing component I see is a means of tracking KPIs again, real time activity both behind the firewall and in the Cloud. Further, a means of modeling the business value of a project vs time to market, and multiple deployment options would provide a valuable guide.

Ken Oestreich said...

Brian - Agreed. I really haven't seen comprehensive models/analyses that look at the outcomes of different deployment models. I suspect it's as complex as the analysis to determine whether to outsource work overseas or keep it domestic... i.e. lots of hard-dollar data mixed with qualitative issues. Would be great to see a good model for this.

James McAllister said...

Thanks for the list of resources! What sort of software do you use for financial services analytics?