A couple of weeks ago, I wrote about The Art of True Chargebacks and how VMware Tanzu CloudHealth makes simple work of the cost reallocation of cloud expenses. In addition to being a refresher on cost reallocation with Tanzu CloudHealth, it was also shared as a kickoff of our newly released cutting-edge Cost Reallocation API. This officially available API revolutionizes the seamless automation of chargeback reallocation across diverse geographies, brands, business units (BUs), and product lines. This powerful API empowers users to effortlessly tailor and modify reallocation strategies as needed.
Before jumping into an example of leveraging our new Cost Reallocation API, let’s revisit CloudHealth Perspectives and the granularity and control they provide.
Perspectives are lenses by which you can view your cloud infrastructure. These lenses are user-defined groups built on a customer’s public cloud tags, metadata, other cloud characteristics, or even some Tanzu CloudHealth generated tags. The created groups allow customers to tie costs back to business units, teams, applications, or projects.
For a tangible example, let's delve into a Cost Reallocation API schema that exemplifies how a telecom customer can efficiently redistribute consumption costs among key departments: research and development, production, human resources and administration, logistics, finance, and project monitoring. This redistribution is based on the percentage usage attributed to each respective BU.
- Research and development – Telecom companies heavily invest in research and development for technological advancements. The API can attribute a specific percentage of the overall consumption costs to the R&D department, reflecting the resources utilized for innovation and development.
- Production – Production involves the operational aspect of providing telecom services. The API intelligently allocates costs to production based on the consumption of resources needed to deliver these services, ensuring a fair distribution of expenses.
- Human resources and administration – HR and administrative functions are essential for any organization. The API considers the usage of resources related to HR operations and general administration and allocates costs accordingly, aiding in budget management for these critical support functions.
- Logistics – Telecom companies require effective logistics and supply chain management. The API factors in the logistics operations' resource usage, determining the associated costs, and redistributing them accurately based on usage percentages.
- Finance – The finance department handles financial transactions and management. The API attributes a proportionate share of consumption costs to finance, reflecting the resources utilized for financial operations and fiscal planning.
- Project Monitoring – Telecom projects require monitoring and oversight. The API calculates costs linked to project monitoring activities, distributing them based on the percentage of usage by the project monitoring department.
Use case scenario
Let’s look at a customer in the telecom industry’s cost reallocation scenario. This example is across BUs with a sample Cost Reallocation API schema leveraging a Perspective built with the above business groups.
mutation {
createCostReallocationRule(
input: {
name: "Brand-A Reallocation-Rule"
description: "Rule to re-allocate amonsgt business groups"
isEnabled: true,
reallocationAcrossAccounts: false
# Re-allocation Source: Perspective Group.
reallocationSource: PERSPECTIVE_GROUP,
# Source Brand: Telecom Boston
sourcePerspectiveGroup: "crn:[xxxx]:perspective-group/5772436087510:5772436056799:893353197671"
# Destination Sub Rules to reallocate.
subRules: [
{
includeCredits: false,
# Destination type: Reallocate to Specific Groups to Specific Perspectives.
reallocationDestination: SPECIFIC_GROUPS_SPECIFIC_PERSPECTIVES
# Destination Perspective: Departments
destinationPerspectives: [
"crn:[xxxx]:perspective/577243607198:893353197682"
]
destinationPerspectiveGroups: [
{
# Destination Group: R&D
id: "crn:[xxxx]:perspective-group/5772436646679:5772436071989:893353197682"
# Percentage to reallocate to Perspective Group R&D: 20%
percentage: "20"
},
{
# Destination Group: Production
id: "crn:[xxxx]:perspective-group/5772436646680:5772436071989:893353197682"
# Percentage to reallocate to Perspective Group Production: 30%
percentage: "30"
},
{
# Destination Group: HR & Admin
id: "crn:[xxxx]:perspective-group/5772436646681:5772436071989:893353197682"
# Percentage to reallocate to Perspective Group HR & Admin: 10%
percentage: "5"
},
{
# Destination Group: Logistics
id: "crn:[xxxx]:perspective-group/5772436646682:5772436071989:893353197682"
# Percentage to reallocate to Perspective Group Logistics: 20%
percentage: "25"
},
{
# Destination Group: Finance
id: "crn:[xxxx]:perspective-group/5772436646683:5772436071989:893353197682"
# Percentage to reallocate to Perspective Group Finance: 10%
percentage: "10"
},
{
# Destination Group: Project Monitoring
id: "crn:[xxxx]:perspective-group/5772436646684:5772436071989:893353197682"
# Percentage to reallocate to Perspective Group Project Monitoring: 10%
percentage: "10"
}
]
}
]
}
) {
__typename
id
name
isActive
isEnabled
cloud
description
reallocationAccountScope
reallocationSource
sourceIndirectCosts
sourcePerspectiveGroup
createdAt
updatedAt
subRules {
totalCount
edges {
node {
id,
includeCredits,
includeAssetsNotAllocated,
reallocationDestination,
proportionBy,
destinationPerspectives
destinationPerspectiveGroups {
id
percentage
},
createdAt
updatedAt
}
}
}
}
}
Please note: In the above schema, [xxxx] would be replaced by your customer ID.
Our customers enjoy the freedom to tailor the API to reallocate costs based on specific direct expenditures, such as Amazon Elastic Compute Cloud (Amazon EC2) services consumption distributed across various BUs, especially if the service significantly contributes to cloud spend. This level of customization offers a granular approach, serving as the foundational principle for dynamically proportioning cloud-related costs. This reduces manual intervention and streamlines the entire reallocation process, enhancing efficiency for our valued customers.
By leveraging this cost reallocation system, as seen in the example, telecom customers gain detailed insights into resource consumption within each department. This deeper understanding facilitates meticulous financial planning, efficient resource management, and well-informed decision-making, ultimately driving cost-effectiveness and optimizing overall organizational performance.
The Cost Reallocation API stands as a testament to its capabilities, providing our customers with a priceless tool for effective resource allocation and optimization within their organizations. The potential applications and advantages of this cost reallocation feature are extensive, offering customers unprecedented control and efficiency through seamless integration into their existing systems and workflows.
Next steps
To learn more about the Power of Perspectives, cost reallocation, and how to take control of your cloud spend, visit VMware Tanzu CloudHealth and sign up for a free trial of Tanzu CloudHealth to get started on your cost reallocation journey today.
About the Author
More Content by Hagar Sudha
