Overcoming internal billing issues when deploying cloud computing services across multi-national estates

Overcoming internal billing issues when deploying cloud computing services across multi-national estates

For large Enterprises looking to reduce cost and rationalise outdated technology infrastructure and services, transitioning to the cloud makes a great deal of sense.

Firstly, because renting cloud IT and comms services is generally cheaper than purchasing and maintaining on-premise systems. They require little or no up-front expenditure, and software upgrades are frequently included in the price. Secondly, there are a huge range of other benefits – such as removing the need to install bulky on-site equipment, built-in disaster recovery, technical scalability, service resilience and operational flexibility. And thirdly, with many cloud partners offering mission-critical performance monitoring, technical support, customer services and professional services, there’s little need to duplicate these expensive resources in-house.

No wonder corporations the world over are switching to the cloud. Industry analysts Gartner estimates that global cloud expenditure reached $209,244m by 2016 and predicts that figure will grow to $383,355m by 2020. The highest growth, it claims, will come from the cloud infrastructure as a service (36.8% estimated growth) and software as a service (20.1%) sectors.

Cloud migration issues

Recognising the benefits of cloud is one thing. Realising those benefits, however, can be quite a different matter. As many large and multi-national organisations have found to their cost, trying to efficiently operate a mixed technology estate, where traditional on-premise applications co-exist alongside new generation cloud services, is anything but easy. Not only can it create technical integration issues at both network and desktop levels, but also operational issues when it comes to provisioning, management and billing.

Take internal billing, re-invoicing and revenue collections. In the past, it was (in theory) pretty straightforward for multi-nationals to centrally purchase new on-premise technology resources and deploy them within subsidiary companies around the world. At its most basic level, the process could have been simply: issue a central purchase order to the supplier, one supplier invoice, and one set of internal invoices to those subsidiary companies. Of course that picture would have been complicated by maintenance agreements, withholding tax calculations, software license agreements, the use of multiple languages/currencies in different countries etc. but it’s still an awful lot simpler than is often the case today with services rented from cloud providers for a monthly/quarterly subscription cost.

Typical issues that large Enterprises encounter with the monthly/quarterly internal billing of cloud services – in either a pure cloud environment or a mixed (i.e. cloud/on-premise) environment -include:

  • Controlling licensing and software asset management against multiple enterprise license agreements
  • Allocating costs against a user/department in the correct legal entity, budget and cost centre
  • Managing local taxes (including withholding taxes) and billing across multiple subsidiaries, languages and currencies
  • Managing one time charges, recurring charges, service duplication, supply chain credit requests and more

Adopting a new mindset. With new processes…

So how do organisations get the best of both worlds? i.e. the cost and productivity advantages of moving IT and comms services to the cloud, with a simple internal billing system across countries, subsidiaries, languages and currencies?

It’s really a question of adopting a new mindset. Moving to new ways of working invariably means adopting new operational processes, management techniques, and technologies…. and switching to subscription-based cloud services is no exception.

To effectively manage the internal billing of subscription-based services, multi-national organisations should:

  • Ensure they can track subscriptions back to individual users, departments and cost centres
  • Re-distribute monthly/quarterly subscription charges through aggregated billing to, and collections from, all local entities
  • Find ways to effectively manage local tax arrangements*.

* Tax treaties between certain countries can cause high levels of withholding taxes (WHT) where countries are trying to incentivise suppliers to set up in-country (so that they pay Corporation Tax, employ local staff etc.).  WHT imposed on purchases exported from the UK to Brazil for example, is 32%, to Colombia is 27%, and to India is 20%. Hence, the effective management of WHT is particularly important.

… new technical solutions…

To manage these new processes effectively, multi-national organisations need new technical tools, foremost of which is an effective management and billing platform.

Provisioning, Management and Billing Portals (PMPBs) – see box copy – are one such example. Using a PMBP such as the iPortalis Control Portal (iCP), organisations can rapidly provision subscription-based products (from Microsoft, West, McAfee (Intel), Citrix, MessageLabs, Acronis, Symantec, Cisco, VMware and more) and manage their terms and conditions, licenses, pricing, billing, governance and reporting.

These unified, self-managed cloud-based portals can manage and report across multiple clients, suppliers, products, services, data centres and geographies – and for both cloud-delivered and on-premise products. And with support for multiple languages and currencies, they can also dramatically simplify global billing processes.

The iPortalis Control Portal

…and new specialist partners

I mentioned earlier how organisations are benefitting from value added services from their cloud partners – such as performance monitoring, technical support, customer services and professional services. The same is true in the area of Cloud Brokerage, Aggregation and Billing Management, as a new breed of cloud player emerges.

By engaging the services of a Cloud Services Broker and Aggregator (CSBA) – see box copy – an organisation can centralise procurement, and then help redistribute monthly/quarterly charges through aggregated billing to local entities.  CSBAs help organisations:

  • Buy competitively, taking advantage of the CSBA’s global purchasing power, while minimising the threat of supplier ‘contractual lock-ins’
  • Automatically check tariffs with de-duplication of services, supply chain credit requests
  • Manage cost centres and budgets
  • Consolidate perpetual and subscription licences under a single solution
  • Take advantage of regional billing hubs (enabling them to buy centrally and redistribute costs down through their structures to ultimately mitigate – if not eradicate – localised WHT)

This is a particularly powerful message for large Enterprises that can develop more decentralised, autonomous decision-making and buying strategies, which in turn enables them to achieve economies of scale, and benefit from higher aggregated license and metered services volume requirements.  It’s also a proposition that delivers strong, on-going financial administration savings, as relationships build, and the CSBA adds a broader scope of services, and achieves greater volume procurement levels year-on-year.

Working with a specialist CSBA to deliver a Provisioning, Management and Billing Portal (PMBP) can take these benefits to the next level. By taking away the need to manage a whole raft of time-consuming and complex management and billing tasks, PMPBs can drive a huge range of efficiencies as well as enable Enterprises to optimise both economies of scale & scope.

Blog by Neil May, CEO, iPortalis