Cloud Service Lifecycle and Management

CLOUD SERVICE
LIFECYCLE AND
MANAGEMENT
PARTICIPANT GUIDE
PARTICIPANT GUIDE
Cloud Service Lifecycle and Management
© Copyright 2021 Dell Inc. Page i

Table of Contents
Cloud Services Lifecycle and Management.......................................................................... 2
Planning and Design Considerations for Cloud Services ...................................... 3

Planning and Design Considerations for Cloud Services...................................................... 4
Overview.............................................................................................................................. 5
Determine What is Needed .................................................................................................. 6
Planning and Design Approach ............................................................................................ 7
Define Goals and Scope ...................................................................................................... 8
Assessment ......................................................................................................................... 9
Design of Cloud Services ................................................................................................... 11
Communicate..................................................................................................................... 12
Deliverables ....................................................................................................................... 13
Knowledge Check .................................................................................................... 14

Question 1 ......................................................................................................................... 15
Lifecycle and Management Considerations .......................................................... 16

Lifecycle and Management Considerations for Cloud Services .......................................... 17
Service Lifecycle Overview ................................................................................................ 18
Waterfall Methodology ....................................................................................................... 19
Waterfall Benefits and Challenges ..................................................................................... 21
Agile Methodology ............................................................................................................. 23
Agile Benefits and Challenges ........................................................................................... 24
Cloud Service Lifecycle Phases ......................................................................................... 26
Service Lifecycle Example ................................................................................................. 27
Service Lifecycle Scenario ................................................................................................. 29
Page ii © Copyright 2021 Dell Inc.

Plan Phase ............................................................................ 30
Service Concept................................................................................................................. 31
Service Business Plan ....................................................................................................... 33
Service Signoff ................................................................................................................... 35
Design Phase ........................................................................ 37

Operational Model and Pricing ........................................................................................... 40
General Design Consideration ........................................................................................... 42
Deployment Considerations ............................................................................................... 44
Build Phase ............................................................................ 46

Service Offering ................................................................................................................. 48
Service Contract ................................................................................................................ 51
Service Orchestration ........................................................................................................ 53
© Copyright 2021 Dell Inc. Page iii

Service Orchestration: Example ............................................. 54
Test Phase ............................................................................ 56
Launch Phase ....................................................................... 58

Launch Key Activities ......................................................................................................... 59
Operate Phase ...................................................................... 61

Operations Management.................................................................................................... 62
Service Reporting and Alerting........................................................................................... 63
Service Termination ........................................................................................................... 64
Page iv © Copyright 2021 Dell Inc.

Feedback Phase ................................................................... 66
Knowledge Check .................................................................................................... 68

Question 1 ......................................................................................................................... 69
Question 2 ......................................................................................................................... 70
Question 3 ......................................................................................................................... 71
Financial Planning ................................................................................................... 72

Financial Planning.............................................................................................................. 73
Financial Planning for Cloud Services ................................................................................ 74
Cost Optimization............................................................................................................... 75
Cost Transparency............................................................................................................. 76
Cost to Serve ..................................................................................................................... 77
Return on Investment ......................................................................................................... 78
Return on Investment: Example ......................................................................................... 79
Service Funding Models..................................................................................................... 80
Service Pricing Factors ...................................................................................................... 81
Service Pricing Factors (Cont'd) ......................................................................................... 82
Service Costing .................................................................................................................. 84
Service Pricing Considerations .......................................................................................... 85
Service Pricing Challenges ................................................................................................ 86
Software Licensing............................................................................................................. 87
Hybrid/Multi-Cloud Deployment.......................................................................................... 89
Service Pricing Optimization Strategies ............................................................................. 91
Service Deployment Cost Considerations .......................................................................... 93
© Copyright 2021 Dell Inc. Page v

Example: Private vs Public Cloud Costs ................................. 94
Chargeback and Showback ............................................................................................... 95
Chargeback and Showback Functions ............................................................................... 96
Chargeback Pricing Models ............................................................................................... 97
Chargeback Pricing Models (Contd.).................................................................................. 99
Monitoring and Reporting Financial Data ......................................................................... 100
Financial Considerations for SLAs ................................................................................... 101
Service Pricing Tools ....................................................................................................... 102
Cloud Cost Management Tools ........................................................................................ 103
Knowledge Check .................................................................................................. 105

Question 1 ....................................................................................................................... 106
Question 2 ....................................................................................................................... 107
NanCo Case Study ................................................................................................. 108

NanCo Case Study .......................................................................................................... 109
Scenario .......................................................................................................................... 110
NanCo Case Study: Discussion Area ............................................................................... 111
Proven Professional Certification ..................................................................................... 112
You Have Completed This eLearning. .............................................................................. 113
Appendix .................................................................................................. 115
Glossary ................................................................................................... 121
Page vi © Copyright 2021 Dell Inc.

Planning and Design Considerations for Cloud Services
© Copyright 2021 Dell Inc. Page 1

Cloud Services Lifecycle and Management
Page 2 © Copyright 2021 Dell Inc.



Overview
Proper planning is needed to successfully transition from legacy IT processes to a

cloud service-based model. Cloud services planning and design involve:
• Assessing the current IT organization and then forming a vision.

• Determining a course of action to meet the organization's established
objectives.
• Developing of a set of guidelines for the organization to implement cloud
services.

Determine What is Needed
To meet the needs of both internal users and IT's broader customer base,
organizations must:
• Identify which cloud services are needed and which service tiers and service
levels to offer.
• Determine how multi-cloud might be leveraged.
• Decide how cloud service provides will be selected and managed.
• Consider the current and future demand for not only IT but the business as a
whole.
• Determine service costing and pricing, operating model, plus governance and
compliance requirements.
• Establish a testing and training schedule.
• Develop an on-going maintenance strategy.

Planning and Design Approach
Proper planning and design starts with defining the purpose or business objectives
of the proposed cloud services.
An organization must conduct a proper assessment of the business needs and IT

environment; this helps identify requirements and constraints that must be included
for the design to be successful.
During the assessment phase, involve stakeholders and subject matter experts.
Review design decisions to gain validation and acceptance or to adjust
requirements due to certain constraints.
Effective and frequent communication is important. In the end, present the final
solution and defend the design decisions.

Define Goals and Scope
Design goals describe the desired result of a design and are used for guidance.
Examples of design goals for a cloud-based service model are:
• Provide internal users the ability to provision infrastructure on-demand.

• Offer customers the ability to use services in a secure and cost-effective
manner.
• Leverage a multi-cloud strategy to effectively provide cloud services to
consumers.
Goal statements offer a broad direction for the project and provide an architect with
the knowledge of where the organization would like to go.
Goals are the starting point for gathering more specific requirements, and all this
information is used to ensure that the final design meets the organization’s needs.
The scope is the boundary that defines what should be in the design and what
should not.

Assessment
An assessment is an evaluation of an organization and its assets as they relate to

the cloud service design project.
During the assessment:
• Clarify and define the project goals, requirements, and constraints that are used
to guide your design to meet the needs of the business.
• Examine business goals, processes and policies, project goals and
requirements.
• Evaluate IT processes and abilities, existing services, and the current IT/cloud
infrastructure capabilities.
An assessment, such as a gap analysis, will:
• Discover the environment, applications, workloads, current offerings, skills, job

functions, and more.
• Assess the readiness for creating and operating cloud services.
• Identify many of the items that IT currently offers so that they may be used and
packaged into cloud services.

An important activity that is involved in the assessment phase is requirement

gathering.
Click here to see other examples of activities involved during an assessment

phase.

Design of Cloud Services
A good design ensures:
• Cloud services that are being created will address the needs of the
organization.
• The resulting cloud services continue to be scalable, available, supportable, and
functional after they are built.
A cloud architect:
• Understands the various technical solutions and options that are available to
create a design.
• Matches the technical solution with the requirements to determine what goes
into the design.
Click here for some best practices that can be considered while designing cloud
services.
Since the cloud environment changes frequently and business requirements will
not all be the same, organizations are expected to do research during the design
process.

Communicate
The ability to communicate effectively in various modes is a key quality of a cloud

architect.
• At the beginning of the process, employ effective listening and questioning skills
to gather requirements.
• During the assessment phase, teach stakeholders about cloud services and
technologies.
• Once it is time to research technologies, begin to communicate with different
vendors and their professional networks.
Deliver the final design as well as an overview presentation where

recommendations are discussed, and questions answered. During this entire
process, work with all levels of stakeholders from management to staff, technical to
non-technical, and accepting to skeptical.

Deliverables
• The outcome of the design process is to produce documents that support your
design.
− Documents can include cloud service designs, bill of materials, operational
procedures, and recommended standards.
• Deliverables can be very large and detailed documents.
• What you deliver and the level of detail needed is defined during the
requirements gathering phase.
• Expect that the organization will want to meet to discuss your design; you will
likely create a presentation for this meeting to help explain your ideas.

Knowledge Check
Knowledge Check

Knowledge Check
Question 1
1. An organization is looking to transform its IT and has decided to offer cloud

services to internal users and customers. Currently they are performing cloud
services planning and design as a part of their transition. As a cloud architect,
in which phase of the planning and design would you carry out a gap analysis?
a. Design goal and scope
b. Assessment
c. Design of cloud services
d. Communicate results

Lifecycle and Management Considerations

Lifecycle and Management Considerations for Cloud Services

Service Lifecycle Overview
A service lifecycle is a key component of service management. A consistent and

well-defined lifecycle for building and operating services can help drive an IT
organization to better optimize resources. There are two common frameworks that
can be adopted to create a service lifecycle.
• Waterfall methodology
• Agile methodology
The methodologies described here have their own strengths and weaknesses.
Organizations can determine what methodology works best for them.

Waterfall Methodology
Waterfall methodology involves having a fixed plan with clearly defined phases in a
specific sequential order. Each phase is treated as independent and there is no
going back to previous phases that are already completed. Different teams often
perform the activities involved in the different phases. Waterfall requires team
members to perform deep and complete research and documentation at the
beginning of the project to eliminate project risk.
For an example, service lifecycle phases in a waterfall method typically include:
1. Strategy: The service proposal is initiated for management approval by

gathering all the requirements, aligning requirements to stakeholders’
expectations, and performing market research.
2. Design: The actual service is designed; requirements are determined for
delivery hand-off, and an operational model and pricing are defined.
3. Build: Construct the technology capabilities for a service. This phase can be
about building a new service or redesigning an existing service.
4. Test: A User Acceptance Test (UAT), or similar, is performed to determine
whether the developed service meets the customer requirements.

5. Launch: A service is prepared for general availability (GA).

6. Manage: All of the processes needed to support a fully deployed system are
managed; this includes the help desk facility.

Waterfall Benefits and Challenges
Click ‘arrow marks’ or ‘dots’ to navigate through each option.
Benefits
• The project plan is fixed and changes are not

easily accommodated; the plan and the
deliverables are viewed as strict and predictable.
• Documentation that was created can be followed to
provide a stable and a repeatable process.
• Detailed planning and clear requirements make
setting deliverable dates and milestone planning
easier.
Challenges
• Since the project plan is set at the beginning and it

is fixed, updates or changes are usually limited or
not allowed.
• The phases are independent and cannot be broken
down into smaller iterations; therefore, some errors
may not be identified until the entire development
is completed, and the testing stage begins.
− Resolving any errors that are detected can be
problematic.
− Development might have occurred weeks or months before testing.
− Original developers may have moved on to other projects.
• The process involves different teams for different phases so this may create
silos and decrease coordination among team members.
• Creating and maintaining detailed documentation involves significant effort and
time.

Summary
Waterfall methodology is a linear approach that is ideal for projects when:
• All the requirements are defined up-front and no

changes are expected during the project.
• The timeline and budget are fixed and offer a
predictable outcome.
• Enhancements are required for an existing or
already established service.
Example
Traditional IT services development: A traditional IT

organizational organization develops offerings, but
there are separate groups for development,
operations, and testing. Their resources and budgets
are constrained, and they are not prepared to handle
changes because of fixed planning and mindset.

Agile Methodology
Agile methodology is a collaborative approach where requirements and the final

solution evolve through iterations. The working feature that is developed will be
reviewed by the customer and their feedback will be considered for the next
iteration.
This approach relies on self-organizing, cross-functional teams building a solution

with continuous improvement through regular customer involvement. The release
cycles in Agile look like what is shown in the diagram.
Establish a few initial requirements during the planning, design, and build. Integrate
the components of a feature, test and validate the features against technical
functionality, policy and compliance requirements, and launch/release the feature
for customer use. Provide required support to enhance the customer experience
and collect customer feedback.
Establish new requirements based on the feedback; repeat the cycle for the next
Minimal Viable Product (MVP) outcome until the final desired service or product is
achieved.

Agile Benefits and Challenges
Benefits
• Embraces change by offering flexibility to

accommodate new or changing requirements and
priorities.
• Smaller iterations provide opportunities to detect
and debug errors faster and not at the very end.
• Accelerates time-to-market by delivering a working
feature with each iteration.
− Prioritizes working software over
comprehensive documentation.
• Empowers team – cross-functional team members collaborate to work together
as a team in building, testing, and operating the service and create a learning
environment.
Challenges
• The project outcome and timeline are less

predictable as only a few iterations are planned at
the beginning.
• It may be challenging for the project team to adapt
to this dynamic approach and requires sufficient
skills and proper training.
− A trust relationship must exist between the
team members.
• Requires customer’s presence and time to review
the outcome and to make important decisions.
− In this case, a customer would be someone who owns the product, usually a
product owner.

Summary
Agile methodology is an iterative process, where new requirements and priorities

are added based on success of the previous iterations and customer feedback.
This approach is ideal when:
• Only a few initial requirements are known at the

beginning of the project and there is a greater
chance of frequent changes in the requirements.
• Developing new software, sometimes called
greenfield development, where customers are
allowed to discover and add required features in an
iterative way.
• Valuable product features and time-to-market are
more important than adhering to a strict budget.
− Sometimes, adding a new, important feature requires a little extra time and
money.
Example
Cloud services development (cloud solutions):

Developing a new cloud service requires the use of
modern technologies and understanding any new
requirements from customers. This may introduce
many unknowns or priorities in the projects which
must be addressed by the team. The team will likely
prioritize the speed and flexibility that is provided by
agile methodology in developing this new service. This
will allow the team to create incremental features and
make adjustments.

Cloud Service Lifecycle Phases

Service Lifecycle Example
Cloud Services
Lifecycle
• A well-defined lifecycle for building and operating cloud services is important.

− A lifecycle should incorporate essential features of common industry
frameworks, best practices, product lifecycle, industry research, and
practical experience.
− IT organizations can better optimize resources and offer more robust
services using a lifecycle.
• The image shows is an example lifecycle and is closely aligned with the Agile
methodology. The lifecycle provides a means to build efficient services that
meet business needs.
− This lifecycle represents a continuous improvement loop which is constantly
applied to every service.
− Not every service will complete all phases of the lifecycle, nor will all
activities in a phase be applicable to every service.

− Organizations may already rely on a different lifecycle, but the concepts that
are shown, will still apply.
• The following lifecycle steps or phases will be discussed: plan, design, build,
test, launch, operate, and feedback.

Service Lifecycle Scenario
An organization is planning to adopt the cloud-based service model to offer

services to their employees. As a first step, the organization has decided to offer
Infrastructure as a Service (IaaS) using their existing IT infrastructure. They will
also leverage multiple public cloud services. To build this service, they want to
adopt agile methodology and deliver the outcome in a MVP fashion. For example,
the first MVP would be Compute as a Service, the second would be Storage as a
Service and third one Network as a Service. Later, they want to build Platform as a
Service and Software as a Service offerings in the same manner.
Learn how the organization builds the service offerings by following the steps that
are involved in the cloud services lifecycle.

Plan Phase
Service plan is the phase in which the service proposal is initiated, and several
planning artifacts are created for approval from management. There are three
components of this phase:
• Service concept
• Service business plan
• Service sign-off

Service Concept
Identify the Opportunity
• Verify that the proposed service aligns with business outcomes.

• Determine how the new service will complement existing offerings without
overlapping too much.
• Conduct external research to understand industry trends and ensure that the
right direction is being set for IT services.
Define Features and Benefits
• Decide the features based on the capabilities inherent in the offering and data
from research on competitor offerings.
− Initially offer a small set of features and expand as the road map for the
service is developed and capabilities are increased.
• Describe the benefits of the service (cost and value from provider’s perspective)
to ensure that the approvers have a clear understanding of the offering.
− As the service moves through the lifecycle, benefits from a customer

standpoint will need to be developed.

Develop Pricing and Packaging
• Complete a rough draft of the packaging and pricing so the service proposal
can be built.
− In future phases, these details get further refined and finalized.
• Look at what other organizations are doing in the industry regarding packaging
and pricing.
• Perform a preliminary pricing analysis so that a rough estimate can be
developed.
− Include key elements of cost such as fixed and variable costs, resource
costs, licensing costs, and so on.
Identify Target Market
• One approach could be to release an MVP with limited functionality to test the
product. The capabilities could then be expanded based on market feedback
• Another approach could be to create an offering with specific features only for a
specific segment of the market.
− For example, a high compute offering might be needed by engineering

consumers while a standard offering might be suitable for the rest of the
organization.
In the IaaS scenario, the target audience will be the internal employees of an
organization.

Service Business Plan
Create a Service Business Plan
• Create the service business plan document to provide a business case for
launching a new service or updating the existing service with new features.
− The plan facilitates the ability to make a fact-based decision for approving
the new service or updating the service.
Assess Technical Feasibility
• Assess the technical features that will be included in the offering.

• Perform capacity assessment to verify that the organization can deliver the
services in an uninterrupted manner and can accommodate the typical business
cycles.
Analyze Service Financials
• Calculate preliminary costs of the service that includes hardware, software,

licensing, resource, and maintenance.

• Establish margin strategy: Organizations try to build a margin into the cost while
calculating final pricing so that the service generates enough funds for re-
investment purposes.
• Calculate the Return on Investment (ROI) and breakeven numbers using
preliminary demand forecasting.
• Forecast revenue as a result of selling a certain number of units over a period of
time such as one, three, or five years.
Identify Operational Requirements
• From a service level perspective, planning must be done for the support levels
that can be guaranteed.
• Identify automation requirements for provisioning and reporting so that the
necessary planning can be done, and investments can be reserved.
• Examine the service catalog requirements for the order form, feature sets,
provisioning workflow, and approval workflow.
Analyze Build, Buy, or Partner Strategy
• Analyze whether to build the underlying capabilities or services internally or to

buy such capabilities from a vendor. Another option is to rent such capabilities
from an external service provider.
− There are pros and cons with every approach and several factors such as
required resources, skillset, and budget go into making this decision.
In the IaaS scenario, the organization wants to build the service using their exiting
IT infrastructure and leverage multiple public cloud services based on the need.

Service Signoff
Create a High-Level Release Plan
• Capture various details such as:
− Release milestones: Product availability or feature release schedule

− Release themes: Waterfall or Agile
− Release criteria: Customer environment standards, testing standards, and
so on
− Resources: Identified roles and their responsibilities
− Sales plan
− Support plan
− Training plan
Present Business Plan for Approval

• Present the business plan and seek executive approval to move forward with
the service.
• Plan for performance benchmarks and periodical service performance reviews.

Design Phase
Service design phase is all about designing the actual service and identifying its
deployment considerations.
• Includes various activities carried out in service design and working out the
operational model and pricing for the service.
Some of the key activities that are carried out include:
Click each tab to view details.

Review And Analyze Requirements
High-level requirements that were identified during planning stage

are further analyzed to determine any dependencies with
underlying capabilities.
For example, during the initial requirement stage for Backup as a

Service, authentication services may not have been originally planned to be
delivered as part of the ordered service. However, they now may be needed to
ensure a seamless customer experience.
Create Policy Documents
One of the important activities in this phase is to create the

required policy documents. This generally includes the product
data sheet, the financial agreement, the intended use document,
and frequently asked questions (FAQ).
Some organizations may create other documents as required by their governance

function.
Define Provisioning Process
Provisioning process includes a series of steps that

explain how the order will be executed once it is
received. It also incorporates the time it takes at
each step of the process.
The complete service provisioning process should

be automated and orchestrated to remove the
manual intervention in this process.

Define Feedback Process
It is important to establish feedback processes. It is an effective way to judge how

well your service is performing and to ensure that the customer feels invested in
the service.
A forum needs to be created for this and suitable participants from IT, and the
customer must be identified. The goal is to ensure that the service is meeting the
customer needs and the input may result in features being added.
Create Functional and Technical Design
Functional design is essentially a service design that

is agreed between the IT provider and lines of
business. It describes what the service must do in a
way that both parties can understand and agree.
The key input to a functional design begins with the
requirements of the product that have been specified
earlier. The features and requirements are designed
modularly, to prevent catastrophic failure.
Technical design is the kind of design that is agreed

upon by the architects and software developers. It
describes how the service will be built to meet the
functional design.

Operational Model and Pricing
Critical elements of the design process include design of both the operational
model plus the costing and pricing. The following are the key tasks carried out:
Scroll to view all the options.
Define Service Levels
Defining the levels of service involves describing the features, benefits, and
performance in various packages, each associated with a specific, and different
price. The goal is to offer the customer choices in terms of picking the level (for
example: Platinum, Gold, Silver, and Bronze) that suits their needs. When they
have a choice selecting what meets their needs, it helps them use the appropriate
level of resources for their requirements.
Demand and Capacity Planning Processes

One of the important aspects of service management is to have a process to

manage demand and capacity. This becomes crucial from the perspective of
meeting SLAs and ensuring a good customer experience. From a service
perspective, demand management becomes a crucial activity since that feeds into
capacity planning and any additional resources that might be needed.
Regarding IaaS scenario, the organization should plan for having sufficient
compute, network, and storage resources to meet the required SLAs.
Pricing
All the fixed costs such as hardware and software, and variable costs such as
operational costs and licensing must be included. Licensing costs are complex
depending on the technology. One of the goals of the costing model is to arrive at
the unit cost for the service and plan for optimizing that cost. Some organizations
might decide to set a lower pricing for a limited time to gain market share.
As part of this, the chargeback and showback framework will need to be

established.

General Design Consideration
The general service design considerations are given below:
Considerations Benefits Examples
Focus design on • Lower cost by • Standardization of

improving workload producing the processes, practices,
efficiencies required workload and infrastructure
with fewer offerings
resources • Utilize automation
• Improve time-to-
value
• Improve efficiency
for over and
underutilized
resources
Identify service • Reuse resources to • Reuse service templates

commonalities improve and offerings when
development possible
efficiencies • Standardize on most
• Improve efficiency common requirements
by using common • Design templates that can
templates be reused
• Support economies
of scale

Design loosely coupled • Repurpose • Design services that are

services independent, not dependent on other
atomic services to services
provide service • Design services that can
design efficiencies be used by other services
without concern for
interoperability
dependencies
Manage the entire • Reduce manual • Automate the service

service lifecycle effort, improve workflow –provision,
management monitor, modify, meter,
efficiencies and and deprovision
reduce
administrative
costs by
incorporating
automation from
instance creation to
deletion

Deployment Considerations
Considerations Private Public Cloud Hybrid Cloud Multi-Cloud

Cloud
Cost Costly if Ideal for Model may be Model may be

services and startup costly and cost-effective,
resources do organizations complex to but complex to
not exist in- due to lower architect, architect,
house cost deploy, and deploy, and
manage manage
GRC and Policies and Governance, Governance, Governance,

Security measures are risk, and risk, and risk, and
already in compliance compliance compliance
place may be an may be an may be an
issue issue issue
Application Better suited SLA Ideal for apps Provides

Performance for management with cyclic options that will
performance- more critical demands meet
sensitive performance
applications requirements
at the lowest
cost
Data Protection Utilize Well suited Good for Good for

capacity and for archive, application application
other backup, and high high availability
resources for disaster availability
backup and recovery
archiving

Geography User access Access may Typically, When users

is close to be cross- users are are widely
data center continental widely disbursed
so latency distributed geographically,
issues are geographically this model
expected and this model helps to
may help to address
address application
application latency
latency problems
problems

Build Phase
The next phase in the cloud services lifecycle is to build the actual service. During
this phase, providers aim at defining services in the service catalog and creating
workflows for service orchestration.
This allows a consumer to self-provision cloud services from the cloud portal and
the orchestrator to automate process execution according to the workflows.
The key tasks of this phase are:
• Create service offering

• Define service contract

• Create service orchestration

Service Offering
A service offering is a service template that is combined with an SLA, price, and
other data necessary to offer the service described in the template. It can contain
additional rules, constraints, and policies necessary to offer the service to the
consumer. Examples are security parameters, network access, and resource
limitations. Service consumers may or may not be able to customize certain
policies and constraints. The service catalog presents the policy options to the
consumer.
Service Template
A service template is a collection of interrelated hardware and software

components that constitute a service and work together upon deployment of a
service. When a service provisioning request is received, hardware and software
resources are allocated, configured, and integrated as per the service template to
create an new instance. Click here1 to know more about service template.
The example of a service template for IaaS offering is shown below:
1
Service templates are defined in the service catalog, which is in the cloud portal.
From consumer’s perspective, the service template specifics help them to
understand the hardware configuration, software, and protection mechanism for a
service. From a provider’s perspective, it provides guidelines to create workflows
for service orchestration.


SLA and SLO
The Service Level Agreement (SLA) should be a clear and logical description of the
service, its capabilities, and the key performance indicators. The SLA may specify
the levels of availability, serviceability, performance, operation, or other attributes of
the service, such as billing. The SLA should also include remedies for the
consumer or the provider if the terms of the SLA are not met.
Service Level Objectives (SLO) are a key element of an SLA and define how to
measure the performance of the cloud service provider. They help avoid disputes
between the two parties based on misunderstanding.

Service Contract
The service contract is an agreement between the cloud service provider and the
cloud consumer to state the terms of service usage. It represents a business and
technical subscription for the delivery of the service.
Establish the Contract
When a consumer wants to instantiate a service, a contract must be established

with the cloud service provider. A consumer and provider enter into a contract for
services, including agreements on costs, SLAs, SLOs, and specific configuration
options. The contract terms are often presented on the portal to the consumer and
must be selected before the service can be used.
Contract Billing and Reporting
Billing occurs based on the contracted services and the service agreement.

• Metrics must be defined in the service to collect the appropriate usage

information.
• Metering system interfaces with the billing system to provide the usage metrics.
• Usage and billing information is provided to the reporting mechanism.
• Several reporting options are listed. The reporting mechanism also produces an
invoice for the service consumer.

Service Orchestration
Orchestration is the automated arrangement, coordination, management, and

monitoring processes that enable the tenets of cloud services through workflow
automation.
The service catalog is involved in the instantiation of a service in many ways. A

workflow is defined, and the appropriate mechanisms are involved to provision the
service. For example, a virtual machine is instantiated based on the characteristics
that are passed to it.
Orchestration is also involved in creating and implementing protection and security

policies.
Orchestration should allow for the collection of all required metrics, interfacing with
management frameworks through APIs, dictating threshold processing and
generate reporting triggers.

Service Orchestration: Example
Shown is an example of instantiating a service through automation.
Click each number to learn more about the step details.
1 3
4
2
1: 1. The user (employee) requests a service (Compute as a Service) through the

service catalog.
2: 2. The orchestration engine, and its associated workflow, interface with the
provisioning manager.
3: 3. The provisioning manager communicates to the CMDB to inquire about

requested resources.

4: 4. The provisioning manager communicates to the cloud infrastructure to

instantiate the service.
5: 5. The user is presented with the service instance, for example, a virtual
machine.

Test Phase
The purpose of the cloud service validation and testing phase is to ensure that a
new or updated service matches its design specification. It also verifies that the
needs of the customer and business objectives are met.
To perform effective validation and testing, you must have the following:
• Detailed understanding of the cloud solution.

• Scope of work to be performed, dependencies, and effort that is required to

conduct the testing.
• Knowledge of testing techniques and skills to apply these techniques in an
effective and efficient manner.
Once the testing is done, the build team can first focus on fixing critical issues and
then resolve other issues as time and cost allow.
Click here2 to learn more about this phase.
2
In this phase, test the service end to end. Service failures can harm the service
provider’s business and result in outcomes such as loss of reputation and loss of
money. Conduct UAT during the build phase in order to ensure that the service is
meeting customer needs. It is a good practice to include beta customers as part of
the testing since they will provide accurate feedback and feel invested in the
service. By providing additional information about a defect in the feedback, the
build team can focus on critical success factors first and then continue to work on
other issues as time and budget allow. In the IaaS scenario, the developed
Compute as a Service offering will be tested by the testing team and other internal
employees ensure that the offering is working as expected. If there is any
feedback, the development team will prioritize and address the critical issues
before launching the service.

Launch Phase
This is the phase in which a service is prepared for general availability (GA). The
key tasks of this phase are:
• Operational readiness
• Marketing and communication
• Release plan

Launch Key Activities
Operational Readiness
Focus on ensuring that the service operations team is ready to deliver the service
efficiently and without any issues. As part of it, training and having access to the
completed support documentation is crucial.
Similarly, ensuring that the operations team checklist has been completed and
updating the business plan for the service with any new information is also
important. That allows the service to be handed over to the support teams.
Marketing and Communication
This is an important activity since it keeps the customer informed and ensures that
the service has an effective launch. There are several activities in this stage
including having a robust marketing and communication plan, executing a launch
plan and activating the service in the catalog.
These activities must be well-coordinated with the rest of the preparations to launch
the service.

Release Plan
The goal of this component is to ensure success of the service. There are multiple
approaches that an organization can choose to employ. One includes releasing a
pilot to a select group of consumers; another is iterating on the service before
releasing it more generally. Another option is making the decision to have a full
release of the service as the initial release.
In any case, the approach must be iterative and agile. This involves the team
making and releasing quick changes as necessary to help with the success and
acceptance of the service.

Operate Phase
This phase deals with the processes to support the fully deployed cloud service. It
includes all the service-related functions that are necessary for the operations of
those services.
A cloud service provider performs functions to support cloud service management.

Some of the key activities that can be carried out in this phase are:
• Operations management
• Service reporting and alerting
• Service termination

Operations Management
During operations management, IT staff can provide value added day-to-day

activities to ensure services are working as intended. Staff can also forecast future
needs, monitor and fix issues, and design for efficiency, while maintaining the
highest-quality services.
IT staff should have a quick reference dashboard that provides the status of any
given service infrastructure. This provides a quick method to respond to issues.
It is important to focus on the various management processes to meet the required

SLAs and improve customer satisfaction. These processes include performance,
capacity, incident, problem, availability, and security.

Service Reporting and Alerting
• Monitoring is the foundation of metering, reporting, and alerting.

− Monitoring provides data that is related to performance behavior and
informational data from CPU usage, memory usage, network usage, disk
usage, and so on.
− This data can be used for billing, alerting, and reporting.
• Reports are formulated from the metrics that are gathered through discovery
and monitoring and can contain combined performance and usage information
across service dependencies.
− Reports are stored in the service catalog and may be generated through the
service portal by the user or requested by the user.
− Reports can provide information to make capacity decisions or show usage
trends.

Service Termination
When the service is terminated, the service instance resources must be

automatically returned to the pool for reuse. Termination may occur by contract
agreement, contract violation in accordance with the terms and conditions, or by
the user.
Often, termination by the user is easily done through the portal.
The termination process consists of four parts:
• Deprovisioning the service instance

• Ensuring user information remains private

• Providing a chargeback or showback report

• Feedback to improve the service
Click here3 to learn about the considerations for service termination.
Depending on the terms and conditions, premature termination may

incur penalties. An example is when the service is contracted on a
monthly basis and the instance is terminated by the user before the
end of the billing cycle.
3
The process of service termination must be achieved without impacting other
instances of the service or its users, or compromising any data, resources, or
confidential information. 1) Determine who can terminate the service 2) Determine
what resources need to be deprovisioned 3) Ensure that data is disposed or
archived in accordance with the contract terms and conditions 4) Resolve the
digital footprint 5) Perform infrastructure garbage collection

Feedback Phase
Typically, customer feedback provides a lot of input to improve the service. Also,
customers like to request enhancements to the service to meet their business
needs, and a forum to capture these requests is useful for making service
improvements.
As requests get prioritized and approved, you can add them to the service road
map and put a plan in place to release these enhancements. These enhancement
requests could be in the areas of ordering, delivery, or performance of the service.
In any case, the need is to iterate and improve the service. It is recommended to
make small changes, iterate, test, and release the change before working on the

next set. This agile method of service enhancements will minimize disruptions and
not adversely impact the user base.
In the IaaS scenario, based on the customer feedback, the second iteration would
involve updating the Compute as a Service offering or developing a new service
(Storage as a Service) to grow their business.

Knowledge Check
Knowledge Check

Knowledge Check
Question 1
1. As part of cloud service build phase, which element has a service template that
is combined with SLAs, price, billing information, and can contain additional
rules, constraints, and policies necessary to offer the service to the consumer?
a. Service contract
b. Service offering
c. Service portfolio
d. Service catalog

Knowledge Check
Question 2
2. In a cloud service life cycle management, in which phase should an

organization focus on to ensure that the service operations team is ready to
deliver the service efficiently and without any issues?
a. Build
b. Launch
c. Operate
d. Design

Knowledge Check
Question 3
3. In cloud service life cycle management, which phase deals with the processes
to support the fully-deployed cloud service?
a. Build
b. Launch
c. Operate
d. Design

Financial Planning
Financial Planning

Financial Planning
Financial Planning

Financial Planning
Financial Planning for Cloud Services
For organizations adopting a cloud-based IT transformation, it is important to

understand the financial planning because their IT department will change from a
typical cost center model to work more like a cloud service provider.
A successful cloud financial model can be created by including financial

considerations such as:
• Transitioning from capital expenses to operating expenses.

• Ensuring investments are made in the right places using IT governance.
• Evaluating options for delivery of service offerings: Private, public, or multi-
cloud.
• Establishing service funding and costing models.
• Requiring new roles and responsibilities to manage the financial model.
Let us begin the journey by understanding some important goals for the financial
planning of cloud services.

Financial Planning
Cost Optimization
To achieve true success, cost optimization must become everyone’s responsibility

in the organization. Organizations can have a cost-optimization engineer to take
the primary responsibility for cost optimization. Cost optimization can be achieved
using:
• Increased utilization of resources through sharing and pooling of resources.

• Using right sizing tools to size instances based on exact requirement to prevent
under-utilization of resources.
• Considering multi-cloud versus a single cloud option.

Financial Planning
Cost Transparency
Cost transparency helps to create a shared sense of ownership over cloud costs
and encourage people to minimize them. Cost transparency can be achieved by:
• Using the service catalog

− Helps consumers make appropriate decisions at the budget planning level
− Contains information about the complete service, including costs for
supporting and delivering the service
• Communicate costs
− Important even if they are not connected to chargeback
− Helps users to be more aware of the organization’s expenses
• Allowing teams to share best practices, showcase trends, and thereby identify
the opportunities for improvement.

Financial Planning
Cost to Serve
The most common discussion on cloud economics is about the tradeoffs between
CAPEX and OPEX. Instead of OPEX/CAPEX, look at the Cost to Serve. Cost to
Serve is a measure of the direct expenses incurred in order to operate a service.
• A Cost to Serve model includes OPEX and CAPEX, but it also includes an
important measurement – utilization.
• If you take the cost to provide the service and look at the useful ratio of
utilization, you can start to look at costs in a cost-to-serve way.
Example: Aggregate all the costs to acquire and spin up the storage. Then
translate cash investments into monthly expenses. Determine storage GBs utilized
in a month. Next, divide monthly costs by monthly GBs utilized.

Financial Planning
Return on Investment
Return on Investment (ROI) is used as a quantitative way to justify an investment.

The simple equation to calculate ROI is:
ROI = (Gain from investment – Cost of investment)/Cost of

investment
There is no direct way of measuring ROI in the cloud. Other factors that can
eventually lead to improving ROI include:
• Time to market
• Time to value
• IT capacity and utilization

Financial Planning
Return on Investment: Example
Scenario: An organization wants to modernize their IT infrastructure by adopting a

cloud-based service model. The total investment that the organization is planning
to implement for this solution is $200,000. The organization is expecting the gain to
be $25,000 per month. Calculate the ROI for a year.
Solution: ROI calculation
ROI = (Gain from investment – Cost of investment)/Cost of investment
ROI = (25000 * 12 - 200,000)/200,000 = 50%
The ROI is 50%.

Financial Planning
Service Funding Models
Organizations need to plan how they are going to fund their IT investments to
develop new cloud service initiatives. There are various funding models available to
guide organizations with this process.
• Project Funding: Provided on a project basis

• Central Funding: Provided by a central pool of funds; helps cover costs that
are beyond the scope of each project
• Hybrid Funding: Combination of project and central funding
• Usage-based Funding: Uses central funding model; uses public cloud service
provider; project teams billed based on usage

Financial Planning
Service Pricing Factors
Along with the funding models, organizations need to determine their service
pricing strategies for a successful business. Three main factors that affect the
pricing of a cloud service include:
• Service cost: The cloud service providers must calculate the cost involved in
creating a service and add additional charges to set the final price of the service
delivery to achieve the targeted profit.
• Market competition: The cloud service providers must set the price for their
service by comparing their price with other providers offering the same service
to remain competitive in the market.
• Value to the customers: The cloud service provider should measure the value
that the service brings to their customer before finalizing the service price. It
also helps them to enhance their customer experience and measure customer
satisfaction.

Financial Planning
Service Pricing Factors (Cont'd)
Investment
This factor directly impacts the cloud service pricing and it represents the amount
of money the service provider can spend on IT resources to offer cloud services.
Quality of Service (QoS)
This factor represents the quality assurance from the cloud service provider to their
customers. The key aspects of quality of service are: integrity of a service provider,
plus availability, security, privacy, and performance. To meet these QoS
parameters, the service provider needs to spend more money which impacts the
prices of cloud services.
Depreciation
This factor represents the rate at which the IT hardware resources of a cloud
service provider are expected to lose its financial value. So, it important to consider
this factor while pricing a cloud service.

Financial Planning
Maintenance
This factor represents the amount of money that is spent by the cloud service
provider to maintain and secure the cloud infrastructure and services.

Financial Planning
Service Costing
Two types of values can be used to associate cost with a particular service. They
are fixed and variable types.
Fixed Costs
• Fixed costs are expenses that remain constant for a period of time and are
typically associated with capital expenditures.
• Examples: Compute, memory, storage, network, load balancers, firewalls,
licensing, power, and cooling.
Variable Costs
• Variable costs identify administrative and operational activities to be performed

and assigns a cost to each activity.
• These are typically indirect, or overhead, operational expenditures.
• Example: Labor, training, tuning, problem resolution, testing.

Financial Planning
Service Pricing Considerations
Core elements that need to be considered for service pricing are:
Factor Description Type
Hardware Unit cost Fixed
One-time fees Activation, cancellation, Fixed

terminations, violations, and
so on
Soft costs Management, security, and Variable

audits
Multidimensional Disaster recovery, public Variable

cloud off-loading
Metered units Time, bandwidth, and Fixed

capacity
Software licensing Per usage: CPU, VM, and Fixed

hypervisor
Data protection Data replication and Variable

application recovery
Interval Period of time over which Variable

the calculations are
performed

Financial Planning
Service Pricing Challenges
Service pricing helps both a cloud service provider and cloud customers to make a
critical decision either to achieve competitive advantages or to manage cloud
resources effectively.
The two main challenges that arise for cloud service pricing are:
• Software licensing
• Hybrid/Multi-cloud deployment

Financial Planning
Software Licensing
• Cloud computing service models make software licensing more challenging.

− Most cloud providers either license by server, by CPU socket, by core, or by
VM.
• While organizations leverage PaaS and SaaS offerings for some of their
workloads, they still frequently install licensed software on cloud instances.
− These licenses may be covered under existing enterprise agreements and a
BYOL (Bring-Your Own License) policy or may require net new licenses to
be purchased.
• Some cloud providers price software licenses differently for public cloud
instances and on-premise instances.
− Organizations must consider this when migrating their workloads or building
applications in the cloud.
• Organizations adopting cloud can better manage software licenses by:

Financial Planning
− Rightsizing their cloud instances.

− Re-allocating their existing licenses between on-premises and public clouds.
− Continually optimizing the use of software licenses that have already been
purchased.

Financial Planning
Hybrid/Multi-Cloud Deployment
Although a hybrid/multi-cloud deployment provides flexibility, it leads to some

pricing challenges such as:
• Multiple Billing Accounts: Since this deployment includes multiple private and
public cloud environments, cloud customers will have multiple billing accounts
to manage.
− The cost per MB/GB of data transfer and the bandwidth consumed per
month can be different for different cloud providers. Finding experts,
processes and software to manage these involves additional costs.
• Different Forms of Pricing: Combining subscription-based pricing for software
licenses and pay-per-use for IaaS resources from multiple service providers
becomes challenging.
• Different Billing Formats and Varying Invoice Dates: Different cloud
providers use different formats for billing, and they tend to publish billing reports
and invoices on different days of the month. Therefore, managing these various
formats can become an obstacle for organizations.

Financial Planning
• Increased Auditing and Compliance Costs: Complying with data protection

policies can incur additional costs when moving workloads fluidly between on-
premise and multiple public clouds.
• Single Pane of Glass View: Technologies are available to manage multiple
environments and provide a unified view but there are costly.

Financial Planning
Service Pricing Optimization Strategies
An important initiative of cloud customers is to optimize cloud costs to prevent

cloud sprawl. Cloud sprawl occurs when an organization lacks visibility into their
cloud instances which affect their cloud bill. Some of the strategies to drive cloud
cost optimization include:
Click each list item to view details.
Find Unused Resources
A most common scenario in IT department is an admin might forget to turn-off a

temporary server when the job is completed or may forget to remove storage
attached to compute instances after they terminate the instance. It is always
important to identify unused resources and remove them.
Consolidate Idle Resources
Since cloud provides auto-scaling and on-demand capabilities, taking advantage of

these features can better utilize resources so they are not sitting idle.
Right Sizing the Cloud Resources
This is the most effective way to control cloud costs. This mechanism involves
analyzing the usage needs and patterns to avoid wasting resources.
Swapping Unused/Existing On-Premise Licenses for Cloud Services
Cloud providers have policies like Bring-your Own License (BYOL) and offer
licenses that cover both on-premise and cloud usage to reduce software licensing
costs.
Use Discounted or Reserved Instances
Cloud providers may provide an option called reserved instances where they offer
a discount in exchange for making a long-term commitment. This requires
analyzing past usage and planning for future demand.

Financial Planning
Another option, called spot instances, can also be leveraged for a small duration
until the price an organization specified during a bid has been reached.

Financial Planning
Service Deployment Cost Considerations
Public cloud providers, due to economies of scale, can often provide services at a
lower cost than a private deployment solution. This is particularly true for start-ups
that have not invested heavily in IT infrastructure. In this case, the on-demand
operational cost incurred for a cloud service provider is more attractive than a large
capital expenditure for IT equipment.
In hybrid cloud, organizations do not need to buy all of their own data center
equipment. This deployment may be cost effective but when performance is
required to scale, the cost-per-hour fees will rise.
An ideal multi-cloud environment would consist of cloud vendors that match an

organization's business needs and provide cost-efficient services to meet those
needs.

Financial Planning
Example: Private vs Public Cloud Costs
Key cost components differ between public and private cloud, as demonstrated in
the image.
The cost comparison varies based on the type of workload. It is not always true that
running a workload in a public cloud is cheaper than running it in a private cloud.
The key cost component to investigate in the public cloud is

“bandwidth in” and “bandwidth out.” This is because public providers
usually make it much cheaper to upload information; they try to lock
the organization in by making it more expensive to move data out
(download).

Financial Planning
Chargeback and Showback
Chargeback is the ability to charge according to resources consumed.
Showback is showing the consumer the charge, but not actually applying the
charge.
Benefits of chargeback and showback:
• Provides cost transparency

• Lowers IT spending by driving LOB accountability
• Reduces IT costs by proactive control and visibility
• Gains predictability in IT spending
• Fosters interactive communication between IT and its customers

Financial Planning
Chargeback and Showback Functions
Report cost and • Cost model should be used regardless of billing.

usage of resources • Helps shape usage to:
− Pay for what you use.

− Identify underused allocated resources and
therefore waste.
Analysis tools • Allow for comparing prices between public cloud

services.
• Help with TCO/ROI analysis in determining what to do
in-house or outsource.
• Enable project accountability and justification.
Increase perceived • Convert from being a cost center to a business

value of IT partner.
• Pass savings back to the business.
Click here4 to know more about chargeback and showback functions.
4
Service costs should be analyzed and reported—even if the organization has
chosen not to charge consumers for IT services. The information can be used to
shape consumer behavior. Reporting on the use of virtualized resources is
encouraged because consumers often don’t understand that virtual resources have
a cost associated with them—just like physical resources do. Chargeback allows

Financial Planning
Chargeback Pricing Models
A range of approaches have been developed for implementing chargeback in an

organization, some of the common pricing models are:
Subscription- Allows a cloud customer to purchase or subscribe to a provider’s

based Model cloud services for a specific period for a predetermined price
• Customers typically commit to the services on a monthly or
annual basis.
• Consumption and revenue are simple to measure.
• Heavy usage of service by one LOB or customer may not incur
penalties.
the consumer of IT services to make decisions based on service criteria. It provides

the proper incentives (or disincentives) to direct consumers to the efficient use of
resources. It also provides tiers of service that associate higher cost with higher
service levels. Paying for services causes consumers to be more cautious about
the use of resources (even with a showback methodology). When pricing the
service, it is important that the cost of the public cloud service provider be
researched. If consumers find that the same type of service is offered at a lower
price for the same level of performance, they will purchase services from the cloud
service provider. Internal prices should be competitive with public offerings.
Providing cost transparency to the consumer and embracing the use of public
providers where it makes sense increases the perceived value of IT as a business
partner instead of a cost center.

Financial Planning
Pay-per-use/ Customers only have to pay for what they consume or use.
Pay-as-you- • Allows users to be aware of the cost of doing business and
go consuming a server, for example, some provider charges on
hourly for usage of RAM and CPU.
• Customers don't have to pay for unused systems and are not
locked-in to a measured billing cycle.
• Factoring resource consumption can be complex.
Hybrid Model Combination of subscription cost model and pay-per-use

• Some providers charge initially on a monthly basis and, if the
limit is exceeded, then charges may convert to an hourly basis.
User-based Service providers charge based on the number of individuals using

Model the service.
• Revenue scales along with the adoption of the service by
users.
• Revenue is easy to calculate from this model.
• Multiple individuals using a single account may reduce the
revenue from the service.

Financial Planning
Chargeback Pricing Models (Contd.)
Tiered- The cloud service provider builds several bundled packages of

based Model services; the more expensive the package, the more services are
provided.
• Appeals to a broad range of customers, from beginners to
advanced.
• Customers are given the power of choice, so that they can pick
and choose the plan that works for them.
• Every tier increases the complexity of customers’ decision-
making process.
Competitive- The price is dynamic because it is dependent on the competition.

based Model • Could be implemented easily, but it may impact the customers
loyalty.
Freemium • Service providers can target users to sign up for a free but
Model limited version of a cloud service.
• The goal is to hook users to the services and push them later to
upgrade to a paid version.
• There is an increased burden on operational resources due to
free users.
Bid/Spot Users bid for unused resource, which can yield lower cost.
Instance • Spot instance is an unused compute instance that is available
Model for less than the on-demand price.
• Spot instances enable customers to request unused compute
instances at high discounts.
• Customers can lower the overall costs for the service.

Financial Planning
Monitoring and Reporting Financial Data
Click ‘arrow marks’ or 'dots’ to navigate through each option.
Monitoring Financial Data
The ability to track financial details for each service is important, especially if each
service or group of services, such as a service portfolio, will be operated as a profit
and loss center. Monitoring provides data points to validate the overall financial
performance of each service. The data can be used to routinely validate the cost,
price, breakeven point, revenue forecast, and so on.
Reporting Financial Data
Reports can provide information to make financial decisions and give a clear
picture about how the cloud services are performing financially. Organizations
should have reporting tools that help to determine if business activities are aligned
with the strategic vision of the organization. At the executive level, businesses have
used instruments, such as the Balanced Scorecard for years. This type of
scorecard is often used by the upper level executives (for example, CIOs, CTOs,
CEOs) and/or the Board of Directors to provide strategic goals and measure
against them.

Financial Planning
Financial Considerations for SLAs
The SLA for each service is a critical piece for financial planning and the cost of the
service is also related to the SLA. Expect the following financial information to be
included in the SLA for each service:
• Fee structure
• Add-on costs
• Service violation penalties
• Policy for re-imbursement
• Discount structure

Financial Planning
Service Pricing Tools
Cloud service pricing tools help organizations explore services and create an way
to estimate cost depending on their use cases or requirements. Organizations can
create an estimate by selecting a service, region, and providing configuration
details.
Pricing tools should provide transparency, multi-region support, and suggest cost-
effective instances. Below is an example of service pricing tool from VMware:
VMware TCO Comparison Calculator

Financial Planning
Cloud Cost Management Tools
Cloud cost management tools play an important role in cost optimization. These
tools help organizations increase the efficiency of their cloud usage by monitoring
and reporting capabilities.
The common features often found in cost management tools are:
• Dashboard for resource usage and cost reports

• Support for multi-cloud platforms
• Recommendations for cost-optimization
• Demonstrate governance and security
A few vendors integrate these management features in their cloud management

platform software. Some examples include:
Click ‘arrow marks’ or 'dots’ to navigate through each option.
VMware vRealize Business

Financial Planning
CloudHealth by VMware

Knowledge Check
Knowledge Check

Knowledge Check
Question 1
1. Match the goals of financial planning with their descriptions.
A. Cost B Increased utilization of resources

Transparency through sharing and pooling of
resources
B. Cost A Shared sense of ownership over

Optimization cloud costs
C. Return on D Measure of the direct expenses

Investment incurred in order to operate a
service
D. Cost to Serve C Quantitative way to justify an

investment

Knowledge Check
Question 2
2. Which pricing model proposes an idea to hook users to the services and push
them later to upgrade to a paid version?
a. Freemium
b. Competitive-based
c. Spot-instance
d. Subscription-based

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Appendix

Appendix
Requirement Gathering
Requirements are desired characteristics or behaviors that the cloud environment

should possess as dictated by an organization. Requirements gathering is a critical
step of the planning and design process. An important part of proper requirements
gathering is to listen to the stakeholders and SMEs because they are responsible
for creating the requirements to be used in your design.
While you are listening, ask questions. Ask for further clarification and don’t always
assume that you know what the organization wants. Collect and review the
requirements with the organization and ensure that they provide acceptance or
approval before you start the design. As the design progresses, you may hit
constraints that prevent you from fully meeting a requirement. This is normal but it
is important to include the organization in the process when this happens so that
they have input into the design decisions or changes. Prioritize the requirements so
that you know what is an absolute must-have and what is a nice-to-have. This will
also help if you run into any constraints.
In requirements gathering, identifying dependencies is an important task.

Dependencies are technologies or processes that a solution or project relies on to
work fully. In a cloud service design example, let’s say that an organization wants
to create a backup-as-a-storage service on the cloud infrastructure. It should be
obvious to you that this may require self-service and metering capabilities.
The assessment will require gathering information from existing documentation

such as business policies, operational procedures, and architecture designs as well
as through interviews and meetings with subject matter experts and stakeholders.

Appendix
Assessment: Examples
During an assessment phase, you can determine what costing information will be
used to calculate eventual prices for any IaaS services that you offer. Skills
assessment can be performed for IT staffs to determine what training might be
needed. You can also assess whether your current service catalog model is
sufficient.
Taking an inventory of existing services with the intention of including them in a

services catalog will lead to a rationalization of what IT is doing. What makes the
most sense to the business will emerge as the services that will be offered in the
services catalog. This assessment should also lead to services becoming more
standardized and automated.
Since services are often available through a service catalog on a web portal,
categorizing services can help keep the various offerings organized. The
assessment process could reveal that utilizing some cloud services offered by
cloud service providers (hybrid/multi-cloud approach) may be a better option than
trying to build and offer them in-house .

Appendix
Best Practices of Cloud Service Design

Some of the best practices that can be adopted while designing cloud services are:
• Consider service management in the design process, not after the service has
been completed
• Keep the design simple to reduce complexity and reduce administrative costs
• Designed services should be loosely coupled
• Each service should operate independently and be easily called upon, or
combined with, other services
− This improves design efficiencies and developer productivity
• Consider the options to adopt hybrid or multi-cloud to use public cloud services
to meet the organization's requirements.

Appendix
Scenario
NanCo has decided to develop all the three versions of ArtPort (Gallery, Museum, and consumer version) in-house through cloud-native approach and wants to leverage public clouds
for moving some of their workload. They also want to adopt agile methodology for their development of services. There is a need to s hare resources to reduce costs, improve
eff iciency, and provide elasticity. They are also looking for more efficient and reliable b ackup, archive, and disaster recovery solutions (lower RTO/RPO metrics).
NanCo would like to move new production versions of the application into the catalog where IT staff and external customers can deploy ArtPort with minimal manual intervention.
Each instance of the service will be accessed by one client. Data for that client should be protected. The production environment will have better performance characteristics than the
development environment.
In the production environment, customers will be given the option to add scheduled backups to their database instances to protect against data corruption. If data corruption occurs, a
restore can be accomplished in less than 12 hours, which is well within the one day service level agreement. NanCo lik es to explore the backup and archive options f rom public cloud
services.
In the event of a web application instance failure, a new instance will be deployed. If the database instance fails, processing will failover to the secondary
instance. Then a new database instance will then be deployed and synchronized with the remaining active instance.
NanCo expects that each gallery will run an initial ArtPort instance and would like an additional 40% reserve capacity for possible scaling and overhead.

Appendix
What is a Requirement?
Non-Functional
Requirements
Functional
Requirements
Requirements refer to functionalities or characteristics addressed in a design.

Requirements must be actionable, measurable, testable, related to identified
business needs or opportunities, and defined to a level of detail enough for cloud
service design. To meet business goals, the requirements must be included and
addressed in the design phase whether it is a functional or nonfunctional
requirement. A functional requirement describes the behaviors (functions or
services) of the system that support goals, tasks, or activities. A nonfunctional
requirement includes constraints and qualities.
Examples of cloud service design requirements are:
• Consumers should be able to access the cloud using their Active Directory
credentials (functional requirement).
• Cloud services offered through multi-cloud model (Private and Public) should be
monitored using unified management tool (functional requirement).
• Cloud services should be available 24x7 (non-functional requirement).
For a design to be considered successful, the requirements must be included and

addressed. Otherwise the design will not meet the business’s goals.

Glossary
Iteration
An iteration is referred to as a sprint which is a short window (typically of two to four
weeks) focused on completing the prioritized tasks. Each iteration acts as a mini
project by itself. The goal is to deliver a working feature (also called as Minimum
Viable Product (MVP) at the end of the iteration).


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CLOUD SERVICE

© Copyright 2021 Dell Inc. Page i

Cloud Services Lifecycle and Management.......................................................................... 2

Planning and Design Considerations for Cloud Services ...................................... 3

Knowledge Check .................................................................................................... 14

Lifecycle and Management Considerations .......................................................... 16

Page ii © Copyright 2021 Dell Inc.

Design Phase ........................................................................ 37

Build Phase ............................................................................ 46