In a world where every company, irrespective of size, is meticulously managing their expenses, FinOps emerges as a vital component in strategies determining where resources should be allocated and monitored it's lifecycle.
I often encounter a conceptual stumbling block, confusion between Cost and Price during my interactions with customers. Allow me to shed light on this riddle with the tale of a parking lot owner.
Picture an entrepreneur investing in a parking lot.
They procure the land, construct the parking facility, delineate parking spaces, create landscaping, install cameras and monitoring systems, hire personnel, invest in software for customer utilization tracking, secure insurance, and the list goes on.
All of these elements constitute the COST. It's the fundamental expenditure required to keep the business running, irrespective of whether the parking lot is empty or bustling with cars. Essentially, the cost remains constant.
Drawing parallels to a data center, the scenario isn't vastly different. You need the infrastructure, be it through ownership or renting, a fleet of servers, a network fabric, external storage (unless you're fortunate enough to have an HCI system), software for running applications, an IT team to manage operations and so on;
Such as the parking lot owner, regardless of whether your data center is overflowing with applications or not, the cost remains fixed.
In
VMware Aria Operations, these costs are derived from the Cost Drivers, the aspects contributing to the expense of business operations.
But let's circle back to our parking lot story.
As a customer, I don't concern myself with the intricacies of running the parking lot, nor should I. My primary interest lies in understanding the PRICE, how much it costs to park my car there. And just like in the realm of FinOps, this price is dynamic, varying between companies based on their unique business strategies and pricing policies.
Consider the complexities involved in crafting a pricing policy:
- How soon do you want a return on investments (RTO)?
- Should you charge hourly, daily, or monthly?
- Should larger vehicles incur higher fees?
- What profit margin are you aiming for?
- Factor in competition; a higher rate might drive customers away, while a lower one might jeopardize your financial viability.
In the universe of VMware Aria Operations, customers share the same sentiment. They're not concerned with the complex costs of your impressive servers; they want to know how much it "costs" to run their applications, the PRICE. Operations simplifies this with the Pricing Cards.
Here, you can structure your pricing based on the cost itself, allowing you to add fees or discounts on top of the actual cost.
Alternatively, you can employ a straightforward equation, adding values to individual resources like vCPU, memory, and disk.
So, in essence, this simple tale aims to demystify the enigma of Cost vs. Price.
Dive into cost management today and navigate the intricate waters of FinOps with clarity.
