Chargeback with System Center 2012 SP1 tutorial

In System Center 2012 SP1 a new feature is introduced called Chargeback. In a series of blog posts we will explain how this can be implemented in the Datacenter using System Center 2012 SP1

Blog Post 1: Discuss the background behind Chargeback and how System Center makes use of this. (This Blog post)

Why chargeback is important, what are the different granularities of chargeback

Blog Post 2: Show how Virtual Machine Manager and Operations Manager should be configured to make Chargeback work.

Step by step guidance that explains how to configure the tools around Service Manager for Chargeback to work

Blog Post 3:   How should Service Manager be configured to make Chargeback work and generate reports on the data.

Walk through the different options that can be used for chargeback and how reporting can be made available based on the defined price sheets that have been created in Service Manager


Chargeback is something more and more companies are starting to look at, as they are getting more structured around how they deliver IT-services to the business. This enables IT to show and or bill the department that is consuming it-services from them. This can help to educate that IT is not an unlimited resource and having the ability to show and bill for delivered services will in most cases make the consumers think about how they spend these resources and use their resources effectively.  If you have VM Server sprawl, or your cloud consistently expands, but never contracts or you never delete VMs, your chargeback costs are not providing enough incentive for consumers to  measure their behavior.


The Theory

Yes I know it’s boring, but I just want to spend a little space explaining some of the background behind Chargeback and some of the things to keep in mind when thinking about implementing Chargeback / Show back into the Datacenter. In ITIL Chargeback is a discipline under  “Financial Management for It Services” described as part of Service Strategy. The objectives are among some designed to establish an understanding between the relationship of expenses and income and ensuring that the two are balanced. In order to drive chargeback some equations needs to make up the charging model, this is normally referred to as a cost model. A cost model provides a structured way that identifies where money is being spent, once this is understood it becomes easier to find out what  should be charged back to the consumer.

When defining cost models there are several things to take into account. Among these are:

  • Identify Opex: What are my ongoing cost
  • Identify Capex: What are my capital asset

Once these are identified it should be broken into the following:

  • Direct cost
  • Indirect cost

It’s not easy to identify costs and break them down into cost models, and this work should not be underestimated.

Two things to keep in mind when making these cost models is that it should be:

  • Fair: One party or individual should not pay for others
  • Transparent: It should be clear to why the cost is applied to a cost model. The bill should be easy to read and understandable by the person who receives the bill.  Like in the old days we charged by MIPS, can you quantify the value per MIP?  No that is way too difficult to understand what you are being charged for.

Chargeback can be as complicated as you want to make it, it’s a journey so taking a practical approach in the beginning could be a good idea.

Charging for the lamp in the server room might not be realistic, so it’s about finding a balance of what the Consumer will pay for, realistically.


Chargeback vs. Show back

Many companies take a two step approach as they are simply not ready to chargeback departments for usage. The alternative here is called Show back, where you are showing who is using what, but without applying a cost to the service. In some cases it might be appropriate to create a “Wall of shame” to help drive more cost effective use of resources. This can in some cases help to drive a fiscally responsible behavior from the consumers of the service. Once this is working well, the next step can be to start charging for the service.


System Center Integration is the key

One of the very strong features within System Center is the integration between the components of the suite. Having information of updates to important CI flowing automatically into the CMDB is a key driver for keeping the CMDB up to date with the latest changes, so these can be reflected in the charging model.


The flow of Chargeback information through the components is shown in the illustration below



Virtual Machine Manager:

Virtual Machine Manager is the place in the System Center Suite where we manage resources in the fabric and delegate these resources in a controlled manner to private clouds.

By defining private clouds as well as delegated access to these, VMM can control whom uses what VMs and at the same time use these clouds for Chargeback.

Private Clouds in Virtual Machine Manager looks like this:



Operations Manager:

Operations Manager has the capability of monitoring the other components in the System Center suite and Virtual Machine Manager is no exception.

Integration between Virtual Machine Manager and Operations Manager is made via connectors, which can be configured in Virtual Machine Manager. This will allow Virtual Machine Manager and Operations Manager to exchange information between them when changes happens in either component.

Operations Manager will monitor resources in VMM that has a capacity of some sort. eg. Virtual Machines, Hosts, Private Clouds. As Operations Manager uses an object oriented model to monitor resources, it will automatically create an object for each  new resource created in VMM and begin to monitor it.

Below is an example of monitored Private Clouds and an example of one object of a Private Clouds and it’s attributes.

image    image

If a Private Cloud is running low on capacity, Operations Manger will notify the operator, so remediation can be done in time.


Service Manager:

Service Manager is the central component for holding information about Private Clouds. This is done in the CMDB which is a key component of Service Manager.

In order to feed and keep information in the CMDB up to date, Service Manager uses connectors to the other System Center components and Active Directory.

Operations Manager holds information about the private clouds and which VM that are part of which Private clouds, as shown above. By connecting Service Manager and Operations Manager via a connector we can now import this information into Service Manager CMDB.

Service Manager also has a connector to Virtual Machine Manager. This connector will however not import VMs, Private Clouds and hosts, but objects that are not monitored by Operations Manager. Eg. VM Templates, Host Profiles, Logical Networks and similar object types.



Once the needed information is in the CMDB, we can now start to define our price sheets in Service Manager.

A price sheet is an object class that allows you to associate a set of prices for various attributes for a VM and associate these to Private clouds.

All VM belonging to a private cloud will then have the price for the defined attributes applied to it and based on these a total price for this VM will then be calculated over time.

Example of a Price Sheet:



Service Manager Data warehouse:

Service Manager Data warehouse is the component in the System Center Suite that is used for reporting.

Service Manager alone cannot provide the information on the price that given tenant or user should pay over a month.  This information is stored in the Service Manager Data Warehouse.

The Data Warehouse uses RTL (Report Transfer Load) between Service Manager and Data Warehouse to get reporting data into the Data warehouse. BI Cubes are then created to make it easier for the Reporting Analyst to generate reports based on the data in the cubes.


This allows the Reporting Analyst to generate Reports in three ways.

  • Use Reporting Services
  • Use Power Pivot in Excel
  • Use SharePoint Performance Point


Excel Example:



Performance Point Example:



Summery Overview

Hopefully this gives a high level introduction to how Chargeback can be used in System Center. In this version the main focus is on VMs and defining a charging model for Private Clouds. Acknowledging that Chargeback can be more than VMs, SP1 has implemented the first step to start looking into Charging back for a service. We have partner solutions that can help taking a broader look at charging for other services than VMs.


For a quick introduction video on Chargeback by Bill Anderson please have a look here


In the next blog post we will take a look at how Virtual Machine Manager and Operations Manager should be configured to make Chargeback work in Service Manager.


Stay Tuned