Cloud Billing – Interview With MetraTech’s Scott Swartz

Cloud Billing – Interview with MetraTech’s Scott Swartz

Every SaaS, IaaS and PaaS vendor needs a robust billing module which works seamlessly across both single and hybrid Cloud deployments. Even though every Cloud service provider gives billing functionality, the issues arise when you have a hybrid Cloud deployment and you want to stitch together various billing services to provide a unified view of the costs. This is what MetraTech specializes in and offers products and services which enable SaaS vendors, for example, to focus on delivering value through their service while MetraTech’s MetraNet takes care of all their billing requirements.

The interview is conducted between CloudTweaks and Scott Swartz, CEO of MetraTech.

Scott founded MetraTech in 1998, after spending time at NetCentric, an early entrant in the business of cloud computing and where he created the industry’s first SGML/XML billing protocol. Prior to NetCentric, Scott was a Director at Cambridge Technology Partners, a pioneer in the delivery of client/server solutions for large enterprises. Scott has been named a Technology Pioneer by the World Economic Forum and is a Director of the Massachusetts Network Communications Council. Scott holds a bachelor’s degree in Electrical, Computer, and Systems Engineering from Harvard University. 

1. Tell us a bit about MetraTech and how it’s making it easier for Cloud service providers to bill users?

This week we announced MetraNet for Cloud. It’s an out-of-the-box cloud billing and compensation module that makes it easy to deploy infrastructure-as-a-service (IaaS), platform-as-a-service (PaaS) or software-as-a-service (SaaS) solutions in public, private or hybrid cloud environments. It includes pre-configured service and pricing templates for major cloud services including Microsoft Azure, Office 365, AWS, Cisco vBlock and Hosted Collaboration Services, IBM SmartCloud and others.

It enables cloud providers to create personalized volume or commitment-based agreements that span any combination of subscription, consumption-based and value-added services, resulting in predictable, recurring revenues. These types of agreements also provide enterprise customers with elasticity and value. Lastly, it supports multi-party settlement and compensation for partners, suppliers and channels.

2. Tell us about agreements-based billing™?

Agreements-based billing makes it easy for service providers to optimize and personalize customer and partner relationships. Their enterprise sales teams can fluidly negotiate agreements based on tailored pricing, bundling, discounting and commitment terms across any number of accounts, services, service metrics or commitments. This results in service differentiation, stickiness, higher margins and increased customer satisfaction.

MetraTech’s now-cast dashboard gives service providers’ customers and IT departments a view of customer or departmental status against an agreement along with configurable threshold notifications, enabling behavioral modifications to manage costs or meet commitments.

3. What do you mean by “Behavioral Billing™”?

There are three key stages to Behavioral Billing: strategy, action and observation. Which comes first is a classic chicken-and-egg discussion but it doesn’t really matter because the process is cyclical.

Let’s look at a simple example. A cloud provider has to manage peak periods. To drive customer behavior to run loads during off-peak times, its strategy is to provide lower off-peak prices. During negotiation, the sales rep may fine-tune the price points and seek a certain commitment for off-peak usage.

Once the agreement has been executed, its terms are seamlessly carried out in MetraNet. From that point forward, both the customer and the service provider have near-real-time insight into consumption patterns via the now-cast dashboard and the interactive bill. Customers can observe peak and off-peak consumption and whether they are on track to meet their commitments. Threshold-based notifications can also be configured so customers don’t need to constantly monitor the dashboard.

Based on this insight, either party may change its behavior. The customer can push its quality assurance department to run regression tests during off-peak periods, or the service provider may change its price. Based on those changes, the cycle will repeat itself.

4. In the SaaS scenario, does MetraTech sit in between the software vendor and the cloud infrastructure it’s utilizing? How does this change in a hybrid cloud infrastructure deployment?

Our products are available via SaaS, managed service and on-premise delivery models. In each case, MetraNet is integrated with the SaaS provider’s system to provide a complete view of the financial relationship between the SaaS provider and its customers, suppliers and partners. If the SaaS provider’s cloud consumption is germane to its business model, then the cloud consumption data will be processed by MetraNet so that fees can be passed to end customers where appropriate and the provider can understand its margins. We don’t sit between the SaaS provider and the cloud infrastructure; rather, we view the SaaS provider as a supplier whose services must be monetized.

Hybrid or multiple public cloud deployments merely add another supplier to the mix. Right out of the box MetraNet for Cloud™ supports AWS, Azure, Cisco vBlock and other cloud models.

5. Does MetraTech integrate with the Cloud provider billing system, add a layer on top of it or replace it?

If the SaaS provider wants to monetize its cloud consumption, we need to get the consumption data from somewhere. That might be the cloud provider’s billing system, but in some cases the billing system doesn’t associate usage with tenants. If that’s the case, we’ll likely get the information from a mediation system, the SaaS provider’s application or some combination of the two.

Replacing the cloud provider’s billing system is an interesting concept.  Essentially, the SaaS provider would be saying, “We’ll tell you what we owe you. Trust us.” I don’t see that happening. However, the cloud provider is a supplier, and MetraNet can be configured to determine if a supplier’s invoices are correct. “Trust, but inspect” is a good approach.

6. How do customers verify and audit the billing? What level of granularity does MetraTech offer?

MetraNet provides fine-grained audit details for customers, partners and auditors. Its metadata-driven architecture enables users to simply configure the service metrics they want to track and how those relate to charges within a billable event. For example, we had a customer using our out-of-the-box Compute definition, and the company wanted to include one VM snapshot for free and charge for any additional ones. In a matter of minutes, the customer was able to configure Snapshot Quantity and a Snapshot Charge into the data model, pricing engine, application programming interfaces (APIs) and user interfaces (UIs) – all accurate to 10 decimal places. This provides complete transparency into how the number of snapshots affected the price, general ledger (GL) mappings and more.

Of course, with any enterprise agreement there are additional aggregate terms that may affect the price. For example, a single snapshot charge within a Compute usage event may be modified multiple times based on the interaction of discounts, commitments or single-bucket pricing. We have a feature called Intermediate Calculation Auditing that audits the impact of all aggregate terms that modify the price.

We also enable multinationals to easily analyze their consumption by corporate hierarchy or product. We have seen single enterprise customers with more than 70,000 accounts and 5 million usage events per month. Assuming there are four charges per event and two aggregate terms (discount and single-bucket pricing), we’re generating approximately 40 million discrete audit points on that one bill. That’s before you audit the changes to the agreement terms themselves or taxes.

By Salam UI Haq

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