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NSX Revenue Planning calculator

The NSX revenue planning calculator is designed to show a service provider how to make additional revenue by up-selling component NSX derived services. Many service providers I speak to are asking VMware the age-old question, ‘How can I make money from your bundles?’ Equally we also hear that the bundles are expensive, my response to this is – are you realizing the value and selling the functionality of the bundles or just internally operationalizing it?

Most end consumers are after vCAN managed services, but also desire ‘cloud like’ self-service from a cloud catalogue; this has been compounded with vendors bringing cloud portals into the private cloud and the realization from consumers that this is now a reality. Hence rolling all services into a robust ‘managed service’ may or may not be ideal for your customers, they may desire a mix of both, and certainly to minimise operational spend, a provider could hand over as much as possible to self-service.

In the upcoming vCloud Director release 8.2 and in the previous release 8.1 VMware has included NSX functionality in the vCD self-service portal, this means for the first time a service provider can provide self-service NSX services (whilst maintaining multi-tenancy & security) to end customers if they are permitted access. This presents the ideal solution of managed services and self-service controls for customers who want them and allows providers to become much more granular about their charging and service definitions.

The calculator focuses on the vCAN 7, 9 & 12 point bundles (Advanced, Advanced with Networking and Advanced with Networking & Management). Of course we would like our providers to use the 12-point bundle, and this is what the calculator attempts to show – the additional margin with each vCAN bundle where NSX exposes capabilities & services.

The calculator allows input in RED text for a fast calculation, in the ‘Inputs’ tab update the red text fields; add in the number of VM expected in the provider data centre, the number that need to remain on site, the average VM specification, number of sites, users & protected VM % of estate. On the provider side the amount of RAM per host and costs are required – the calculator will work out the estimated hosts required which will naturally be offset against the returning revenues. Lastly please supply the provider’s price per point – used to calculate the outgoing costs to VMware. Please note the calculator does not include other licensing costs such as Microsoft OS licenses.

You can then set the services sell price per unit if desired – sample pricing has been assumed in the BLUE text in accordance to some light research conducted on mega clouds and vCloud Air, with quite a bit of assumption, hence these cells can be modified simply.

In the 7-point bundle, there are the services; VXLAN Service, Point to Site SSL VPN, Site to Site IPsec VPN, Edge Firewall, Edge Load balancing rule pack, Edge Load balancing instance & NAT Rules. Of course, not all of these are something a customer would necessarily understand if they were not already a VMware customer, but the good news is that most are already.

The 9-point bundle introduces some increased security and network connectivity offerings with network routing services for customer routing, micro-segmented Virtual Machines, layer 2 VXLAN to vLAN connectivity for managing outgrown IP address space without impacting customer’s existing datacentre network architecture & DHCP ranges as the estate grows. Lastly server activity monitoring provides essential visibility into your customer’s virtual network to ensure that the organization’s security is being enforced correctly, whilst this is not self-service it could make a valuable managed service up-sell to security conscious customers.

The 12-point bundle brings in hybridity with Cross vCenter vMotion HA, bursting, & distributed load balancing, L2 VPN site Hardware (remote Gateway) and Server/infrastructure breakout providing connectivity to older hardware.

The services and their pricing are shown in the table below:

 

Possible NSX derived services tableWithin the sheet called “Host Calculations” you can see the calculations used to work out the number of hosts and hence the capital investment outlay, the sheet uses some rudimentary practices to look at the CPU estate and RAM estate requirement, then picks the calculator that takes the worst case either the number of hosts to run CPU required or RAM required. Please note that the calculator does not consider storage, networking, power, cooling nor rack space or datacentre costs. 

The “Per Service Calculations” tab then pulls all the data together into several different sections:

  • The number of VM on boarded is never going to be in the first month, rather this calculator spreads on-boarding over 12 months, reality is this could be less, it depends on the size of estate:

number of VM on boarded

  • There will be some cost outlay for the provider, this will be in the form of monthly Capital & Operational (FTE and Licenses) investment. In this calculator, we are looking at the different vCAN bundle costs, hence each one is calculated separately. An assumed operational cost has been made, this whilst quite low does not consider onboarding operational time, only the number of VM on boarded and an estimated time (hence FTE cost) per unit VM.

Outgoing License costs

  • Various networking upsell services are then calculated, these are the same as in the input tabs, however now we are taking the estate, number of sites etc. into consideration, and the volume of each unit cost is multiplied out accordingly. There are some assumptions in these calculations, these can be changed in the calculations themselves if needed.

networking upsell services calculated

  • Lastly we calculate the services additional gross revenue from a baseline IAAS service, to baseline + the 7-point bundle networking upsell, to the 9 and 12 point upsell respectively:

services additional gross revenue

  • The investment over time can be seen in the sheet “Additional revenues” where you can clearly see the negative revenue stream (highlighted RED in the picture prior) and the differing up-sell value bands:

Additional Revenues

Lastly the total gross revenue gains over time can be seen, clearly showing that in this case the 12-point bundle if monetized correctly can net over $900k of additional revenue.

total gross revenue gains

I hope this calculator is useful to show the possibility of additional revenue when driving a cloud consumption like service up-sell, rather than a fully managed service where the service components are hidden. Naturally both have their place and their customer profile, it is interesting to see how customers are expecting cloud services from their managed provider whilst wanting some self-service capability, and I’m pleased to see vCloud Director 8.2 making some serious steps in this direction.

The planner is now published as business asset within the SET for ‘Network and Security with NSX’ in Partner Central:

https://vmware.my.salesforce.com/apex/page?name=set.hybrid

https://vmware.my.salesforce.com/sfc/#version?selectedDocumentId=06934000001Sz9N

If you would like to understand more about the opportunity for workload mobility and now NSX can benefit you supplying network services over multiple clouds, please read https://cloudsolutions.vmware.com/assets/blteb97f601814b3df7/Multi-DC-pooling-with-NSX.pdf

Any questions or comments, please contact me gbartram@vmware.com