Romonet is taking advantage of recent announcements by Google, Amazon and Microsoft, which recently lowered the costs of their cloud services, launching a costing service designed for cloud service providers wanting to compete against the big guys.

The Dynamic Cloud-Costing Service, according to Romonet co-founder and CEO Zahl Limbuwala, is designed to help Tier 2 cloud service providers compete with providers with purpose built data centers by using accurate and timely data covering delivery costs of services.

Sitting on top of Romoent’s predictive analytics tools, the service can provide costs for kWh or per server. It can also look at climate.

The aim is to use detailed reports to bring down the cost of running the data center in such a “volatile” market and to model future use so that data center savings can be passed on to the Cloud customer.

“This is what we have been working towards all along at Romonet, but we have used our software to focus on efficiency in the past as that is what the market was most concerned about,” Limbuwala said.

“We are seeing this real need for dynamic capacity management to sell services electronically by auction. Markets like this mean you cannot be selling capacity you no longer have. They also mean that Tier 2 players need the tools and capacity available to them that Tier 1 players have built in house, otherwise they won’t be able to compete.”

The Cloud has now reached a tipping point, according to Limbuwala, who said the cottage-based industry Romonet has worked with in the past is fast becoming highly industrialized.

“With that comes the productization, automation and commoditization of all these products and services that are part of the full technology stacks, from the nuts and bolts of the data center to cloud computing instances and storage in the Cloud,” Limbuwala said.

“You just have to look at IBM selling its x86 business to Lenovo as an indicator of this trend. It could get US$2.3bn for this. Then you see Google acquiring Nest, a business based around the Internet of Things (IoI), for $3.2bn."

Romonet has already tested its service software with users with some interesting results.

Limbuwala said Romonet has seen customers looking at delivery costs per IT kWh ranging from $0.10 to more than $1.50.

“Adding in just the capital cost of the IT equipment brings the per virtual server hour delivery cost to around $0.01 in the cheap data center or $0.04 at the expensive end. This is significant as Rackspace and others retail virtual servers at $0.04 per hour and less,” Limbuwala said.

“This means even without including software costs, staff or overheads the delivery cost for cloud operators stuck in expensive colo matches what the service can be sold for.”

Romonet is offering its new service under flexible commercial models.

“Some prospects want to pay for this upfront, others want to pay with revenue share per transaction,” Limbuwala said. “We are still working out these finer details.”