Solved: Who in here is actually fronting the equipment cost for your clients?

#devops #programming #tutorial #cloud

🚀 Executive Summary

TL;DR: DevOps professionals and MSPs often struggle with cash flow strain and project delays due to client equipment and cloud resource procurement. This guide presents three distinct models—Pure Consultant, MSP, and Hybrid Cloud Broker—to effectively manage infrastructure costs without fronting capital, thereby defining service boundaries and building resilient businesses.

🎯 Key Takeaways

The Pure Consultant model eliminates financial risk and ownership ambiguity by having the client procure all assets, but can result in slower execution due to reliance on client procurement processes and reduced client stickiness.
The Managed Service Provider (MSP) model offers significant recurring revenue and maximum client stickiness through reselling hardware and cloud services with a markup, but incurs high financial risk, administrative overhead, and full liability for security and costs.
The Hybrid / Cloud Broker model provides control and high client stickiness without financial risk by leveraging cloud organizational structures (e.g., AWS Organizations, Service Control Policies) to manage client accounts while direct billing goes to the client, adding value through governance and security expertise.

Navigating client equipment and cloud resource procurement can strain cash flow and create project bottlenecks. This guide details three proven models—Pure Consultant, MSP, and Hybrid Cloud Broker—to help DevOps professionals and MSPs manage infrastructure costs effectively without fronting capital.

The Symptoms: When Procurement Becomes a Pain Point

The question of “who pays for the gear?” is more than a financial nuisance; it’s a critical business model decision that impacts cash flow, risk, and client relationships. If you’re a consultant or running a Managed Service Provider (MSP), you’ve likely encountered these symptoms:

Project Delays: Your team is ready to deploy, but you’re stalled, waiting for the client’s internal procurement department to approve a purchase order for servers or a new cloud subscription.
Cash Flow Strain: You’ve put thousands of dollars of a client’s AWS or Azure spend on your company credit card, hoping their invoice payment arrives before your card is due. This is not a scalable or sustainable model.
Ownership Ambiguity: A project ends, and a dispute arises. Who truly owns the hardware or the cloud account that holds critical data? If it’s in your name, the offboarding process becomes a legal and technical nightmare.
Liability and Risk: If you own the master cloud account and a client’s application gets breached, the liability chain can point directly back to you. You are on the hook for security, uptime, and runaway costs.

Solving this isn’t just about billing. It’s about defining your service boundaries and building a resilient business. Let’s explore three distinct models to handle this challenge.

Solution 1: The “Pure Consultant” Model (Client Procures Everything)

In this model, your role is strictly advisory and implementation-focused. You design the architecture, write the Infrastructure as Code (IaC), and deploy the solution, but you never touch the money. The client retains full ownership and financial responsibility for all assets, both physical and virtual.

How It Works

The client provides you with access to their existing accounts. For cloud providers, this means you are granted an IAM (Identity and Access Management) role with the necessary permissions within their AWS, Azure, or GCP organization. You deploy resources into their environment, and the bill goes directly to their finance department.

Pros and Cons

Pro: Zero Financial Risk. You never front costs, eliminating all cash flow problems related to client infrastructure.
Pro: Clear Ownership. There is no ambiguity. The client owns the accounts, the data, and the hardware. Offboarding is as simple as revoking your access.
Con: Slower Execution. You are entirely dependent on the client’s internal procurement speed and processes.
Con: Reduced “Stickiness”. Since you don’t own the core infrastructure, it can be easier for a client to replace you with another consultant.

Technical Implementation Example

Your Terraform or IaC configurations should be designed to work with credentials provided by the client. You never hardcode or manage sensitive keys. The provider block in your Terraform code makes no assumptions about how credentials are provided; it expects them to be present in the execution environment, which the client controls.

terraform {
  required_providers {
    aws = {
      source  = "hashicorp/aws"
      version = "~> 5.0"
    }
  }
}

# The client is responsible for configuring credentials.
# This could be via environment variables (AWS_ACCESS_KEY_ID),
# an EC2 instance profile, or a federated role.
# Your code remains clean and agnostic.
provider "aws" {
  region = "us-east-1"
}

# Example resource deployed into the client's account.
resource "aws_s3_bucket" "client_data" {
  bucket = "acme-corp-financial-data-2024" # A bucket in their account
}

Solution 2: The “Managed Service Provider (MSP)” Model (You Procure and Manage)

This is the traditional approach where you act as a reseller. You purchase the hardware or hold the master cloud account, add a margin (typically 15-30%), and bill the client for usage as part of a monthly service package. This model positions you as an indispensable, all-in-one partner.

How It Works

You handle everything from vendor negotiations to billing and support. For cloud, you utilize a master payer account and use cost allocation tags to meticulously track each client’s spend. You then use a Cloud Management Platform (CMP) or billing software to generate invoices, adding your management fee.

Pros and Cons

Pro: Significant Recurring Revenue. The markup on hardware and cloud spend can be a highly profitable, stable revenue stream.
Pro: Maximum Client Stickiness. Migrating away from an MSP that owns and manages the entire infrastructure stack is a massive undertaking for a client, ensuring long-term relationships.
Con: High Financial Risk and Overhead. You are fronting significant capital. A client’s non-payment can be catastrophic. This requires dedicated finance and administrative staff to manage billing and collections.
Con: Full Liability. You are responsible for everything: security breaches, downtime, cost overruns, and compliance.

Tooling Example

You aren’t doing this manually with spreadsheets. You’re using enterprise-grade tools to manage multi-tenant cloud billing:

AWS Cost Explorer with Cost Allocation Tags: You enforce a strict tagging policy on all resources. For example, every resource must have a client-id tag.
CloudHealth by VMware or Flexera One: These platforms connect to your master payer account, ingest the cost and usage data, and allow you to build reports, set budgets, and create billing rules on a per-client basis.
ConnectWise Manage or Datto Autotask: Professional Services Automation (PSA) tools that integrate billing from various sources (like your CMP) into a single invoice for the client.

Solution 3: The “Hybrid / Cloud Broker” Model (Facilitate, Don’t Front)

This modern approach offers the best of both worlds: the control and stickiness of the MSP model without the financial risk. You use the cloud providers’ built-in organizational structures to create and manage accounts on behalf of your clients, but the client is directly responsible for billing.

How It Works

Using a service like AWS Organizations, you invite the client’s existing account into your Organization or create a new account for them under your management umbrella. You attach their billing information directly to their sub-account. You retain high-level administrative access from the management account to enforce security policies and best practices, but you never see or touch their bill.

Pros and Cons

Pro: Control Without Financial Risk. You can enforce security guardrails, deploy standardized architectures, and manage IAM, all without fronting the cost.
Pro: Scalable and Automated. Onboarding a new client can be scripted using tools like the AWS Control Tower Account Factory.

–

Pro: Adds Demonstrable Value. You are selling your expertise in governance and security, not just reselling a commodity.
Con: Higher Technical Complexity. This model requires deep expertise in cloud governance tools like AWS Organizations, Service Control Policies (SCPs), or Azure Management Groups and Policy.

Technical Implementation Example

A key value-add in this model is enforcing cost-control guardrails. You can deploy a Service Control Policy (SCP) from your management account that applies to a client’s sub-account, preventing them from provisioning expensive or unapproved resources. The client cannot override this policy.

Here is an SCP that denies the ability to launch notoriously expensive GPU and Inference instance types in EC2:

{
  "Version": "2012-10-17",
  "Statement": [
    {
      "Sid": "DenyHighCostInstanceTypes",
      "Effect": "Deny",
      "Action": "ec2:RunInstances",
      "Resource": "arn:aws:ec2:*:*:instance/*",
      "Condition": {
        "StringLike": {
          "ec2:InstanceType": [
            "p4d.*",
            "p3.*",
            "g5.*",
            "g4dn.*",
            "inf1.*",
            "inf2.*"
          ]
        }
      }
    }
  ]
}

You apply this policy to the client’s Organizational Unit (OU), and now you’ve provided tangible value by protecting them from accidental high spend, reinforcing your role as a trusted advisor.

Model Comparison at a Glance

Metric	Pure Consultant	MSP (Reseller)	Hybrid / Cloud Broker
Cash Flow Impact	None	Very High (Negative)	None
Administrative Overhead	Low	Very High	Medium
Client Stickiness	Low	Very High	High
Risk Exposure	Low	Very High	Low (Financial) / Medium (Technical)
Technical Complexity	Low	Medium (Billing Tools)	High (Governance Tools)

Choosing the Right Model

There is no single correct answer, only the right answer for your business.

Choose the Pure Consultant model if: You are a freelancer or a small firm focused on short-term, project-based work and want to avoid financial complexity entirely.
Choose the MSP model if: You are a well-capitalized business with dedicated finance and operations teams, aiming to maximize recurring revenue and become deeply embedded with your clients.
Choose the Hybrid/Cloud Broker model if: You are a modern cloud consultancy or DevOps-focused firm. This model aligns perfectly with selling high-value expertise in governance, security, and automation, providing immense client value without taking on financial risk.

By consciously choosing your procurement model, you move from a reactive, often painful process to a strategic one that defines your services, protects your cash flow, and strengthens your client relationships.