Pros and Cons of Azure Chargeback

Azure chargeback is a cost allocation strategy of charging all business units in your organization. The Azure Cost Management Billing Console allows you to create a chargeback model for all business units in your organization. You can then import external budgets and use custom tags to categorize costs on Azure.

Azure chargeback allows you to bill departments or customers for software, cloud services, storage, and more. With Azure chargeback in place, each department provisions its services and submits internal payments based on their usage. This strategy comes with lots of benefits as well as some downsides. In this article, we’ll explore the benefits of creating chargeback for different departments in your organization, as well as some challenges you may experience. Read on!

Also Read: How to Do Effective Chargebacks Models for the Cloud

Benefits of Azure Chargeback

Azure chargeback comes in handy for your business in many ways. Some of the top benefits include:

Improved Cost Allocation Capabilities

Cost allocation in Azure can be a challenging prospect. The chargeback feature ensures you allocate each customer their costs depending on their spending.

Accountability Within the Organization

Most organizations operate on a cost-cutting basis to be profitable. However, cutting costs is a massive challenge, as there is minimal accountability for spending control.

Azure chargeback ensures every department or customer is accountable for their usage. “The higher your use, the more you pay” provides users the freedom to explore cost optimization capabilities and keep costs down. This way, the management team doesn’t have a hard time bringing everyone on board.

Service Levels

Different customers have different SLAs (service level agreement). Therefore, charging them the same is unfair and can lead to disputes. Each user in your organization needs to know what they are paying for.

Efficiency

Organizations with Azure chargebacks experience a reduction in resource consumption. These include efficient hardware utilization, reduced Virtual Machines usage, and more. Efficiency eventually reduces other overhead costs such as power usage. Ideally, these chargebacks bring about an enterprise-wide focus on lowering data center infrastructure costs.

Business Value

Azure chargeback demonstrates IT business value. It ensures users utilize resources efficiently, reducing resource wastage.

By relying on transparent data and pursuing common goals, chargebacks achieve efficient IT outcomes. It drives a holistic approach whereby reducing resource consumption and optimizing the data center becomes the norm.

Reporting

A correctly implemented chargeback process brings costs in a centralized dashboard, which allows decision-makers to show the different customers or departments the licenses or Azure services they consume.

These reports are ideal for budgeting and planning. They give both department heads and management teams a clear image of potential costs incurred.

Organizational Maturity

A well-implemented Azure chargeback model propels the organization to higher levels. It drives the need for continuous monitoring and automation, and allows users to collect data and other KPIs (key performance indicator), improving overall business performance and effectiveness.

Cons

Azure chargeback has some downsides. These include:

Difficulty Accounting for Shared Services

Shared services are an account challenge to most organizations. When operating your IT on Azure, it’s highly likely that your business will share services among different teams or users. As a result, you will end up with costs that no one is willing to pay for.

It’s difficult to track the usage of shared IT services across multiple teams. Also, there is a complex technological landscape centered across virtual machines, containers, servers, and others. Determining how to allocate costs for shared services is a considerable challenge.

How to Use the Azure Chargeback Feature

The Azure chargeback feature is a way of enabling organizations to break down their cloud bills and charge individual departments or teams for specific use.

It is also a handy way of determining exactly where you spend your money so you can potentially reduce your costs in the future. This information is available on your Azure billing portal. As a tenant, you can take this usage data and export it into your own billing system. To get the most out of your chargeback feature, organize your resources so you can query them. You can organize your resources by assigning metadata or tags to help you search your data and organize it in a relevant manner for your business. You can also structure your tenant and subscription configuration to match your

organizational and departmental model closely. You need to ensure that you set up the chargeback feature correctly and that it delivers maximum value to your business.

The Bottom Line

A transparent Azure chargeback can streamline operations in your organization by a huge margin. They increase efficiency, lower costs, and increase business value, among other benefits.

The nOps billing console allows you to create and implement an efficient Azure chargeback model to manage costs in your organization. You can use it to allocate costs and create tags appropriately.

Start your nOps free trial today, or schedule a demo to see it in action!