Azure Cost Optimisation Blogging Series Part 1 — Budgeting & Forecasting Azure
As Microsoft Azure becomes more integrated into business operations, it is increasingly important for IT and Finance professionals to understand key Azure cost saving concepts. Azure charges often captures customer’s attention when spending patterns are trending upwards or spiralling out of control. The automatic reaction generally is to perform one-off tasks to reduce spend, however, it is important to realise that Azure cost control is not a one and done exercise.
This 4-part blog series covers 4 key areas of invaluable Azure cost optimisation strategies that should be adopted by companies looking to stem unnecessary Azure spend and manage this situation ongoing.
In this first part, I’ll take a look at Azure budgeting and forecasting, followed by Part 2 where William Nelson highlights the non-disruptive ways of cutting your Azure costs, Richard Ojo illustrates where using non-production licensing models can reduce your Azure costs in Part 3 and Niamh Ni Shuilleabhain completes the series in Part 4 with planning for procurement and negotiation of the Microsoft Azure Consumption Commitment (MACC).
You can also watch our accompanying video blog on Azure Budgeting & Forecasting below.
Azure Budgeting & Forecasting — Prior to the emergence of cloud computing, predicting IT expenses typically revolved around a yearly budgeting cycle. This generally entailed developing business justifications for capital investments with a certain level of coordination across various business units or departments.
As organisations transition to cloud-based solutions, the need for more precise forecasting methods has become more apparent. Forecasting cloud expenses now requires heightened collaboration across departments and improved communication between those different business units, so that your budgets and business goals are in sync with each other.
It’s also apparent that variable cost structures have become standard practice in the cloud and therefore, errors in forecasting can lead to unforeseen expenditure and substantial financial repercussions, in some cases.
Azure Forecasting Models — Let’s take a look at the different Azure forecasting models. The type of forecasting model that you choose will depend on the scale and complexity of your organisation’s cloud consumption.
· A composite forecasting model will enhance prediction accuracy by combining multiple forecasts from different models and averaging the results.
· If your organisation is moderately static in nature and its cloud spend has been stable and predictable, then a static forecast will be ideal. This is typically created at the beginning of a set period ie. every 12 months and remains unchanged throughout. The only issues with this type of model is that it might not suit certain business environments that are more dynamic in nature.
· Rolling forecasts are similar to a static forecast however, rolling forecasts include more regular updates at set intervals. Rolling forecasts are better suited to organisations that are more dynamic in their consumption and spend of Microsoft Azure, and for those that are seeking to improve upon their financial planning, cost control processes, and decision-making capabilities.
Whatever forecasting model you choose, it’s important that you follow an established forecasting model to prevent your organisation from falling into the trap of ‘wish casting.’ This can lead to, more than likely, a higher degree of unexpected expenditure and unnecessary costs, as well as potentially missed cost savings.
Azure Budgeting & Forecasting Tools — Microsoft has introduced a range of tools for end users and organisations to assist with pre-deployment planning and forecasting future demand in Azure, as follows:
· Azure Pricing Calculator is designed to estimate Azure costs before deployment. The Azure calculator will give you an indicative view of what the potential spend is going to be based on the price that you obtained from Microsoft.
· The Azure TCO Calculator is probably a best fit for those who are looking to compare the cost of on-premises solutions against Azure alternatives.
· Microsoft Cost Management Service — formerly known as Azure Cost Management, this is a free service that enables organisations to budget, forecast, track, alert and optimize Azure spending. It’s a really useful tool in the Azure portal at your disposal.
· Invoices — a simple one. They are issued every month, and within the portal, there is a repository of legacy invoices. You can use these to analyse previous spending patterns that potentially feed into the forecasting process and enable a higher degree of accuracy.
· Azure Usage Reports. If you are looking to uncover more detail within your Azure consumption and clarify the costs associated with each resource, Azure usage reports are hugely powerful. There is a lot of detail available, so you may want to develop your own custom tooling to help extrapolate information in a meaningful way or utilise other third-party tools to help you expose greater insights.
· Subscriptions View in the Azure portal. I like this tool as it showcases charts depicting monthly spending rates. This can be useful to quickly identify unexpected usage patterns against forecasts and budgets, which can allow organisations to take corrective action before that risk or unexpected expenditure is allowed to fester over time.
In Summary — To conclude, without a clear understanding of past spending patterns and future requirements, you are at risk of overspending on cloud services. Forecasting cloud expenses is crucial for organisations aiming for financial efficiency and cost management. Adopting more accurate forecasting techniques and selecting suitable forecasting models will allow your organisation to take control and optimize its Azure spend now and into the future.
In Part 2 of this series, my colleague William Nelson will highlight ways of cutting your Azure costs achieved using non-disruptive billing mechanisms, not a technical configuration of resources.
If you have any questions on Azure cost optimisation techniques, feel free to contact us. We’d be delighted to answer any licensing and cost optimisation queries that you might have on all things Microsoft or on any other software vendor.
About the Author:
Karl is a Principal Licensing Consultant at Version 1, providing Microsoft license expertise to organisations globally and ensuring customers get the best value from their Microsoft assets.
