Seven Azure Cost Saving Opportunities for Finance Managers
The presence of Microsoft Azure within an organisation can involve significant ongoing costs that can lead to unforeseen expenditure and financial waste without proactive management. As Azure becomes more integrated into business operations, it is becoming increasingly important for Finance Directors to understand key Azure cost saving concepts to enable them to:
- Communicate with IT stakeholders.
- Better understand the costs and risks associated of Azure from a financial perspective.
- Help make informed decisions that protect budgets and avoid price shocks.
Azure often captures the attention of finance departments when spending patterns are trending upwards or spiralling out of control. On the inverse when Azure spend has plateaued or stabilised there is often less attention paid by Finance. In the former this will often prompt Finance Directors to ask IT Manager to review the root cause of spending increases and implement controls to manage costs. In the latter there is a heightened risk that Finance & IT management alike will take no further action as funds are meeting budgeted commitments.
Regardless of the scenario faced it is important to realise that Azure cost control is not a one and done exercise. In this blog I provide 7 Azure specific cost saving concepts that individuals within the finance department should become familiar with. Including these cost saving concepts in conversations with IT stakeholders may facilitate improved cost management.
Windows Server & SQL Server Azure Hybrid Benefit
Windows Server & SQL Server licenses acquired with Software Assurance or on a subscription basis include Azure Hybrid Benefit. Leveraging this benefit allows you to remove software rental fees associated with Windows Server and a variety of SQL services in Azure. By assigning the benefit effectively you may obtain cost savings of between 20% & 40%. Finance managers should challenge IT to ensure AHB is optimised so that it can deliver hard cost savings. Finance managers must also beware AHB usage is a trust-based model and AHB non-compliance could result in significant financial risk if audited by Microsoft, due to the need to:
· Acquire additional on-premises licenses to obtain AHB rights.
· Requested to make payments to cover backdated unauthorised usage of AHB discounts.
Reservations
Microsoft incentivise customers that make a medium to long term commitment to Azure using reservations. Reservations can enable up to 70% cost savings for Azure VMs depending on the duration of the reservation and up to 30% for Capacity based reservations for SQL Server. Finance stakeholders should obtain visibility on the use of reservations to ensure they are deployed to enable cost reduction for long running/predictable workloads. This visibility will also provide finance with insights on poorly utilised reservations that may need to be cancelled, not renewed, or put to better use through rightsizing.
Azure Savings Plan
Released late 2022, Azure Savings Plan enables customers to obtain discounted Azure pricing when compared to regular Pay As You Go ‘PAYG’. This model is similar to reservations as customers must make either a one- or three-year commitment to a savings plan. Microsoft advise that this model can enable savings of up to 65%. The way Savings Plans are applied includes a greater level of flexibility when compared to reservations. Regardless of the level of perceived flexibility, Finance should seek guidance from IT that Savings Plans are assigned correctly to avoid waste.
MACC Amendment Planning — The Microsoft Azure Consumption Commitment provides organisations with access to a variety of concessions by making a financial commitment to Microsoft. It also gives Microsoft a platform to provide flexibility during Azure negotiations while providing customers with access to a variety of incentives designed to reduce consumption cost and enable usage. Finance managers need to understand if their business is availing of this model and what is the potential impact of missing or overachieving on spending targets. If MACC is not currently in use and there is a significant Azure spend or a material future increase in spend, then the usage of this model should be investigated by finance, IT and ITAM.
Non-Production Cost Models — IT Departments will often adopt a one size fits all approach when licensing Azure production and non-production environments. Challenging the IT function to examine the viability of non-production licensing models may yield cost savings. Microsoft make available a variety of non-production licensing models that enable cost avoidance, examples include:
1. Azure free accounts
2. Azure monthly credits included with Visual Studio
3. Non-production license rights included with Visual Studio
4. Azure Dev / Test benefit
Beware: options 2, 3 & 4 create a requirement for Visual Studio per user licenses that might make cost savings less attractive.
Regional Cost Savings — Differences in tax laws, lower energy costs and capacity availability can result in cost differences for Azure between regions. If constrains like data residency laws, network latency, and availability of services are not blockers then Finance should engage with IT to take action to qualify the cost benefit and operational impact of leveraging lower cost alternative regions.
Right Sizing — Has your business over spec’d its Azure requirements leading to unnecessary monthly Azure expenditure. Where there are no monthly overruns in projected Azure spend this risk might not be as evident without the necessary governance. Having access to and understanding certain data driven insights will enable finance to understand the art of the possible. For example, this could also include identification scenarios where services can be retired, powered down out of hours or where newer Azure VMs with fewer VCPU’s with greater performance at a lower price point, can be leveraged.
In Summary
Customers need to move away from the mind set that Azure cost management is a one and done exercise that might at best be annually. It’s therefore essential that finance and procurement work in tandem with IT and ITAM to conduct regular reviews of Azure usage and costs. This will enable adjustments as needed to optimise your usage, control spend and mitigate license compliance risk.
Working with an Azure expert like Version 1, can help you baseline your Azure estate and develop a cost management strategy that will enable effective management of your Azure spend and adherence with complex Microsoft licensing terms.
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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.
