Azure Governance: how to manage and optimize cloud costs

One of the main features of the cloud is the ability to create and deploy resources in an extremely agile and fast manner. Using optimized solutions to minimize costs and always control the costs to be incurred for resources created in the cloud environment is a key aspect. This article summarizes the principles and tools you should consider to manage and optimize cloud costs.

The cloud cost optimization process is definitely a theme that is very popular with different customers, to the point that for the fourth year in a row, turns out to be the main cloud initiative based on the report of Flexera:

Figure 1 – Top cloud initiatives for the year 2020

Principles to better manage costs

To achieve a successful position in cloud cost management, consider the principles below.


Only thanks to a structured design process, which includes a careful analysis of business requirements, you are able to customize the use of solutions in the cloud environment. It is therefore important to determine the infrastructure to be implemented and how it is used, all through a design process to maximize the efficiency of resources located in the Azure environment.


Having tools that allow you to have global visibility and allow you to receive notifications about Azure costs is an important aspect to consider.


It's a good practice to attribute cloud resource costs within your business organization, to ensure that the people responsible are aware of the costs attributable to their working group. This allows you to fully understand the organization's Azure expenses. To do this, you should organize your Azure resources to maximize your understanding of cost allocation.


Periodic review processes should act on Azure resources with the goal of reducing spending where possible. Thanks to the set of information available, it is possible to easily identify underutilized resources, remove waste and maximize cost savings opportunities.


IT staff should be continuously involved in the iterative cost optimization processes of Azure resources, as it is a key principle for a responsible cloud environment governance process.

What solutions to use?

During the design phase it is useful to have an estimate as precise as possible relating to the costs that must be incurred in adopting a solution in the Azure area. You can use the following tools to make these estimates::

The solution Azure Cost Management + Billing provides a comprehensive set of cloud cost management capabilities and is especially useful for:

  • Monitor and analyze your Azure invoice.
  • Set up budgets and expense alerts.
  • Assign costs to teams and projects.

Figure 2 – Azure Cost Management + Billing: cost analysis

Once you understand current and future cloud expenses, you can work to optimize the costs of your workloads in Azure. In this area, the Microsoft tools that you can use are:

  • Azure Advisor: It's a completely free solution that's included in Azure that makes it easy to optimize resources in your deployments, offering recommendations specific to different categories, among them Costs. Azure Advisor provides guidance for maximizing the economic return of investments in Azure. This solution can be useful, for example, to identify unused resources or to identify opportunities for better sizing services.

Figure 3 – Azure Advisor: Example of a recommendation

Policies to optimize costs

Regardless of the tools used, to optimize Azure costs you can adopt the following policies:

  • Turn off unused resources as the cost of various Azure services is calculated based on resource usage. For resources that do not need continuous execution and that allow, without loss of configurations or data, shutdown or suspension, you can use automation that, based on a default scheduling, optimizes the use and consequently the costs of the same.
  • Appropriately scale resources by consolidating workloads and intervening on underutilized resources.
  • For resources in the Azure environment that are being used continuously, you can evaluate the activation ofAzure Reservations. The Azure Reservation allow you to achieve cost savings up to 72% compared to the pay-as-you-go price , simply committing to payment, for one or three years, for the use of Azure resources. The purchase of these reservations can be made directly from the Azure portal and is contemplated for customers who have the following types of subscriptions: Enterprise agreement, Pay-As-You-Go and Cloud Solution Provider (CSP).
  • To reduce Azure costs it is also possible to adopt the’Azure Hybrid Benefit, that saves up to 40% on the cost of Windows Server virtual machines that are deployed on Azure. The savings is given from the fact that Microsoft allows you to pay only the cost of Azure infrastructure, while the licensing for Windows Server is covered by Software Assurance. This benefit is applicable both to the Standard and Datacenter version and is available for Windows Server 200 R2 or later.

Figure 4 – Cost structure for a Windows VM

The Azure Hybrid Benefit can also be used for Azure SQL Database and SQL Server installed on Azure virtual machines. These advantages facilitate the migration to cloud solutions and help to maximize the investments already made in terms of SQL Server licenses. For more information on how you can use the Azure Hybrid Benefit for SQL Server you can view FAQ in this document.

The Azure Hybrid Benefit can be used in conjunction with the Azure Reserved VM Instance, allowing overall savings that can reach 80% (in the case of purchase of Azure Reserved Instance for 3 years).

Figure 5 – Percentages of savings by adopting RIs and Azure Hybrid Benefit

  • For test and development environments it is possible to use DevTest subscriptions, which allow you to get considerable discounts on Azure rates. These subscriptions can be activated as part of an Enterprise Agreement.
  • Evaluate the adoption of new serverless technologies and apply improvements to existing architectures.


Using a methodical approach to cost management and adopting the right tools, are key to addressing cloud cost challenges. The various elements discussed in this article help you reduce expenses and maximize your investment in the cloud.

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