Principles and techniques for governing and optimizing Azure costs

What are the main features and potential strengths of the cloud can in some circumstances hide pitfalls if not properly governed. Cost management is one of the fundamental disciplines in cloud governance. This article summarizes the principles and techniques that can be adopted to better manage and minimize the costs to be incurred for the resources created in the Azure environment..

The cloud cost optimization process is certainly a theme very much felt by several customers to the point that, for the sixth consecutive year, appears to be the leading cloud initiative according to the Flexera report:

Figure 1 – Top cloud initiatives for the year 2022

Principles to better manage costs

To better manage Azure costs, it is important to take into consideration the principles described in the following paragraphs.

Design

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 define 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.

Visibility

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

Responsibility

A good practice is to attribute the costs of cloud resources, within its own 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.

Optimization

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.

Iteration

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

Techniques to optimize costs

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

  • Turn off unused resources since the cost of the various Azure services is calculated based on the use of resources. 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.
  • Size resources appropriately consolidating workloads and addressing underutilized resources.
  • For resources in the Azure environment that are being used continuously, you can evaluate the activation of 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 payment can take place in advance or on a monthly basis, at no additional cost. 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).  Azure Reserved Instances not only allow you to obtain an important benefit in terms of costs, but they also guarantee to reserve computational resources for their own workloads. One might think that the resources in Azure are almost infinite, but in reality this is not the case. You tend to always have the opportunity to draw on new resources, but in special situations (see for example in the initial period of COVID-19) these may be in short supply and, only in the face of having purchased resources in this mode, you can be sure that the resources necessary for the execution of your workloads are reserved.
  • To reduce Azure costs, it is also possible to evaluate the adoption of’Azure Hybrid Benefit. The savings is given from the fact that Microsoft allows you to pay only the cost of Azure infrastructure, while licensing for Windows Server or SQL Server is covered by an existing Software Assurance or subscription agreement. This benefit is applicable to both the Standard version and the Datacenter version of Windows Server .

Figure 2 – Cost structure for a Windows VM

The Azure Hybrid Benefit can also be used for Azure SQL Database, for SQL Servers installed on Azure virtual machines and for SQL Managed Instance. These benefits facilitate the migration to cloud solutions (180 days of dual use right) 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. Furthermore, this advantage also applies to RedHat and SUSE Linux subscriptions.

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 3 – Percentages of savings by adopting RIs and Azure Hybrid Benefit

  • Evaluate the adoption of new serverless technologies and apply optimizations in the architectures by selecting the Azure service most suitable for the specific application.
  • Dynamically allocate and de-allocate resources to meet performance needs. In this case we are talking about “autoscaling” which is the process of dynamically allocating resources to meet performance requirements. With the increase in the volume of work, an application may require additional resources to maintain desired performance levels and meet SLAs (Service Level Agreement). From the moment the demand decreases and the additional resources are no longer needed, they can be deallocated to minimize costs. The autoscaling process takes advantage of the elasticity of cloud-hosted environments while reducing management overhead.
  • For test and development environments it is possible to evaluate the adoption of DevTest subscriptions, which allow you to get considerable discounts on Azure rates. These subscriptions can be activated as part of an Enterprise Agreement.

Conclusions

The use of a methodological approach to cloud cost management and the adoption of the right techniques are fundamental aspects that allow you to better address the cost governance challenge. Taking into consideration the principles and techniques given in this article, you have the ability to optimize expenses and maximize your investment in the cloud.

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