Sep 12, 2023

Reducing and controlling costs – Azure Cost Planning and Management

Reducing and controlling costs

The following are some of the ways we can reduce and control costs:

• Optimize resources: This is an operational activity. Its purpose is to identify any resources that are not used and can be deleted, any resources that can be right-sized onto more cost-optimal resource types or sizes, and identifying any resources that don’t need to be running 24/7 and that could be shut down or paused to avoid costs. Any resources running on IaaS should be evaluated to see whether they can be moved to PaaS, serverless, or SaaS. Azure Advisor is an essential tool for this activity; tags should also be used to identify costs owners.
• Azure hybrid benefit: This is a licensing benefit and allows an organization to maximize any investment in existing on-premises Software Assurance (SA)-enabled Windows Server or SQL licenses (or eligible subscription-based licenses); this removes the need to license and pay with the Pay as You Go (PAYG) model. For a VM, this does not discount or remove the compute costs or any storage or networking costs; you are still liable for those and need to factor this into the total operating costs of a VM.
• Azure reservations: This is a resource benefit and acts as a billing discount mechanism to reduce PAYG consumption charges. It does this by allowing you to commit to paying for an amount of capacity for a fixed term at a discounted rate than you would pay for on the PAYG consumption rate. Reservations are available for a range of resources, such as VMs; they make the most sense and are best used where the workloads must run for long periods or 24/7, where costs are usually reduced by shutting down the VMs to save costs and this is no longer possible. For a VM, this does not apply a discount, remove the software license costs, or any storage or networking costs; you are still liable for those and need to factor this into the total operating costs of a VM.
• Spot pricing: This is a resource benefit and allows an organization to make considerable savings based on the ability to take advantage of unused capacity. This is best used for workloads that don’t need a specific period in which they must run. This could be tested/dev, analytics, machine learning, batch processes, rendering, and so on.

In this section, we looked at how to reduce and control costs. In the next section, we will look at Azure Cost Management.