Azure Cost Optimization – Techniques and Tools

Azure Cloud deployment is making it easy to develop and scale applications. Businesses no longer need to worry about setting up and maintaining the infrastructure. It certainly is a convenient and cost-effective option, providing a wide range of benefits. There may be possible downsides, only if there is a lack of efficient resource management and Azure cost optimization. But with the right strategies, you can hit the goal. 

Most businesses would hire a top software development company that can cater to their IT requirements. These companies understand how to use resources efficiently and can help optimize spending. You must be aware of various resource types, pricing models, and optimization techniques. You must ensure their effective implementation to obtain maximum return on investment. 

1. What is Azure Cost Optimization?

Azure cost optimization is an approach for managing costs on the Azure platform. The aim is to save money while getting the most out of its cloud capabilities. Azure users practice different combinations of cost optimization techniques. Don’t just go for the widely used or best practices. Adopt the ones that can truly fulfill your project requirements.

Cost optimization also demands a complete system analysis to report the usage patterns, trends, and inefficiencies of the system. After all, Azure cost optimization is also about checking whether all resources are performing optimally or not. With this data, you can easily eliminate all the unnecessary expenses on your Azure platform. 

2. Importance of Optimizing Azure Costs

Cost optimization always gives you the upper hand when you’re considering cutting costs so that it can be capital can be moved to some other areas. The following section will provide more insights into why it is important to optimize Cloud costs.

2.1 Improved Cost-Effectiveness

Businesses are slowly migrating all of their workloads to the Azure cloud to reap a range of benefits. However, poor management of Azure resources can lead to a significant increase in cloud expenses. That’s where Azure cost optimization strategies come in. It helps you gain control over your Azure spending with increased resource efficiency and profitability. 

2.2 Efficient Resource Utilization

Maximizing returns from your investments is essential. Cost optimization helps you get the most value from your resources. 

2.3 Compliance and Governance

Optimizing Azure costs would also allow you to check whether all your resources work in compliance with the relevant policies and regulations. 

3. Azure Cost Optimization Techniques

There are numerous ways to reduce expenses on an Azure platform. Let’s explore one after another.

3.1 Azure Right-Sizing

In some cases, you might be overpaying than your actual resource usage. Such an imbalance can lead to unnecessary costs. 

But you can strike a perfect balance between cost and performance with Azure Right-sizing. Here, you will be using cost optimization and Azure sizing tools to adjust the resource usage to meet your workload requirements for better performance and cost efficiency. 

Understandably, your needs might change with time. To cope with that, you have to monitor and optimize your resources continuously. 

For example, your average memory usage is 50 GB but can spike to 300 GB during peak times. Some would say you can rent 300 GB of memory on the cloud to meet those unexpected spikes in usage. However, that option is costly. Most of that space will be sitting idly incurring huge expenses to your business. 

Instead, consider purchasing the memory space for your average utilization and opt for the pay-as-you-go model that instantly assigns you the required memory during peak times. The extra memory will be dislocated once the usage subsides. This way you only have to pay for resources you use. 

3.2 Azure Storage Access Tiers

Do you know Azure offers flexible storage access tiers for cost-effective data management? They are divided based on usage patterns and access frequency. You have to understand how each tier works to pick a suitable option that reduces your storage costs. 

• Hot access tier: Those who need to access or modify their data frequently, use this hot access tier. Users can immediately access data, with the lowest access and the highest storage costs. 
• Cool Access tier: Users who need to access their data quickly but do not frequently use the cool tier. With a minimum storage duration of 30 days, this tier costs more in access and lower in storage than the hot tier. 
• Archive access tier: The archive access tier is for those users who rarely access their data and don’t need it quickly. The term archive gives it away that this tier is specifically built for long-term data retention with a minimum storage time of 90 days. The storage costs in the archive access tier is the lowest but its access time is the highest of all. 

Azure determines the limits of storage capacities at the account level rather than at the tier level. So, if the need arises, users can easily increase the storage capacity within one tier or distribute its usage across multiple tiers. 

3.3 Leveraging Azure Hybrid Benefit

Do you want to save around 85% on standard Azure prices? Azure Hybrid Benefits is a licensing program that helps organizations migrate to Azure and save costs. To qualify, you must either have an active Windows Server or SQL Server License with Software Assurance or any active Linux subscription in Azure. 

It reduces operational expenditure through seamless integration between cloud and on-premise environments. Microsoft offers 180 days of dual-use rights, allowing you to keep your on-premise solutions after migrating to Azure.

This cost optimization program provides many more options to save costs across various Azure resources. Feel free to explore them with the Azure Hybrid Benefit Savings Calculator.

3.4 Identify Hidden Azure Cost

In a software project, especially large and complex ones, many costs go unnoticed. You can put a stop to them only if you first identify them. 

Unattached Disks and Snapshots

Data of a virtual machine is stored in disks. VMs are deleted when they are no longer useful. However, developers forget to delete their unattached disks, which continue to consume storage space and incur charges. The same goes for snapshots as well.

So, whenever you create a disk or a snapshot, always attach them to the relevant VM. By regularly monitoring your Azure accounts, you can easily identify unattached disks and snapshots. 

Incorrectly Stopped Azure VMs

You can stop the unused or underused VMs to eliminate unnecessary costs. But if you fail to stop it correctly, Azure may still consider it active. The correct method would be to stop the VM and terminate the VM instance. If you do it incorrectly, then that particular VM will be reflected as active on the Azure platform and you will be charged for it. 

A thorough analysis can help identify and resolve this problem. You can either check manually or perform automated checks which are quite fast and more accurate. 

Load Balancer Data Transfer

A load balancer has a pay-per-use pricing model, meaning users pay hourly rates for using it. However, some unexpected incoming or outgoing data transfers can incur significant costs. These additional costs are so high that sometimes they even surpass the cost of the load balancer itself. 

Staying vigilant and monitoring necessary load balancer metrics is the key to avoiding this hidden cost. This includes setting proactive alerts for data transfer when it passes pre-determined thresholds.

Unused Network Interfaces

Just delete the unused network interfaces to avoid unnecessary charges. 

Overprovisioning 

Never provide more resources like storage, bandwidth, and capacity to the virtual machines than they need. Overprovisioning inflicts an unnecessary burden on your IT budget. Therefore, ensure that your team is strictly adhering to the predetermined budget and set alerts if the Azure costs are nearing the spending limits. 

3.5 Switch To Azure Elastic Databases

When a system faces unpredictable usage demands or needs to scale or simply handles multiple databases, consider using Azure SQL Elastic Database. It is an elastic pool situated on a single server. It can hold all the databases you throw in it. 

The more databases you add to this pool, the more money you save. This money-saving scheme works on the principle that Azure Elastic Database offers limited resources to every service at a limited rate. 

3.6 Implement Tagging and Resource Organization

Tags are used to identify, classify, and organize things. Azure Resource Tagging is no different. Here, you will be assigning customized labels to each Azure resource including VMs, databases, and more. 

Every metadata tag you assign consists of a key-value pair that helps organize resources according to the criteria that meet your company’s requirements. In the tags, you can also add descriptions, or specific details to better organize your Azure resources. This entire process can be automated easily. This tagging process can be easily automated using tools including Azure Portal and Azure Resource Manager Templates.

3.7 Turn Off Unused or Idle Resources

To reduce cost, shut down the resources you are not using anymore or are using very little. These unused resources are the biggest source of your hidden costs. You can identify such redundant resources by leveraging services like Azure Advisor and Azure Cost Management. They also provide estimates on cost savings and assist in budgetary decisions. 

3.8 Configure Autoscaling For VMs

VMs are certainly very important and robust resources in an Azure cloud environment. So, configuring them can certainly lead to significant cost savings. Autoscaling for VMs would help in configuring VMs to respond dynamically to varying demands. With that, you can keep operations to a minimum during off-peak hours and easily scale them up with the increasing demand. 

3.9 Utilize Serverless Technologies

To reduce your cloud costs, use serverless technologies. Cloud service providers offer two options; you either rent a dedicated server or pay for the space you are using on their server. 

In the first option, you are renting the entire infrastructure from them. In the second, you are paying them to use the necessary components or resources of their infrastructure. Azure serverless is truly a cost-effective option, eliminating the need to hire personnel to set up and maintain the infrastructure.

3.10 Azure Dev/Test Pricing

Cost optimization also means opting for a price model. Azure offers three pricing plans: 

• Pay-per-use: You only pay for what you use. No more no less. No unnecessarily renting or buying any cloud resources. This plan allows you to maintain multiple accounts in a single isolated environment. You get a separate bill for each account for the Azure resources they have subscribed to. 
• Enterprise: Sign an Enterprise Agreement and get to use dev/test workloads at lower rates. You wouldn’t have to pay its bill separately as it is paid from the funds in your Enterprise Agreement. 
• Azure Plan: This plan from Azure gives you the flexibility to stretch your Microsoft Customer Agreement and get discounts when signing up for dev/test workloads.

3.11 Review and Optimize Azure Subscriptions

A user must review and optimize their Azure subscriptions regularly. The purpose is to monitor resource usage and costs. That helps in finding inefficiencies and implementing solutions is straightforward. Tools like Azure Cost Management and PowerBI provide detailed reports on Azure costs. You can leverage them to gain valuable insights into your Azure expenses. 

4. Azure Cost Optimization Tools

The effective implementation of the techniques discussed in the above section is not possible without using the right tools. They are helpful at every step of the cost optimization process.

Use cost optimization tools in Azure to:

☑️ Save with offers and licensing
☑️ Estimate costs
☑️ Allocate spending

Learn how with our on-demand webinar: https://t.co/RNGKUoFAqu pic.twitter.com/WAe5BO7qmi

— Microsoft Azure (@Azure) June 12, 2023

Here are the top tools from Azure:

4.1 Azure Cost Management and Billing

Azure Cost Management and Billing tool allows you to track your cloud costs by resources, services, and locations. It generates reports that provide details on your spending patterns and cost drivers. Its alerting features help keep the expenses within the limits of your budget. More interestingly, it can forecast your cloud expenses, which helps you make important budgetary decisions. 

4.2 Azure Advisor

Using Azure Advisor feels like having a personal advisor who helps in handling all your Azure finances. This cost optimization tool can conduct a thorough analysis of your usage and spending pattern as well as resource performance. Based on that data, Azure Advisor, true to its name, offers personalized advice for cloud optimization. It takes care of rightsizing underused and idle resources. 

Three new Azure Advisor Workbooks help optimize the cost-effectiveness, reliability, and operational excellence of all your Azure workloads: https://t.co/q3LcAkcjTf pic.twitter.com/8mJmcSXvya

— Microsoft Azure (@Azure) December 4, 2023

4.3 Azure Pricing Calculator

Do you wish to get an estimate for your Azure services beforehand? Use the Azure pricing calculator. You only need to provide information about expected resource usage and you can see the estimated cost per month. The calculator is useful in planning Azure migrations, managing cloud budgets, and comparing pricing options and configurations. 

4.4 Azure Monitor

Azure Monitor is one of the best cost optimization tools focusing on performance. You can leverage this tool to monitor the performance of your application, network, and infrastructure. Azure monitor identifies the performance issues in your cloud environment by collecting and analyzing telemetry data. Moreover, it also provides detailed details on cost optimization and efficient resource utilization. 

4.5 Azure Resource Graph

You can monitor your Azure resources using Azure Resource Graph. It gives a unified view of every resource you have subscribed to across all accounts. Managing and optimizing resources becomes easy with this tool. 

So, this Azure Resource Graph tells about your resource usage and helps understand the dependencies and relationships between them. Large enterprises can benefit the most and improve their cost management strategies by adopting this cost management service. 

5. Factors Affecting Azure Cost Optimization

Understanding and managing the factors that contribute to expenses is the key to significant cost savings. 

5.1 Pricing Models

Like every other service, Azure also offers various pricing models. Each of these pricing models caters to different sets of workload requirements. So, it becomes necessary to understand your requirements and pick a suitable Azure pricing model. 

• Pay-per-use 
• Spot instances 
• Reserved instances 
• Hybrid benefits.

5.2 Resource Type

Even in a specific pricing range, the costs may vary depending on the resource type you choose to use. The Azure meter will track your resource usage and charge you in billable units for each billing period.

5.3 Service Type

Similar to the resource type, you are also charged according to the service type you subscribe to. Azure offers several service types such as Enterprise, Cloud Solution Provider, and Web Direct. You are also given a usage allowance for every service.

5.4 Location

The cost of Azure services depends on what you are using but along with this where you use it also matters. Location is important as not all resources and services are available everywhere. Many factors can affect the service or resource availability in a specific location, affecting both accessibility and pricing at the time of subscription.

5.5 Billing Zones

Your costs are also influenced greatly by the billing zone you are operating in. All inbound data transfers are free in Azure. However, it charges for outbound data transfers, and those charges vary in different billing zones. 

Azure offers 5GB of outbound data transfer for free every month. After that, your data transfers will be charged per GB basis.

6. Conclusion

A service provider always offers more than what you need, and the same sounds true for Microsoft Azure. But you have to stick to your requirements and don’t get tempted to buy unnecessary resources no matter how advanced they may seem. 

Why would you want to keep paying for that additional functionality that you won’t use regularly? 

If you already have an existing Azure environment then continuously monitor the resources and costs. This will help you understand your resource usage and costs. Once you have a clear picture, making the most out of your Azure investment will be an easy game. 

FAQs

What are the 3 pricing models of Azure?

If you don’t know whether Azure services are really helpful or not then take them for a test drive.  Azure offers a 30-day trial period. If they work up to expectation then you can subscribe to them with a suitable pricing model. There are three options to choose from: Pay-as-you-go, Reserved VM Instances, and Spot Virtual Machines. 

What is the Cost Management strategy in Azure?

A cost management strategy is all about reducing your costs. In Azure, it is about proper budget and cost allocations, that ought to put a limit on your expenditures.