Building Async and Cloud Native organizations - Issue #21

Unlocking the Secrets of Azure Cost Optimization: Proven Tips and Strategies to Save You Money

Welcome to the latest edition of my newsletter, and it’s not sponsored by Microsoft this time. We’re trying to save costs on their platform, after all. In this edition, I will be talking about how to optimize your Azure cost and make the most out of your resources.

As someone who has worked extensively with Azure, I can tell you that there are numerous ways to save money while still getting the most out of the platform. So, without further ado, let’s dive in!

License benefits

One of the easiest ways to save costs in Azure is by taking advantage of the license benefits. These benefits come in various forms, including:

  • Azure Hybrid Benefit: If you have an existing Windows Server or SQL Server license, you can use that license to pay a reduced rate on Azure. This benefit can save you up to 40% on your Azure costs.

  • Reserved Instances: Azure Reserved Instances allow you to reserve virtual machines for one or three years, giving you significant discounts on the hourly rate. By reserving resources in advance, you can save up to 72% compared to the pay-as-you-go price.

  • Dev/Test Pricing: Microsoft offers discounts of up to 55% for customers who use Azure for development and testing purposes. These discounts apply to virtual machines, storage, and other Azure services.

  • Azure Saving Plans: With Azure Saving Plans, you can prepay for your usage of specific Azure services (mainly compute) and receive a discount on the pay-as-you-go price. This can save you up to 65% on your Azure costs.

Budget-friendly alternatives

There are several budget-friendly alternatives that you can leverage to optimize your Azure costs. Here are a few worth exploring:

  1. Queue on a budget: If you need a simple queue, consider using a storage account instead of Service Bus. This can save you a significant amount of money while still allowing you to get the job done.

  2. Free Azure Functions: Azure Functions on a consumption plan offers up to 1 million free invocations, which is a great way to get started with serverless computing without breaking the bank.

  3. Linux savings: Consider switching from Windows machines to Linux to cut your costs in half. Not only is Linux more cost-effective, but it also provides more power to open-source.

  4. CosmosDB for the win: Give CosmosDB's free edition a try to test the waters, or go serverless with no pre-commitment required. This is a great way to try out a powerful database solution without the financial risk.

By incorporating these budget-friendly alternatives, you can make the most out of your Azure investment without spending a fortune.

Optimize resources

Optimizing your resources in Azure is a great way to save costs. Here are some tips to help you optimize your resources:

  1. Remove unattached disks: If you have disks that are not attached to a virtual machine, delete them to save costs.

  2. Use auto-shutdown for virtual machines: With Azure, you can set up automatic shutdown times for your virtual machines. This ensures that you don't pay for unnecessary compute time when you're not using your VMs.

  3. Use Virtual Machine Scale Sets: Virtual Machine Scale Sets allow you to automatically scale your virtual machine capacity up or down based on demand. This helps ensure that you're only paying for the resources you need.

  4. Clean up Public IP Addresses: Public IP Addresses are charged by the hour, so it's important to release them when they're not in use.

  5. Use Azure Blob Storage lifecycle management: Lifecycle management can be used to automatically transition blobs to cooler storage tiers or delete them when they are no longer needed.

  6. Right-sizing resources: Ensure your virtual machines are appropriately sized for your workload. You don’t want to pay for resources you don’t need.

  7. Use managed services: Azure offers many managed services, such as Azure SQL Database and Azure App Service, which can help you reduce costs by eliminating the need for in-house management.

Tips for cost management

Here are some additional tips for managing your Azure costs and get insights:

  • Monitor your usage: Keep track of your usage to ensure you’re not exceeding your budget. You can use Azure Cost Management to track your costs and set up alerts for when you’re approaching your budget.

  • Use tags: Use tags to organize your resources and track costs by department, cost center, project, or other categories.

  • Review your costs regularly: Review your costs regularly to identify areas where you can save money. Azure Cost Management provides reports and recommendations to help you optimize your spending.

Monitoring your costs

Azure provides several tools to help you monitor your costs, including Azure Cost Management and Azure Advisor. These tools can help you identify areas where you can save money and provide recommendations for optimizing your spending.

Azure cost management in the portal

Maturity of cost management

To achieve the highest level of cost optimization, organizations must strive to improve their maturity of cost management. I believe there are five levels of cost maturity that organizations can aspire to:

  1. Level One: Unawareness At this level, organizations lack visibility into their cloud spend and don't have any cost management practices in place. They may be overspending on cloud resources without realizing it.

  2. Level Two: Awareness Organizations at this level are aware of their cloud spend, but they don't have a formal cost optimization strategy. They may use basic tools like Azure Cost Management to track their costs, but they're not proactively optimizing their usage.

  3. Level Three: Optimization At this level, organizations have implemented cost optimization practices, such as using Azure Advisor recommendations and Reserved Instances to reduce costs. They regularly analyze their cloud spend and look for ways to optimize usage.

  4. Level Four: Governance Organizations at this level have implemented a cost governance framework to manage and optimize their cloud spend. They use Azure policies to enforce spending limits and ensure that resources are deployed with cost optimization in mind.

  5. Level Five: Continuous Optimization The highest level of cost maturity is characterized by continuous optimization. Organizations at this level have a culture of cost optimization, where everyone is responsible for optimizing cloud spend. They use advanced tools like Azure Cost Management and Cloudyn to monitor and analyze their cloud spend in real-time, and they have established processes for continuous improvement.

Additionally, it's important to consider the maturity of your cost management practices. Are you actively tracking and analyzing your spending on a regular basis? Are you adjusting your resources and usage to optimize costs? Are you staying up to date with new cost-saving features and services offered by Azure? These are all important questions to ask yourself to gauge the maturity of your cost management practices.

Another important aspect of maturity is to have a dedicated cost management team or individual responsible for overseeing cost optimization. This can ensure that cost-saving measures are prioritized and implemented effectively throughout the organization.

In conclusion, optimizing cost in Azure is a critical part of managing your cloud resources effectively. By utilizing the different cost-saving strategies and tools available, such as reserved instances, virtual machine size optimization, and Azure Saving Plans, you can significantly reduce your spending while maintaining optimal performance.

Additionally, regularly tracking and analyzing your spending, staying up to date with new cost-saving features, and having a dedicated cost management team or individual can help increase the maturity of your cost management practices and maximize your cost savings.

I hope you've enjoyed this week's special issue of my newsletter. If you found it helpful, I invite you to share it with your friends and colleagues. And if you're not already a subscriber, be sure to sign up to receive future issues.

Next week, I'll be back with more articles, tutorials, and resources to help you stay up-to-date on the latest developments in coding and architecture. In the meantime, keep learning and growing, and happy coding!

Best regards, Michiel


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