Why do businesses choose to migrate key workloads to public cloud environments like Microsoft Azure? The promise of unlocking new efficiencies around performance, security or administration is often the driving force. And while an initial migration helps realise these benefits up to a point, it should only be treated as the first step.
Once your business is established in the cloud, greater levels of scrutiny should be applied to the current performance of your environment – especially when it comes to cost control.
There are opportunities available to create real savings today, but only if you know which routes are the right fit for your current environment.
In this piece, the first article in our Microsoft Azure series, we’ll explore some of the key avenues for cost saving within Microsoft Azure, where they are best applied, and the potential benefits available.
No two Microsoft Azure environments are identical, and so they won’t always share the same paths to cost optimisation. But in our experience, organisations can typically benefit from at least one of the following levers to increase the value of their existing cloud environment.
Microsoft Azure Reservations
Microsoft Azure Reservations provide one of the most direct paths to potential cost savings, but agreeing better commercials comes with a trade-off on flexibility.
Available over one- or three-year terms, a reservation offers a discounted cost for a fixed resource usage – aligned against a particular resource in a specified Azure service. These are tied to your chosen Azure instance family (although narrower scopes can be defined) and aren’t transferable between regions. As such, they’re a strong fit for workloads with static resource requirements, and those that are unlikely to frequently transition between regions.
The success of optimising through reservations is usually determined at the outset, making visibility and forward planning central to success. Teams should review usage data, current reservation inventory, and utilisation to identify the best candidates before they commit. Microsoft offers a number of different reservation scopes, each with their own benefits and drawbacks:
- Single Resource Group (RG): Provides a predictable discount to a single application, allowing for in-depth analysis and granular control, but lacking the ability to manage at scale.
- Single Subscription: A higher-level option that provides discounts across a business unit that can be applied to each workload within. This requires close monitoring, and is often prone to under-utilisation.
- Shared: The simplest scope to set up, which includes management tools designed to operate at scale. This has the lowest risk of under-utilisation, but savings are typically less predictable going into the arrangement.
Once a reservation is in place, it can be continually refined through ongoing monitoring. Alerts can be configured to send notifications when utilisation falls below a certain threshold (for example, setting this to 100% means any workload that isn’t fully utilised will be flagged), and Azure offers some flexibility for refunding or exchanging purchased reservations, allowing you to adjust your commitments accordingly.
Microsoft Azure Savings Plan for Compute
Of course, not every workload follows the kind of consistent usage pattern that is best suited to a reservation. Some change over time, shift between services, or move across regions as business priorities evolve. The Azure Savings Plan for Compute is built for exactly that kind of transient environment and offers another effective route to cost optimisation.
This is still essentially providing a discount, but this isn’t tied to a specific workload or instance type. Instead, the Azure Savings Plan represents a committed hourly spend for a one- or three-year term and comes with a built-in discount of up to 65% compared to pay-as-you-go rates. Since the discounted resource is free to be used across different Microsoft Azure services, it’s useful when flexibility remains as crucial as a need to reduce spend.
The drawback is that any unused commitment within a given hour is lost, and compute used beyond your limit is charged at a standard rate, rather than discounted, meaning planning remains critical. Getting the most from any Savings Plan requires a clear view of historical usage, the likely level of future demand, and a gauge of how much usage will fluctuate.
It also helps to track utilisation against the plan over time, so you can see whether the level of commitment still matches the way your Microsoft Azure environment is currently being used. Compared to Azure Reservations, there’s less flexibility to refund or exchange Azure Savings Plan commitments, but since they can be used across a wide range of services, they can often be repurposed if a given workload isn’t effectively utilising the committed spend.
As your cloud environment grows, it may be worth establishing multiple savings plans that renew at different points in the year, rather than a single large compute commitment. This means that scaling down can be more easily managed without having to attempt to exit the commitment during the term.
Microsoft Azure Hybrid Benefit
While not as broadly applicable as Azure Reservations or the Azure Savings Plan for Compute, the Azure Hybrid Benefit (AHUB) can help optimise costs for organisations with a substantial on-premises environment. Organisations who are part of Microsoft’s Software Assurance programme can transfer eligible Windows Server or SQL Server licences for use in Azure. This means that the Azure costs only need to cover the cost of the infrastructure, providing a substantial discount compared to paying for a full SQL server in Azure.
For businesses with an existing hybrid cloud strategy, this route presents one of the best cost optimisation opportunities. It retains the flexibility to keep workloads on premises while others move to Azure, and allows both to be managed as part of a single licence estate. The savings it provides are significant, with Windows Server workloads seeing discounts of up to 40%, and SQL workloads seeing potential savings of up to 55%.
These savings also compound with cost optimisation from Azure Reservations, which means that Windows Server and SQL workloads with stable resource requirements and Software Assurance licences can see an even more significant reduction in costs.
AHUB supports this approach by enabling centralised management, allowing licenses to be assigned to both on-premises and Azure infrastructure from a central platform, and providing a single view of utilisation across the IT environment.
Want support with Azure optimisation?
Optimisation is at the heart of our focus on creating sustainable value through technology. Our cloud experts provide our Managed Azure and Cloud Insights customers real-time utilisation updates, recommended changes, and guidance that unlocks the full value of cloud. Wherever you are in your cloud journey, get in touch with our team to ensure you’re getting the maximum benefit.
We’ll also be sharing more guidance on how to optimise your Azure environment as part of this series in the coming weeks.
