Optimizing Cloud Costs with Azure FinOps – Azure Resource Usage Planning, Licensing, and Agreements
There are many aspects and potential pain points that should be identified in order to optimize Azure costs. Sometimes it may be beneficial to perform a thorough system audit or redesign. Still, before you even think about complex system analysis and looking for hidden money leaks in your cloud deployment, there is a bunch of organizational and licensing decisions that can help you get to where you need to go. Let’s talk about the ways to optimize your cloud costs with proper planning, licensing, and agreements.
First, it is worth knowing that Microsoft offers price discounts for some key Azure services, when you opt for a long-term engagement. If you know that the system you are building is designed to work for several years, you can commit to the resources that you need and make a reservation, i.e. declare that you will use particular resources for a long time. In most cases, this means either one or three years. Resources that are subject to reservations are: VMs, Storage, SQL DB, Cosmos DB, Synapse Analytics, Databricks, App Service, and more. There are also software plans for SUSE Linux, Red Hat, Azure VMware Solution, and Red Hat OpenShift.
Check out our delivery approach and timeframe for a typical FinOps project.
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For Windows virtual machines and SQL Database, the reservation discount doesn’t apply. This leads us to another possibility of cutting unnecessary costs – you can cover the licensing costs for Windows and SQL Server with Azure Hybrid Benefit. Normally, the costs of licenses are calculated into the price of the VM or Azure SQL DB service, but if you have existing licenses for Windows or SQL Server with Software Assurance and plan to move to the cloud, you can save some money by moving your licenses with you. The savings can reach up to 40% for Azure Virtual Machines running Windows and 55% for Azure SQL Database, and can also be applied to existing VMs retroactively.
The third aspect worth considering when planning a cloud deployment is the licensing or payment model. There are plenty of options here, let us cover the most common ones. If you are a small business and don’t mind paying with a single credit card, you can choose between the basic Pay-as-you-go and open subscription which translates roughly to post-paid vs. pre-paid. If you are a bigger customer, need multiple subscriptions and want to have the prices frozen from day one, you can consider signing an Enterprise Agreement. EAs are signed for one or three years and may cover not only Azure, but also other MS products. Another option is to look for a Cloud Solution Provider or CSP which will provide you with both Azure resources and some extra services, e.g. tailored support. CSP may also be beneficial if you don’t want to take care of any financial aspects, all your costs will be grouped into one invoice.