How To Reduce Azure Costs: Azure Cost Optimization

Read this post to see how to reduce Azure costs by adjusting application usage, storage tiers, and reserved and burstable instances.

how to reduce azure costs

Given IT’s long history with virtualized platforms such as VMware or Hyper-V it’s easy to fall back into old behavior when provisioning virtual servers. When the decision is made to move workloads to the cloud and provision a server in the Microsoft Azure platform then IT’s old habits should in fact- die hard.

What is needed from IT is a fresh perspective and a real understanding of the application that is going to be hosted in the cloud. IT should not simply provision servers for the business and then let the developers or application owners dictate the technical requirements. IT and the business should always work hand-in-hand to ensure that unexpected costs are not going to become a reality!

IT departments should always have a seat at the table in determining an application's performance during the design phase; measured again during the testing or Proof of Concept (PoC) phase, and then re-measured after the production rollout. This constant measurement and feedback loop introduces overall efficiency and in turn lowers consumption cost.

During this uncertain time, business leaders are looking to all departments to identify cost savings. iV4’s Azure consultants can conduct a thorough analysis of your consumption and storage usage to uncover how to reduce Azure costs.

There are Azure cloud cost savings that can be gained by adjusting:

  1. Application Usage
  2. Storage Tiers
  3. Reserved and Burstable instances




Azure Monitor


With an Azure virtual machine, you get CPU, disk, and up/down state of your server from the platform. Enabling Azure Monitor provides additional insights into the performance and dependencies for your virtual machines.

Perhaps a server that IT provisioned several months or even years ago no longer needs its level of resources and can be downgraded from a sizing perspective. Through Azure Monitor, performance metrics can be tracked and visualized to provide real-time and performance history analysis.

All data collected by Azure Monitor fits into one of two fundamental types, metrics, and logs. Metrics are numerical values that describe some aspect of a system at a point in time. They can tell you how your server is performing but typically need to be combined with logs to identify the root cause of issues. The IT team can use both sets of data in a Log Analytics workspace to then "tune" the virtual machine to its optimal level of performance.

Azure Monitor ultimately provides critical insight for IT to recommend potential changes to the business from a service delivery standpoint. By right-sizing line-of-business applications to the Azure consumption necessary to run the application, the total cost of ownership (TCO) can be achieved.

Azure Advisor


Azure Advisor is a powerful tool built right into the Azure platform for all customers to analyze the consumption of their cloud services.

Azure Advisor helps you optimize and reduce Azure costs by identifying idle and underutilized resources. You can get cost recommendations from the cost tab on the Advisor dashboard. The cost tab has built-in intelligence to determine if your organization's cloud environment is over or under-provisioned from a sizing perspective.

Although specific application scenarios can result in low utilization by design, you can often save money by managing the size and number of your virtual machine instances. Azure Advisor uses its artificial intelligence models to review your utilization history and can made recommendations to lower your overall cost.

Keep up with the news


The agility you get with Azure services means that Microsoft is continuously adding new capabilities, platforms, functions, VM sizes, and cost models. By checking in on what is new, you will find out what new mechanisms, cost changes, or new and different platforms can be leveraged to keep your technology working for your business.




Storage Tiers


Along with virtual machine provisioning, storage provisioning is equally, if not more important from an application's performance. Storage can also have major implications on the cost of your Azure subscription.

First, ensure that all storage disks in your subscription are aligned to running active virtual machines. It is very easy to forget about a storage disk that was left behind after the removal of a virtual server.

If you’re like many organizations with legacy-based data, start with a data-classification exercise to determine what data exists and where it currently resides within the Azure subscription.

Let’s start with a quick overview of Azure storage tiers.

Hot Access Tier

The hot access tier has higher storage costs than cool and archive tiers, but the lowest access costs. Example usage scenarios for the hot access tier include:

  • Data that is in regular use or expected to be accessed (read from and written to) frequently.
Cool Access Tier

The cool access tier has lower storage costs and higher access costs compared to hot storage. This tier is intended for data that will remain in the cool tier for at least 30 days. Example usage scenarios for the cool access tier include:

  • Short-term backup and disaster recovery datasets.
  • Older media content not viewed frequently anymore but is expected to be available immediately when accessed.
Archive Access Tier

The archive access tier has the lowest storage cost but it has higher data retrieval costs compared to the hot and cool tiers. Data in the archive tier can take several hours to retrieve and data must remain in the archive tier for at least 180 days or be subject to an early deletion charge. Long-term archival retention, along with compliance data that is required for a minimum six months, are excellent use cases for the archive tier.

Data stored in the cloud grows at an exponential pace. To manage costs for your expanding storage needs, it's helpful to organize your data based on attributes like frequency-of-access and planned retention period.

Azure Recovery (Backup) Vault


Review your backup retention within Azure recovery services vault to determine that the backup policy you are using aligns with the organization's RPO and RTO requirements.

If they do not match, have a conversation with the business leaders or C-Suite to ensure they understand any potential gaps between the amount of backup retention you have and what the business requires.


Reserved & Burstable Instances


From Pay-As-You-Go to Azure Reserved Instances

It is in the best interest of an organization which has adopted the Azure platform to make further inroads to reduce overall operating expense. Using Azure Reserved Instances, an organization makes a commitment on a 1-year or 3-year for a virtual machine's usage.

Unlike an up-front purchase where you pay the full amount, the monthly payment option divides the total cost of the reservation evenly over each month of the term. The total cost of up-front and monthly reservation cost is the same, and you do not pay any extra fees when you choose to pay monthly. Reserved VM Instances are available for most VM sizes with some exceptions. Reservation discounts do not apply for the following VMs: A-series, Av2-series, or G-series.

Under the Cloud Solution Program (CSP), of which iV4 is a Tier-1 provider, customers can elect to purchase reservations with monthly payments.

Use Burstable Instances


Converting servers that are not consistently busy, such as a domain controller or file server to burstable B-Series instances can allow an organization to save on the operational cost of the server. Web servers, small database servers, along with domain controllers often have a CPU characteristic which is very bursty from a performance standpoint.

These workloads will run for long periods using only a small fraction of the CPU performance potential. However, during "spike" usage periods, the CPU will then burst to meet application or traffic demands.

Without a burstable instance, while running in these low points, you are still paying for the full CPU, so that you can handle the high and bursty points. Effectively, you are spending money where you could be saving money.

The B-Series offers a cost-effective way to deploy these workloads that do not need the full performance of the CPU continuously and burst in their performance. While B-Series VMs are running in the low-points and not fully utilizing the baseline performance of the CPU, your VM instance builds up credits. When the instance has accumulated enough credit, you can burst your usage up to 100% of the vCPU for the period when your application requires the higher CPU performance.

Burstable instances range in size from 1 vCPU and 1 GB of RAM to 20 vCPUs and 80 GB of RAM. If you're not using one of the six B-series class instances today, consider converting your over-provisioned instances to save on operational cost. It is easy to switch back to a non-burstable instance if necessary, as well.


At iV4, we take a holistic approach to understanding your business needs before designing solutions.

If you're already leveraging Azure, we can assist your organization with a comprehensive review of your monthly consumption. After this thorough but timely insight report, we can then determine how to reduce Azure costs by analyzing what resources you are consuming on a month-to-month basis. Often, there are considerable savings that can be gained by adjusting your subscription(s) to meet desired business outcomes.

Written by Matt Burcke, Senior Technology Consultant and Microsoft Cloud Specialist at iV4.



Cloud Services

iV4's Azure Consulting Services help you navigate from the discovery and planning stages all the way through to proper licensing assessment, migration, and deployment, to the best practices for management of your usage so there is never a surprise.



Get IT tips and insights right to your inbox. Subscribe to the iV4 Blog: