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Azure Cost Management: How to Reduce Your Cloud Spendings

The cloud has changed the way we do business. We no longer have to worry about IT, networking, and backup infrastructure back to the days when mainframes run the show. Now, we can offload all that to cloud providers like Microsoft Azure, Google Cloud, or AWS. 

But, the trouble is, if you don’t know what you are doing, you will end up paying for resources you don’t use or need.

One of Gartner’s key findings in managing and optimizing public cloud costs states, “focusing on efficient use of cloud services brings immediate and tangible financial benefits. Unfortunately, most organizations are unprepared to profit from this savings opportunity and are likely to overspend.

Poor cloud management techniques like overprovisioning of resources, unutilized assets, poorly optimized data storage, lack of automation, and a lack of central IT governance are some of the common causes of cloud overspending and double the cost of maintaining legacy systems. And according to Gartner, mistakes like these will cause 80% of businesses to overspend by 20 to 50% in cloud adoption.

Microsoft Azure Benefits and Essentials | ModLogix

If you are looking for ways to reduce your cloud spending in Azure cloud, cloud cost management Azure solution and industry best practices can help you do just that. In this guide, we will answer some of the Azure cost management questions that have been bothering you.

What is Cost Management in Azure?

Cloud adoption can help you streamline your business workloads and improve technical performance and capacity. This technology is also supposed to reduce the costs needed to manage organizational assets. You simply select the services that suit your business needs, and the resources you use are billed monthly.

Sadly, many companies overspend on the cloud. 

According to Gartner projections, end-user spending on the public cloud is expected to hit $600 billion by 2023. This is a whopping 46% up from $410.9 billion in 2021. 

In another study, it was discovered that enterprises are currently overspending on cloud services by more than $8.75M, due to stringent pricing and poor data management tools. This is where Azure cost management can help.

Azure Cost Management is a service that helps you optimize your Azure spending and get more value from your Azure subscription. With Azure Cost Management, you can:

  • Understand your Azure costs
  • Monitor your Azure costs
  • Manage your Azure costs

With this tool, users are able to view at-a-glance the costs associated with each resource in their organization, as well as the associated Azure Marketplace products, enabling them to adopt a more efficient and effective cloud strategy. 

By integrating Azure Cost Management with Azure Advisor, you can get personalized cost recommendations based on your usage patterns. 

Cost and usage data for your Azure resources can also be accessed programmatically using an Azure Cost Management API. All-in-all, the tool could help you reduce cloud spending by up to 34%.

But Azure Cost Management and Billing tool is not the only way to optimize your cloud adoption spend. 

5 Glaring Signs You Need to Reduce Azure Costs

Are your Azure costs getting out of control? If so, you’re not alone. Many businesses find that their Azure costs are taking a big chunk out of their budget – but they don’t seem to know where the problem is. The following five signs indicate you need to take action to reduce your Azure costs.

Azure cloud cost breakdown: Why do you overpay? | ModLogix

1. Underutilized Resources

One of the most common mistakes made by organizations that have moved their workloads over to the cloud is underutilized resources. 

Underutilized resources include virtual machines (VMs) that aren’t being used to their maximum capacity or storage accounts that are oversized for the amount of data they hold. It could also mean that you have too many VMs in your account, some of which are idle and contributing to your cloud spending waste. 

If you don’t know which of these applies to your situation, use Azure Advisor to see how much space is currently being wasted by unused resources on your Azure account.

2. Overprovisioned and Oversized VM Instances

Many people make educated guesses and end up overestimating their workload requirements, resulting in purchasing larger VM instances than they need. 

When you overprovision a VM instance, it means that there is more memory allocated to that instance than what the VM requires. It can result in wasted resources and cause unnecessary costs as well.

As part of your Azure cost optimization strategy, you should rightsize or downsize VMs when they are overprovisioned. It is better to start with small VM instances in Azure and scale them as your IT requirements grow.

3. Not Monitoring Azure Data Box Data Transfers

The data box feature of Azure allows users to transfer large amounts of data between regions without incurring any downtime or interruptions. However, egressing data between regions can be expensive, so this feature needs to be monitored properly.

Follow these tips to optimize data transfer to and from Azure:

  • You will have to pay more for data transfer if you are far away from your data source. If possible, store your data closer to the location of the data center where they are used.
  • Identify the best and shortest paths for data transfers across Azure regions and zones. This is one of the most cost-effective methods of transferring data.
  • Data should be compressed and deduplicated using incremental synchronization before being transferred. This will help reduce bandwidth or networking costs.

4. Not Knowing The Number Of Open Azure Cloud Accounts

Another sign that you may be spending too much on your Azure cloud is when you find yourself in a situation where you don’t know what is going on with your account. This typically happens when you lack central control over your azure account, services, and resources. 

Organizations often have a number of users and accounts running diverse workloads, allocating resources to projects, and accessing a variety of services. These are the hotspots for your cost centers. If you’re not centrally managing all of these resources through a single account, then it can be hard for you to easily see where in your billings the costs are increasing or decreasing.

5. Lack Of Automation

If you don’t have any automation built into managing your Azure resources and accounts, then getting a grasp on your costs can become very difficult. For improved cost optimization, it’s crucial to automate processes like workload scheduling, cost anomaly alerts, and termination of idle, outdated resources.

Benefits of Azure Cost Optimization

When it comes to cloud cost management services, organizations can benefit in a variety of ways. What are these benefits?

Save Time and Money

One of the first benefits of Azure cost optimization is that it saves time and money. When you have an accurate understanding of how much you are spending on your cloud infrastructure, it becomes easier to make better decisions about how resources should be used (highly provisioned VMs). This helps you avoid wasting money on unnecessary expenses.

Gain Operational Efficiency

Another benefit of Azure Cost Optimization is that it provides visibility into how your IT environment is performing across all levels of provisioning and which activities are costing you money so that you can adjust costs accordingly. This way, you can make efficient use of your resources and improve productivity.

Gain Visibility

When you do Azure cost optimization, you can see how much money you’re spending on various cloud services, like storage and computing. You can also see how much money is being spent on a particular application or service, which can be useful for budgeting purposes.

Allocate Budget Accurately

Finally, cost optimization can help you accurately allocate your budget across all of your cloud services, which helps ensure that you are maximizing the value of each dollar spent.

7 Proven Ways to Manage Azure Cloud Cost

Implementing and managing a cloud-based solution that optimizes costs is a challenging task. But not an impossible one. Here are some ways you can manage Azure cloud costs.

Best practices to cut on your Azure costs | ModLogix

With Tools

1. Use Azure Cost Analysis Report

You can use the cost analysis tool to track and evaluate all aspects of Azure’s costs and expenditures. For example, once workloads are running on Azure, you can use the Azure cost analysis tool to determine how much each workload will cost. You can also categorize, filter, and group resources depending on your findings.

The cost analysis tool can check:

  • Your organization’s current monthly costs and expenses.
  • If any cost irregularities were detected.
  • Your Microsoft Azure billing against real service usage to ensure that the billing is correct.
  • How the cost of Azure should be allocated between departments, projects, or teams.

This tool also predicts future expenses based on current settings.

2. Utilize Azure Advisor

Azure Advisor is a cost optimization tool that helps you identify opportunities to reduce costs by measuring resource utilization. It provides insight into the costs associated with your workloads and provides recommendations on how to optimize them.

Azure Advisor works by analyzing resource usage for each virtual machine (VM) in your environment, identifying underutilized VMs, and recommending actions such as turning off unused VMs or resizing.


3. Consider Architecture Improvements

It’s important to regularly and closely examine how your cloud applications and services are architected and used. By doing so, you can identify opportunities to right-size your instances, fine-tune your databases, modify the way you use storage, better configure your load balancers, or even tweak your applications.

Optimizing your cloud architecture will help you achieve these three goals:

  1. Make cloud services more available, efficient, and user friendly
  2. Get the most out of your cloud spend while balancing cost and performance
  3. Document KPIs that justify your present cloud spending so that they may be used to support a higher cloud budget when growth requires.

4. Identify and Remove Zombie Infrastructure 

It is important that you are able to identify no longer-used infrastructure. For example, if you see CPU utilization below 5 percent in VMs within the past month, you’re probably seeing a zombie. You may also find unattached Azure managed and unmanaged (VHDs/page blobs) disks. Generally, a volume can be terminated if it has been unattached for two weeks.

5. Proper Cloud Migration Planning

Cloud adoption is both an opportunity and a challenge for IT organizations. The more you can reduce the costs associated with cloud migration, the more likely your organization will be able to successfully migrate workloads to the cloud.

A proper cloud migration strategy is key to reducing these costs. Planning will help you identify all the requirements and business processes that need to be moved to the cloud. It also helps in identifying any hidden risks and potential issues that may come up during the migration process.

Migrate a Webforms Platform to Microsoft Azure

ModLogix moved a desktop system to the Azure cloud.

Migrate a Webforms Platform to Microsoft Azure

But to make the most of your adoption means getting in touch with migration and cloud experts like ModLogix who can help you understand what it takes to move from on-premise storage to the cloud without breaking the bank.

6. Use Storage Tiering

Storage plays a huge role in cloud overspending. Therefore, it is important to look at this area when optimizing azure costs. 

There are different storage tiers (hot, cool, and archive) in the Azure Blob storage model, and each one is priced per GB monthly. Using the right storage tier for the right kind of data will do a lot for your bills. For example, you can choose to store less frequently accessed data in the archive storage, which will mean lower costs per month. 

Moving from one Blob tier to another as your needs evolve can also result in significant long-term cost savings.

7. Multicloud Migration Approach

Multicloud migration can help you save on cloud costs. By moving data and workloads from one cloud service to another, you can take advantage of discounts and lower prices. You can also avoid vendor lock-in, making it difficult and expensive to switch cloud providers.

So if you’re looking to save on cloud costs, multicloud migration is a great option. These days, multicloud cuts across public, private, and hybrid clouds, or a combination of all three to satisfy specific business requirements.

Closer Look at AWS Cost Management vs Azure

AWS and Azure are two of the most popular cloud computing platforms on the market. Both offer cost management features that can help businesses save money on their cloud computing costs. However, there are some key differences between the two platforms that you should be aware of before making a decision.

On the one hand, AWS provides at least 7 reporting and cost-optimization tools that show users how to reduce AWS costs. These are AWS Budgets, AWS CloudTrail, AWS Cost Explorer, AWS Cost, and Usage Report, AWS Trusted Advisor, Amazon CloudWatch, and Amazon S3 Analytics.

Azure, on the other hand, comes with only a number of built-in tools for cost optimization. Azure cost management and billing for budgeting, the Azure pricing calculator for estimating and forecasting, and Azure advisor, which provides recommendations on how to optimize your cloud environment’s costs.

If you compare the number of tools available to lower costs between AWS and Azure, AWS would win clearly. 

It is worth noting, however, that the Azure Cost Management tool does multiple tasks, whereas many of the Amazon Web Services tools duplicate each other.

Apart from the versatility of Azure Cost Management, this tool also provides a dashboard to manage costs for both AWS and Azure cloud users. A feature that is not available in AWS.

Consider Azure Cost Management Best Practices from ModLogix

Cost management is a great way to keep track of your spending and optimize your resources. But it can be tricky to know where to start. At ModLogix, a software modernization company, we’ve been helping companies modernize their legacy systems and move workloads to the cloud for over 8 years. If you’ve got questions on legacy application modernization, our experts have all the answers.

Provided that every company is different, we’ll work with you to find legacy system modernization approaches for your specific needs:

  • assess your current applications, identify which ones need to be modernized;

Summing Up

While cloud spending can be a significant expense for organizations, there are a number of ways to go about optimizing Azure costs, and some of them are covered in this guide. Take advantage of the information provided and take the first steps towards reducing your cloud spending. 

Start with leveraging cloud optimization tools that give you a hint of the assets to delete. Then, make a strategy of what needs to be improved and discuss it with your team or cloud vendor, or get a free consultation from ModLogix experts.

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