7 Effective strategies for optimising Azure costs for MSPs

Efficiently managing Azure costs is essential for MSPs to optimise resource usage and achieve excellence in financial operations (FinOps) within their cloud infrastructure.  

Regardless of whether an organisation is new to cloud computing or has extensive experience, conducting regular reviews of Azure expenses can result in significant cost savings. 

Achieving successful Azure cost optimisation involves teams employing a variety of tools, methodologies, and approaches to strike a suitable balance between cost effectiveness and performance. To help you optimise this process, we've compiled 7 effective strategies for cost optimisation in Azure. Let's dive into them! 

Why optimising Azure costs matters   

According to a recent report, more than half of the respondents exceeded their budgeted expenditure on public cloud storage, mainly due to using more storage than planned (42 per cent) and migrating more applications and data to the cloud than planned (45 per cent). 

This underlines the importance of Azure cost optimisation for MSPs amid growing demand for cloud services and challenges in managing cloud budgets. Effective cost optimisation strategies enable MSPs to help their customers overcome these challenges and achieve cloud objectives efficiently. 

Optimising Azure costs is crucial for MSPs for several reasons. Firstly, it ensures the efficient use of resources, avoiding unnecessary spending on unused or underutilised services. This efficiency has a direct impact on the organisation's bottom line, maximising the value of its cloud investments and providing cost-effective solutions to customers. 

Secondly, effective cost management allows for better budget allocation for MSPs. By monitoring and optimising Azure costs, MSPs can allocate financial resources more effectively, ensuring that funds are available for critical areas such as innovation and expansion. 

Key considerations for effective Azure cost management  

Let's now look at the main aspects to consider for an effective Azure cost optimisation: 

Financial efficiency: With cloud services, you only pay for what you use. Therefore, inefficient use of resources leads to unnecessary costs. Azure cost optimisation strategies help identify and eliminate wasteful spending, allowing for more effective budget allocation. 

Use of resources: Cloud resources are plentiful, but they come with a price tag. Without careful management, you may end up paying for unused resources. With Azure cost optimisation, you can track resource usage to ensure that they are used efficiently and there are enough resources for applications to work effectively.

Compliance and governance: Azure cost optimisation ensures compliance with corporate policies, industry standards and regulations. This includes setting spending policies, monitoring resource utilisation and maintaining documentation for audit purposes. 

Exploring cost-effective Azure pricing models: The primary Azure pricing model is known as pay-as-you-go. While it offers flexibility, it is usually the most expensive option.  

Below are some cost-effective Azure pricing models to optimise your spending: 

• Azure Reservations offer significant discounts for predictable workloads over one or three years, making the price predictable. 
• Azure Spot Virtual Machines (Spot VMs) offer discounts through auctions, but can be reclaimed by Azure at any time. They are suitable for interruptible workloads. 
• Azure Hybrid Benefit allows you to use existing on-premises licences with Azure, resulting in significant savings on Virtual Machines and Azure SQL Database usage. 

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7 Effective strategies for optimising Azure costs  

Azure offers unparalleled scalability and performance, but understanding the pricing model is key to sustainable operations. By strategically managing Azure costs, MSPs can optimise spending and maximise the value of your cloud resources.  

Here we present 7 effective strategies to streamline your Azure spend and ensure cost-effective resource usage. 

1. Tagging your Azure resources  

Use Azure cost-related tags to gain detailed insight into cloud spending. By tagging resources with these tags, you can accurately track cost factors related to users, products and processes.  

This allows you to identify underutilised or unnecessary resources, leading to the elimination of waste and improved cost efficiency. Moreover, tags play a crucial role in automating resource management, improving overall operational efficiency in Azure. 

2. Optimising your resource usage 

Achieving cost optimisation in Azure includes identifying and deactivating unused resources to eliminate unnecessary costs associated with dormant or underutilised services. Efficient resource management requires you to thoroughly identify, evaluate and then deactivate or scale back resources. 

A fundamental practice in this process is to tag and categorise resources to locate unused resources. Using the insights of Azure Cost Management & Billing tools further enhances this process. 

Once you have identified unused resources, automation via Azure Automation Runbooks and Azure Logic Apps becomes essential. This automation allows you to schedule shutdowns for resources during non-business hours or periods of inactivity, contributing to overall cost efficiency. 

3. Recovering unnecessary resources 

It's common to build up digital detritus over time, including forgotten virtual machines, neglected databases and excess storage accounts that have outlived their usefulness.  

This accumulation often drives up the cloud bill without adding value. For example, during application development or migrations, databases are often created for temporary needs but left unused, resulting in orphaned instances that consume storage resources and incur unnecessary costs. 

Removing these redundant resources can result in significant cost savings. But it's not just about removing them, it's also about understanding why they were unused in the first place to avoid similar inefficiencies in the future. 

Azure Cost Management provides the tools to efficiently identify and eliminate unused resources. By providing detailed cost analysis and usage reports, you can gain insight into your resource usage and pinpoint unnecessary spending.

4. Set Up VM Autoscaling  

When virtual machines are set up statically, they can continuously consume resources regardless of actual usage. To address this issue, Azure's Virtual Machine Autoscaling provides a dynamic solution that automatically adjusts the number of VM instances and scales them up or down based on real-time demand. 

For example, imagine a cloud-based application that serves users worldwide, resulting in varying levels of usage throughout the day due to different time zones.  

By configuring VM Autoscaling based on these usage patterns, the system can scale up resources during peak hours when the application experiences more traffic and scale back during quieter periods. This approach optimises resource utilisation and helps control costs effectively. 

5. Proactive cost monitoring With Azure Cost 

Management's proactive cost monitoring, you can make timely budget adjustments, optimise resources and proactively manage your cloud finances. By using tools such as Azure Cost Management you can track expenses, detect deviations and respond quickly to cost fluctuations. 

6. Using Azure Spot Virtual Machines (Spot VMs)  

Azure Spot VMs offer a cost-effective solution within Azure, providing access to unused capacity at discounted rates. They are particularly beneficial for optimising costs, especially for workloads that are non-critical or customisable. 

Spot VMs can be interrupted with little notice, making them suitable for workloads with flexible start and end times, or workloads that can handle interruptions. However, with advanced automation, Spot VMs can also be used for mission-critical tasks. 

7. Make the most of Azure's storage tiering 

Azure's tiered pricing model adjusts costs based on data access frequency. As the volume of data increases, the need for frequent access decreases. Azure Blob Storage offers Hot, Cool, and Archive tiers with varying redundancy options, allowing for cost-effective storage solutions.  

Automated cost optimisation tools further streamline cost management, ensuring optimal resource utiliSation. By leveraging Azure's storage tiering and automation tools, organisations can achieve significant cost savings while maintaining performance and reliability. 

Simplify Azure cost management with CloudBilling    

Efforts to minimise and manage the expenses associated with cloud infrastructure require continuous attention and commitment, often overwhelming IT departments. 

To address this challenge effectively, CloudBilling has emerged as a valuable solution. The platform simplifies invoicing, allowing your team to focus on other critical tasks. With CloudBilling, MSPs can achieve greater efficiency and effectiveness in their Azure cost optimisation efforts. 

The CloudBilling integration enables automatic invoicing of various Azure services, including: 

• Integration with CloudBilling: Direct integrations for Microsoft CSP Partnercenter. 
• Automated billing: Automated billing for Azure usage, Microsoft 365, Reserved Instances, Marketplace, NCE seat-based offers, Software Subscriptions and much more. 

Ready to optimise your Azure costs with CloudBilling? Get a free demo today to find out more!