Cloud cost optimization strategies for Microsoft Azure

Cloud cost optimization strategies encompasses a comprehensive array of strategies, techniques, best practices, and tools designed to reduce cloud costs and amplify the business value derived from cloud adoption.

It is imperative to recognize that optimizing cloud costs goes beyond mere expense reduction; it entails aligning costs with business objectives to generate tangible value, considering that costs and application/workload performance are inherently intertwined in the cloud landscape.

If an organization were optimizing for cost alone, moving all applications by lift & shift to the smallest VM size would be the way to go, but no business would be willing to take the performance hit. So, more than ever in the Cloud, cost, and performance are tied together.

Even though the benefits of the Cloud are numerous, the costs quickly increase, especially for customers not actively managing their cloud spending.

In response, Microsoft recommends that customers take a proactive & continuous approach to “Cloud Cost Optimization Strategies” to significantly reduce their Cloud spending without sacrificing the performance and reliability of their services.

In this blog post, we will delve into various options and techniques that can be employed to achieve these objectives.

It is crucial to recognize that an increase in costs does not inherently signify a problem, provided a corresponding increase in revenue accompanies it.

This means there is more than just managing costs. By optimization of cloud costs, customers get the opportunity to optimize all aspects of their cloud computing to maximize business benefits. Some factors are the performance of applications, speed of innovation, time-to-market, continuity, compliance, and costs.

There are three fundamental drivers of cost in the Cloud which should be kept in mind while architecting solutions: compute, storage, and outbound data transfer.

Cloud cost optimization strategies

1. Increase Linux Compute

There’s no such thing as the perfect operating system, but nearly everyone in the tech world would probably say that Linux is coming close. With the ability to run on almost any machine, configured how clients want it, and with a super-low TCO (to name a few of Linux’s awesome attributes), a Linux-based operating system should be the go-to.

2. Leverage Automation in Cloud

Apply Automation to increase productivity & optimize performance to deliver business value at the lowest price point. With Automation, customers can stay immune from the effects of human error, downtime, and outages. Automation enhances system productivity, improves performance, and reduces costs. Cloud is meant for Automation.

3. Review Pricing and Billing Information to leverage the right pricing model for the workloads.

Azure provides billing details explaining the cost of cloud services. This information can be analyzed & leveraged to identify high-cost areas and generate savings. Understanding cloud costs helps in informed decisions.

4. Start early with cost optimization.

Start with the basics and improve over time. Azure services, tools, and resources to organize and track cost and usage data, enhance control through consolidated billing and access permission, enable better planning through budgeting and forecasts, and further lower cost.

5. Choose the suitable pricing model (payment options) for the use case.

Azure provides several payment options for its services. Customers should opt for the most optimized one after forecasting usage patterns which should be improved over time by observing usage patterns. For example – Customers can optimize cloud investments with Azure Reservations. and leveraging Azure Savings plans

6. Setting budgets

Cloud costs can be controlled by ensuring everyone knows the goals and budgets of each project. Setting a monthly budget to plan is a good step. It helps to measure cost vs. output and track cost anomalies.

7. Embrace the consumption model & align with work cycles

Schedule suspension/deletion of Azure resources to ensure that they aren’t paying for them when people aren’t using them. Customers need to be aware that they pay for what they provision.

8. Apply governance policies & Implement automated processes to identify resource waste (or idle resources) & prevent cloud sprawl.

Cloud sprawl tends to happen when customers lack visibility into the spread of their cloud instances, services, or providers across the organization. Without governance policies, the self-service nature of the Cloud leads to cloud sprawl.

9. Tag Azure resources

Resource tagging is a cloud cost optimization strategy that involves assigning tags to Azure resources to organize them better and monitor them to subsequently optimize workloads once the lay of the land is understood/stable. A good resource tagging policy can save costs.

For example, resources with non-production tags can be de-provisioned or shut down on holidays or when not used. Tags help to analyze and attribute expenditure.

Refer to Azure Advisor recommendations regularly and take action if needed. Azure Advisor helps in reducing costs & increasing operational excellence.

10. Right size services/resources

Every application’s and workload’s needs are unique — and change/evolve over time. Hence it is very important to measure efficiency and then optimize over time. When key factors such as demand patterns and seasonality are well understood, leveraging techniques and tools to predict cloud spend becomes easier.

11. Leverage Azure VM Series to choose the Best Virtual Machine for Azure Workloads

Azure VMs come in various predefined sizes that are called series or families. Each series is designed to support specific workloads or everyday use cases. Virtual machines within each series have a predefined number of vCPUs, memory, storage IO limits, and network bandwidth.

12. Automate capacity planning

Cloud addresses the old & critical pain point – infrastructure supply is static while application demand is dynamic – and allows matching demand with supply in real-time across multiple metrics and dimensions.

13. Limit data transfer fees

These charges are labeled as Bandwidth pricing. Private endpoints can be very useful. Limiting egress through Private IPs can be an excellent strategy to reduce egress charges. Reducing the number of Public IPs in an architecture is recommended, which is beneficial both from a cost and security perspective.

14. Azure Hybrid Benefit (AHB)/Bring-your-own-license (BYOL)

Azure Hybrid Benefit is a licensing benefit that helps to significantly reduce the costs of running workloads in Azure Cloud. It’s an Azure-based program that provides BYOL to Azure, and it is available for Enterprise customers with Software Assurance that provides license mobility.

15. Leverage Microsoft Azure cost monitoring & management tools regularly

Managing cloud costs is too complex for humans to do alone. To address this issue, Microsoft Azure provides tools to track spending across individual Azure services, provides future bill forecasts, and alerts users when they exceed budget.

16. Azure cost analysis

Once workloads run in Azure, use the cost analysis feature in the Azure portal to understand how much each workload will cost. This tool also forecasts future spending based on current configurations.

17. Leverage Azure Dev/Test Pricing

Azure provides deep discounts on services if they are used for development and testing: For example, Run Windows and SQL Server VMs with no charge for Microsoft software (same price as Linux instances) and up to 55% discount on Azure SQL Database.

18. Leverage B-series VMs

B-Series VMs grant discounts of 15-55% compared to equivalent VMs. Identify if there are workloads that need to be available but only occasionally require high performance or throughput and can be moved to B-Series VMs.

19. Optimize storage & make use of Azure storage tiering

Storage can become very costly if not optimized properly. Secondly, customers should understand the actual costs of traditional storage and leverage Azure storage to reduce costs. For example – Azure file storage can reduce TCO by up to 70% compared to conventional storage.

20. Base VM's stop/start schedule on usage

It’s highly recommended to analyze usage patterns and availability to create an optimal VM stop/start schedule. This custom schedule can be combined with autoscaling for better cost-effectiveness in the long run.

In conclusion, cloud cost optimization strategies is about aligning costs with business goals. It’s not just about cutting costs but finding the right balance. If you want to discuss cost optimization on Azure, schedule a 1-1 call with our Azure Practice Head today. Let’s maximize your cloud investment together.

About Parkar Digital

Parkar Digital, a Gold Certified Microsoft Azure partner, provides technology solutions for Digital Healthcare, Digital Retail & CPG. Our solutions are powered by the Parkar platforms built using Cloud, Opensource, and Customer experience technologies. Our goal is to empower a customer-first approach with digital technologies to deliver human-centric solutions for the clients.


Amit Gandhi

As the Co-Founder and CTO for Parkar Digital, Amit leads the Technology and Engineering teams and is responsible for designing and implementing innovative technology solutions for clients across various industries.​

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