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Azure FinOps – Optimizing Costs and Best Practices

Episode 4 of “FinOps on Azure” features Gregor Suttie, an Azure MVP and Azure architect, talking about cost management best practices in Azure. Here are some of the key takeaways from the conversation.

Starting a Cloud Cost Review

When a company engages Gregor for a cost review, he begins by logging into their Azure subscription as an advisor. Azure Advisor is a service that runs in the background and provides recommendations for cost, security, reliability, operational excellence, and performance. Gregor explains that the cost recommendations are usually the focus of his cost scans.

Some common cost-saving recommendations that Gregor looks for include:

  • Reserving instances for virtual machines
  • Using the correct tier for app service plans
  • Cleaning up unmanaged disks or managed disks that are unattached
  • Removing public IP addresses that are no longer needed

Gregor also emphasizes the importance of right-sizing Azure virtual machines before looking at reservations, as reserving instances on underutilized VMs is not recommended.

Who to Speak to in a Company

When conducting a cost review, Gregor typically speaks to the people who look after the Azure environment, which may include finance personnel. He explains that many of the companies he works with are independent software vendors (ISVs) that deploy web apps or services for other customers. While these companies may have technical expertise, they often lack knowledge in cost management.

How Often to Conduct a Cost Review

Gregor recommends conducting a cost review at least once a month for new customers and sending out a monthly report with recommendations from Azure Advisor and Defender for Cloud. He notes that the goalposts for cost management are always moving, as customers may consolidate tenants and subscriptions or bring in new customers with different environments.

Percentage of Customers with Efficient Cost Management

Gregor estimates that only about 20% of customers are on top of their cost management in Azure. The rest of the customers have not considered cost management or are not familiar with the services that can help them save money.

Common Resource Types that Struggle with Cost Management

Gregor explains that virtual machines, app service plans, and log analytics are common resource types that struggle with cost management. He notes that log analytics in particular can be a challenge because it is not always clear what the value of individual logs is, and customers may log more information than they need.

He also shares a case where a customer was spending $14,000 per month on log analytics, primarily due to excessive logging of app traces and performance data. By working with the customer to understand their logging needs, he was able to recommend a cost-effective solution, saving a significant amount of money.

Three Top Tips for Azure Cost Management

  • Check Azure Advisor at least once a week to see if there are any cost-saving recommendations.
  • Put budgets and budget alerts in place on every subscription to prevent bill shock.
  • Use Azure policies to restrict the deployment of expensive virtual machines or to enforce naming conventions.

Learning and Keeping Skills Up to Date

Gregor mentions that he spends a lot of time clicking around the Azure portal and reading documentation to keep his skills up to date. He also recommends using the Azure cost preview workbook to see what resources are retired and when.

Bottom-Up vs Top-Down Approach

Gregor takes a bottom-up approach to cost management, focusing on the technical elements of cost optimization. He notes that this approach is often more effective for smaller companies that do not have dedicated finance teams. However, he acknowledges that a top-down approach, which focuses on process and culture, can also be effective for larger enterprises.

In conclusion, Azure cost management and billing are critical components of managing cloud workloads in Azure. By following best practices such as regular cost reviews, setting budgets and alerts, and using Azure policies, organizations can optimize their Azure costs and ensure that they are getting the most value out of their cloud investments.

Related reading:

Explore Azure costs for multiple subscriptions with cost analysis

10 Ways to Optimize your Azure cost

Top 15 Azure Cost Management Tools in 2024

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