4 Ways to Perform Effective Azure Cost Management

Azure is a cloud platform from Microsoft with numerous services designed to enable companies to operate efficiently, get solutions to problems and create great products.

Different applications and services available in the Azure portal have improved many businesses.

The beauty of these applications is that Azure customers can quickly adopt them without worrying about their efficiency. The applications in the Azure portal adopt high levels of security restrictions in that it is almost impossible for their security to be breached. Therefore, organizations can embrace them and not worry about their crucial data falling into the hands of malicious parties.

Organizations are adopting public clouds to manage workloads and at the same time improve performance. They get to reduce the overhead and costs used to run the organization’s assets.  

However, they might lose track of the number of resources used to make these improvements and might end up running up unnecessary expenses. Therefore, a solution for managing Azure costs is critical. 

This article will define cost management, its benefits, a few factors affecting Azure cost management, and what you should look for in an Azure cost management solution.

What Exactly is Cost Management

Cloud cost management is organizational planning that enables businesses to understand and manage the costs associated with their cloud technology. In short, it’s simply finding cost-effective and efficient ways to use the cloud.

Cost management in an organization should start before the actual expenditures on cloud resources. For successful optimization and implementation of costs, organizations should be ready to adopt the following;

• Cost accountability.
• Be prepared with the right tools.
• Take actionable steps to optimize spending.

However, organizations cannot take the above steps without key parties working together. So to ensure successful allocation and management of costs and resources in an organization, the key parties that need to work together are;

• Finance department – This department is responsible for approving budget requests that depend on forecasts and previous analysis. The department is also responsible for budget allocation accountability.
• Top-Tier managers – They are the primary decision-makers in the company. They are responsible for analyzing the reports from the cloud and coming up with decisions on what adjustments should be made and what and where resources should be allocated.
• IT department – IT personnel manage resources on a daily basis. They develop services to meet the organization’s needs. They need the utmost flexibility to meet the set target.

Benefits of Cost Management

Organizations can get plenty of benefits from doing Azure cost management. What are these benefits?

Saving Money and Time

When using the cloud, many system administrators tend to use the best cloud resources, e.g., highly provisioned VMs. While it’s good to work with the best tools, most times, they come at a premium cost and are quite pricey.

However, with Azure, cost management organizations can manage and reduce costs on these resources.

In addition, they get to save time that would have otherwise been wasted.

Gain Operational Efficiency

When cost management is done, you learn which factors and activities are costing you money, optimizing Azure costs accordingly. This helps your organization be more efficient and reduce costs by saving resources.

Gain Visibility

When you do a cost management audit, you learn about your operations and how everything works. This is very important since you get to see any money pits in your system, and you can take proactive steps to fix the problem.

Allocate Budget Accurately

You can easily plan and set budgets without worrying that you have left out some part of your operation. When performing a cost-management analysis, you can eliminate shared resources and untagged costs from your accounting structure. This gives you an accurate view of your cost centers and business and reduces your overall spending on the cloud.

Your finance teams can analyze the billing data and optimize resource usage with the information. The financial information on cloud use can also help you negotiate pricing with some cloud providers enabling you to get discounts.

Factors Affecting Azure Cost Management

Lack of Visibility

It’s easy to get higher overall costs when you don’t have the whole picture of your Azure costs. You may have forgotten to remove instances that you no longer use, and as a result, you might still be being charged even if you are not using the instances.

This is why you need a cost management solution with a dashboard that clearly shows you;

• Your cost and usage data.
• Resources that you’re getting charged for.

Improper Provisioning 

Provisioning means allocating resources, e.g., Azure virtual machine. When you overestimate or underestimate the costs of your cloud needs, you get higher and higher costs. Also, if you underestimate your cloud needs, you’ll end up using resources that are underpowered, and as a result, your cloud services will have a poor user experience.

In the case of over-provisioning, you find that you only use a fraction of the resources that you’re paying for. You’ll still have to pay for the idle resources, which will add unnecessary costs.

Poor Application Architecture Design

You may have cloud applications that are poorly designed cloud-based platforms. This means that some developers create cloud applications that use certain cloud widgets, which may end up costing you thousands of dollars.

Not every developer understands that high Azure costs are an issue to businesses. So having expert developers who understand the costs associated with specific application features is a blessing.

Lack of Accountability

If you don’t have someone responsible for managing Azure services, you won’t have anyone to blame when someone buys expensive resources. This will directly affect your Azure costs and even security since sensitive data can be leaked or stolen.

Approach Towards Policies and Methodologies 

Your cloud cost optimization efforts may be fruitless when you have different departments that aren’t aligned with your Azure cost management plan.

The teams may be following their method for managing resources leading to high Azure costs.

Billing Complexity

The Azure portal may be challenging to maneuver, and this might be a stumbling block when you get your Azure billing. It might be tricky to understand the invoices sent by Azure.

Azure may have provided you with an invoice with a lot of services. If you don’t understand your bill, you won’t know which resources you’re billed for. Companies waste 30% of their money on Azure costs.

What to Look for in Azure Cost Management Tools

Automated Reporting

Automated reporting shows all the information that’s required for your Azure account. You need a tool that automatically sends reports based on a set of parameters such as a time frame, i.e., monthly reports. This will help you remember your bills and how much you are spending.

Predictive Cost Analysis and Forecasts

A solution that predicts your future Azure cost will greatly help you in Azure cost management. In addition, cost analysis shows you where you are using your cloud technology and what types of Azure services you are using. 

This means that the Azure cost management tool gives you the advantage of forecasting how much money you will spend in the next week or month.

Budgets Status; Subscriptions, Services, and Instances

In addition, your Azure cost management solution should have the ability to show you how much money of your budget you’ve used, the Azure services that you’re currently using, and the Azure resources, e.g., instances that you’re using. You will have a comprehensive view of your Azure cost enabling you to keep your Azure bill to a minimum.

Notification in Case of Overspend and Budget Breach

Not being aware that you’ve spent your whole budget is a recipe for disaster. A good Azure cost management solution will have the necessary ability to notify you whenever you breach your set budget.

Cost Management Strategies

Which Azure cost management strategies should you adopt to reduce your Azure spending?

Deploying Monitoring and Alert Tools

Monitoring tools are cloud tools that track critical resources and infrastructure. They can quickly detect problems in your cloud configurations and send alerts to help you get back on track. You should ensure that you deploy monitoring tools to always be on top of your resources.

Tagging

Tagging is using labels for categories in your resources. Using tagging, you can assign labels for specific purposes or applications to help you better manage the resources and know exactly which resources cost the most.

Tagging helps you in two ways, it helps you during your cloud governance and enables you to associate resources with costs.

Right-Sizing

Most organizations fail to do Azure cost management because they favor speed and performance over cost; this leads to high cloud spending due to oversized instances and Azure resources.

Right-sizing is the process of matching resources, e.g., instance types, to your workload performance using the lowest possible cost. You simply analyze your cloud performance and user needs and then right-size instances that are overprovisioned.

According to Gartner, right-sizing can help reduce your cloud costs. In some instances, e.g., changing resources that are poorly matched to your workload, right-sizing may end up improving your cloud performance.

Since your Azure resources change frequently, right-sizing should be an ongoing process to achieve cost optimization continually. To simplify Azure cost management, you should establish a right-sizing schedule for each team or department.

Removing Underutilized Resources

Removing unused instances is the easiest way to optimize Azure costs. Cloud administrators usually forget to remove these instances after using them in their duties. If it happens often, the unused instances tend to pile up and end up costing your company money. Azure costs skyrocket since you end up paying for instances you’re not using.

Organizations and Cost Management

Now that you’ve understood how to do Azure cost management, how can your organization take advantage of cost management to improve its performance, reduce Azure costs and be more efficient with its use of Azure?

Building a Culture of Cost Awareness

Building a culture in your organization involves creating a mindset that looks for value on an ongoing basis. This means that you need to change your employee’s attitudes. They should view company spending as if it’s their own money. 

Once you’ve succeeded in doing this, your company’s focus will go beyond price reduction to generate value for the cloud services purchased.

You can create the culture via;

• Creating a communicated cost vision that’s transparent and actionable.
• Setting cloud cost targets.
• Creating an organizational structure with clear accountability and decision process.
• Ensuring your top management lead the way by demonstrating a commitment to reducing cloud cost.

Intelligent Procurement of Cloud Service Through Visualizing cost

Visualizing costs makes it easier for those allocating resources to understand Azure costs and usage, helping them avoid surprises and drive accountability. 

Visualizing through intuitive dashboards helps in three significant ways; 

• Those responsible for allocating resources use data to draw conclusions suited for the business. 
• Using intuitive dashboards helps notify users when they are close to a budget overrun or an abnormal increase in expenditure.
• Finally, visualizing via intuitive dashboards that show the running and projected costs is a good way to stay on top of your Azure cloud costs.

Get Started with Cost Management

Azure cost management doesn’t have to be complicated. You only need to know how to reduce your Azure cost. 

In summary, this article has covered the benefits of Azure cost management, which include helping your organization save money and time and improving operational efficiency.

The factors that affect Azure costs include a lack of visibility, billing complexity making it hard for users to understand pricing, and a lack of accountability.

When doing Azure cost management, you should use solutions such as automated reporting, predictive cost analysis, and notification to help you learn about your accumulated costs and cloud spending.

Finally, some strategies to reduce cloud spending include deploying monitoring and alert tools, tagging, and right-sizing.

Are you looking to get an Azure cost management solution? Ceeview is a cost management solution that does cost analysis and allows you to save money on your Azure cloud. Ceeview can help you do the following; monitor cloud spending, monitor and optimize resource costs, cost forecasting, and health monitoring. Do you want to save money on your Azure cloud?

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