Read Azure MVP Stephane Lapointe’s (@s_lapointe) advice on how to create an Azure cost management strategy to improve ROI straight from our most recent webinar.
Organizations are spending more and more in the cloud. Some of that money is spent to develop more and better products. But a big chunk of cloud spend is wasted on resources that could be rightsized or even deleted.
Figuring out what your cloud costs are, what they should be, and how to implement a strategy that will help your team stay in control of spending in the future is more complicated than it sounds.
That’s why we asked Azure MVP and cloud solutions architect Stephane Lapointe to share his best advice on creating an Azure cost strategy for your business. You can watch the full webinar or you can keep reading for the highlights.
Why Azure cost management is so important—and so difficult
The cloud promises great flexibility and agility. You don’t need to buy physical servers and wait until they’re installed to ramp up your compute power. You have the power to spin up any resource you might need whenever you need it.
In a democratized cloud environment, most people on your engineering team will have this power and autonomy as well. Which is great! You’ll be able to work quickly, react faster, and help your business grow without waiting for IT to catch up.
But, as Stephane likes to remind us, “With flexibility comes complexity.”
In a decentralized cloud model, it’s easier for standards and uniformity to be forgotten or ignored. And when that happens, it can be hard to understand the impact of a new resource or service in your architecture.
All of this to say, the more resources being deployed and the more people deploying them can often result in a lack of visibility across your Azure environment and sky-high cloud costs.
Why controlling Azure costs matters
If you’re not monitoring and optimizing your Azure costs, chances are good that you’re wasting money in the cloud.
According to Flexera’s 2020 State of the Cloud Report, respondents self-estimate that their organizations waste 30% of their cloud spend.
A cause for even greater concern? Flexera found that organizations typically underestimate their cloud waste. Their research suggests that actual waste often represents 35% or more of an organization’s cloud spend.
New resources can be spun up when they aren’t truly needed, others can be left on when they’re only used during certain times of the day, others can be used at only 20% capacity instead of being scaled in, and still others can be forgotten about and left idle while you continue to be charged for them.
This kind of cost bleeding can impact your department’s bottomline and the ROI of your organization’s product or service.
And if you don’t have control over your costs, it might be because of a lack of resource management in general, which can cause its own issues, such as inefficiency and even security concerns.
That’s why, according to Flexera’s Report, “73% of organizations plan to optimize existing use of cloud (cost savings).” So, if you feel like you’re wasting money in the cloud and want to turn things around—you’re not alone!
And there are lots of services that can help you take back control of your Azure environment, like Azure Policy, Azure Blueprints, ARM templates, etc. There are also lots of learning resources, including our very own expert-led Azure governance event, Deploy.
Actionable steps to creating an effective Azure cost management strategy
There are four main steps to getting control over your spending, optimizing your costs, and ensuring that Azure cost management becomes a continual part of your team’s work:
- Gain visibility
- Figure out what you need to spend
- Stop the bleeding
- Empower your team to share cost management responsibilities
Stephane gave some tips to help you get started with each of these steps.
Gain visibility into your Azure spending
Only pay for the Azure resources you need with ShareGate Overcast
Before you can fix a problem, you have to understand what the problem is. This means auditing your environment to determine what resources and services you’re spending money on.
The idea of auditing all of your resources can be daunting, especially in the beginning. To make it easier on yourself, trying dividing your environment into logical groups. Whether that’s by environment, product, department, subscription, or whatever makes sense for your organization.
Once you’ve done an audit once or twice, it gets significantly easier to do again. If you can make it a habit, it’ll feel a lot simpler. (Though, it’ll probably always be time consuming and tedious to do manually.)
When you have a good sense of what’s running in your environment and why, you’ll also be able to more easily detect changes or problems that may arise.
Figure out what you spend in Azure
After you audit your Azure resources and services, try to determine what you’re spending on them. We all know Azure invoices aren’t the easiest documents to decipher, so you might need to do some manual calculations or turn to an Azure cost control tool.
The first step here is to determine exactly what you’re spending, and again having this broken down into different groups can make that job easier. The next step is to figure out how much you need to be spending, and then calculate the difference between your baseline necessary costs and your current costs.
They might not be aligned right now, but that’s okay. Now that you have visibility and you know where your spending should be, it’ll be much easier to optimize your Azure costs.
Stop the bleeding
We did it! We’re here! The step we’ve all been waiting for: cutting costs.
Based on your audit and baseline budget, you should have an idea of where you’re overspending. If you’re still feeling a little lost, that’s okay, too. Stephane provided a list of some common areas where organizations are able to optimize costs:
The “General” suggestions in the list above refer to cost-saving measures that can typically be carried out at a high level across different environments, products, or departments.
The “Compute” suggestions should be considered more on a case-by-case basis. You should look into the typical usage of these resources over time and check with the resource admins or leaders of the teams overseeing them to be sure that they make sense.
Not all VMs should be B-Series VMs, but when you find machines that would make good B-Series candidates, it can save you a considerable amount of money.
The “Ingestion/retention” suggestions are not usually the first things that come to mind when people talk about saving on cloud costs. If you’re looking to spin up a new VM, you typically look at the prices for different sizes and types of VMs, but you don’t usually consider the ingestion and retention costs of the activity logs that will be created with each action taken on that VM. Or database. Or storage account. You get the idea.
If you’re performing a lot of actions in your Azure environment, then you’re going to build up a lot of data in the form of activity logs and in Application Insights. Sometimes, you really need and use this data for a long period of time. And sometimes, you don’t. Either way, you’ll be charged for them.
So, consider putting caps on the amount of data you store from Log Analytics and Application Insights or using adaptive sampling to prevent needless spending. (You can read more on the details of controlling Log Analytics and Application Insights costs in this blog.)
One last point from Stephane to remember when you’re optimizing your Azure costs: “Optimized does not equal cheap.”
Your organization may have performance or security standards that require you to keep redundancies in your environment. That’s okay. You can be optimized and have redundancies if that’s what your product or service needs.
That’s why Stephane encourages people to determine what they need to spend in their environment before starting to cut costs.
Optimizing is about cutting out waste so that you’re using all of your resources and services efficiently. It isn’t about cutting corners or choosing a cheaper option that will impact quality.
You want to cut out waste, not blindly cut costs without knowing the effects of your decision on your organization’s product or service.
Empower your team to share Azure cost management responsibilities
The burden of controlling cloud costs shouldn’t be on just one person’s shoulders. First, because it’s a big, time-consuming responsibility. Second, no one wants to be known as ‘the cost police.’ Third, if everyone works together to manage cloud spending, it’s much more manageable.
And lastly, it simply doesn’t scale. As your business grows, so will your organization’s cloud cost monitoring needs. You might as well get your team’s help now rather than when you’re at your breaking point.
The tricky part about this is that cost optimization isn’t an obvious part of cloud engineering. It’s not something you’re taught or expected to be mindful of during your training.
The best things you can do to empower your team to keep costs top of mind is to make sure everyone understands the cost of running and building their workloads, set flexible guidelines about how you deploy or make changes to resources, and to set budgets.
All that work you did auditing your environment and determining what your baseline spend should be to run your products and services effectively? Make sure to share that with your team! They might even have valuable insights to add to the work you’ve done.
Work together to figure out what kind of guidelines make sense for how resources should be spun up or dealt with when they’re no longer used. And you can even create Azure Policies, ARM templates, naming conventions, or tagging standards to help make sure the guidelines are being followed.
It’s helpful to set an overarching budget for your Azure spend, but even more importantly, set individual budgets for your business groupings. This makes the cost of individual resources more meaningful and can make it easier for your team to identify where overspending typically happens.
Another great way to help your team take on some of the cost management responsibilities is to automate these tasks whenever possible. The easier you make it for all of you to stay on top of cloud costs, the easier it’ll be to get buy-in from your team.
An automated Azure cost management solution that can help
ShareGate Overcast is an Azure cost intelligence platform that offers personalized Azure spending insights to help engineering teams understand and reduce their cloud costs.
We built this tool for our own personal use, and when we realized how effective it was, we decided to make it publicly available. In our first year we saved 30% on our Azure costs—and in 2020 alone, it helped us prevent more than $10,000 in cost bleeding thanks to its insights and helped us save $12,000 by applying its cost-saving recommendations.
ShareGate Overcast helps you gain visibility across your Azure environment
One of the main pieces of feedback we get from clients is that ShareGate Overcast offers amazing visibility over their environment. This visibility then helps them to better understand how their team operates in the cloud, how much they’re spending, and where to optimize.
In the Overview page of the app, you can immediately see your Azure spending over the past year, including your AI-powered spending forecast for the rest of the current month and for the next month.
You also get a glimpse of some of your top cost-saving recommendations, anomalies, and top resource administrators by cost.
This means you won’t have to spend your time manually auditing all of your Azure resources and services to get visibility across your Azure environment. Put your skills to more valuable use; you didn’t get into cloud engineering to do manual audits of resources.
ShareGate Overcast helps you determine what you need to spend in Azure
In ShareGate Overcast, you can create CostHubs—logical groupings by environment, product, department, or whatever makes sense for your business. You can set budgets for each CostHub and see every resource, resource group, resource admin, and subscription within it to get a deeper understanding of the cost of building and running your products and services.
As we mentioned above, this is imperative if you want to run an efficient cloud environment. You can’t just start cutting costs without knowing what resources and services you need to build your products and services according to your organization’s standards.
The ability to drill down to the meter level in all of your subscriptions and CostHubs will help you determine what’s necessary, what’s not, and who to talk to for more information if you need it.
ShareGate Overcast provides you with customized cost-saving recommendations
After scanning your Azure environment every day, ShareGate Overcast analyzes your Azure spending to offer you personalized cost-saving recommendations.
With each recommendation, we show you exactly where you might be overspending and provide all kinds of contextual information so you can better understand what this resource does, where, and why. We provide the resource name, resource type, resource admin, resource group, subscription, and CostHub.
We also give specific suggestions regarding whether we think you should downsize, delete, or otherwise rightsize the resource. We provide clear directions for how to carry out the suggestion. Then we give you the link to that resource in the Azure portal so you can make the change quickly and easily.
You can learn more about the types of cost-saving recommendations we make and how we determine whether a resource should be optimized in the ShareGate Overcast documentation.
It’s easy for your whole team to work together in ShareGate Overcast
Each ShareGate Overcast account gets unlimited users, so everyone on your team can use this tool. You can all get this visibility, you can all see the forecasts and cost trends, and you can all make cost-saving recommendations.
You can even filter your views by resource administrator, so everyone on your team can see the costs associated with the resources they spin up and own. Or, if you think there’s an issue with a particular resource, it’s easier for you to identify the resource administrator and then ask them for clarity.
By giving your team this kind of visibility and cost intelligence, they can be more accountable for the resources they create and maintain.
What makes ShareGate Overcast special? Insights!
There are different Azure cost management solutions out there, but what distinguishes ShareGate Overcast from the rest is its insights.
We scan your costs and resource usage data, and then we analyze it and actually provide you with insights about that data.
In the app’s Explore page, you can see all the biggest variations in your Azure costs over the past month. Here, you can drill down into each subscription to individual meters to get the context you need to understand what’s changed in your Azure spending and why.
Your costs might be increasing month over month because your business is growing—that’s great! But they might be increasing because you’re not optimizing your resources—that’s not great.
Being able to examine your cost variations with our insights will help you figure out the difference.
ShareGate Overcast also has anomaly detection. It automatically scans for spikes in your Azure spending and alerts you if it finds any. This AI-powered feature provides with the affected resource’s name, type, administrator, resource group, subscription, and the last action performed on it before the anomaly.
It also gives you the cost and variation details of the anomaly compared to the previous day and month. Having all of this information can help you dive into an investigation of what went wrong and how to fix it so that your business doesn’t continue to rack up unnecessary costs.
Whether you decide to do it manually or with an automated tool like ShareGate Overcast, managing and optimizing your Azure costs is imperative to bringing value to your organization.
Try to get visibility into your current spending, figure out what you should be spending, optimize wherever possible, and empower your team to build and maintain resources cost effectively.
For even more details on how to do this, watch the full webinar!
One of the main issues facing IT departments in 2020 is unchecked cloud spending. Learn how to identify cloud waste, stop the bleeding, and build an Azure cost management strategy for your whole team in our on-demand webinar.
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