Manage and Monitor your Azure Costs

Cloud adoption with Microsoft Azure is the first step towards a reliable, scalable and low-cost IT infrastructure. However, how do you use Azure Cost Management to manage and monitor your  monthly costs to get the most value from Microsoft’s best-in-class solution?

Particularly in larger organisations, with multiple teams deploying Azure resources – do you have the tools and expertise to keep a tab on your organisation’s monthly spend and analyse Azure monthly spend versus your business requirements?  

The good news is that Azure has in-built cost management and billing with detailed cost analysis dashboards, budgets and cost alerts, all of which enable you to proactively optimise costs. What’s more it’s completely free.

Azure Costs

This article will be most relevant to IT decision-makers, procurement, finance and leadership team members wanting to optimise their costs with Azure. With the rapid uptake of Azure’s trusted IT infrastructure during the pandemic, this is more relevant than ever. Organisations now need to start looking into how to manage and streamline their overall spend. 

At Compete366 we are Microsoft Gold partners. If you’d like to discuss how to optimise your organisation’s monthly spend using Azure cost management and billing, then contact us for a free discussion with one of our certified Azure technical consultants.

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    The need for a tool to better manage Azure costs

    Estimating costs for Azure resources can be a complex exercise as more platform resources are built.  The usual pitfall when multiple teams work on platform deployment is to build platform resources based on their individual project requirements. 

    Without a proper cost management tool, underused and redundant resources go undetected, monthly costs spiral out of control and month-on-month the Azure budget can’t be forecast, leading to unnecessary overspend.

    The right cost management tool enables IT managers to monitor, manage and optimise costs regularly and proactively. They can ensure efficient usage of Azure’s resources with automated tracking and notifications to identify any cost spikes from day one.

    Other tools related to Azure costs

    Other frequently used tools and services for managing costs are:

    • Azure monthly invoice
    • Azure pricing calculator
    • Azure advisor
    • Azure policies

    Although these provide an overview of the costs incurred, this is not in real time, reducing their ability to monitor and control costs.  Therefore, they are more suited to post analysis and static financial reports. The Azure Cost Management and Billing suite of tools are best for near real-time cost analysis and addressing issues efficiently,

    Azure Cost Management and Billing 

    As an organisation’s use of Azure grows, it becomes more likely that resources are un-necessarily duplicated or the design becomes cost in-efficient. Azure Cost Management and Billing offers the necessary set of tools to better monitor, manage and optimise overall costs. What’s more, Azure Cost Analysis is free with Azure and all pricing data is maintained by Azure. The following services are included in Azure Cost Management and Billing:

    • Reviewing invoices monthly.
    • Analysing resource costs up to previous business day with different granularity (by day, resource or resource group etc).
    • Downloading or integrating Azure spend data to third party solutions.
    • Proactively conducting spend analysis and setting alerts or notifications.
    • Configuring budget and spending thresholds and associated alerts.
    • Optimising cost by identifying opportunities for savings.
    • Performing cost management for other cloud environments such as AWS.

    Pricing for Azure Cost Management 

    The below features of Azure Cost Management are provided for free for Azure resources:

    • Reporting
    • Data enrichment
    • Budgets
    • Alerts 
    • Recommendations

    Cost management for external cloud environments is charged at 1% of your total monthly spend, as detailed in the Microsoft article, Azure Cost Management and Billing pricing.

    Access to Azure Cost Management

    Azure AD users with one of the following role-based access control (RBAC) roles can access Azure Cost Management and Billing:

    • Service administrator
    • Co-administrator
    • Owner
    • Contributor
    • Reader
    • Billing reader

    Find out more in Microsoft’s article, Manage access to billing information for Azure.

    Azure Cost Planning and Optimisation 

    To plan and control your overall Azure costs, Azure Cost Management provides three key functionalities: 

    1. Cost analysis
    2. Budgets
    3. Recommendations

    1. Cost Analysis for monitoring and management:

    There are various ways of analysing cost including:

    • Actual versus forecast costs
    • Daily, weekly, monthly, quarterly cost analysis
    • Cost by resource or resource group
    • Cost by Azure service type
    • Cost alerts and notifications

    The Microsoft article, Common cost analysis uses provides some of the common use cases for cost analysis including forecasted costs; Azure and AWS costs; new commerce license and consumption costs and many more. 

    Cost Analysis overview

    View the net accumulated charges over time to understand overall expenditures for your organisation for a specific period.

    Azure Cost Management

    View cost breakdown by Azure service

    Viewing costs by an Azure service to help you get a better understanding of the parts of your infrastructure that cost the most. 

    Azure Cost Management

    Cost Analysis by various dimensions

    You can organise your costs based on various metadata values shown in your charges, for example, you could group your costs by location.

    2. Budgets 

    Budgets in Cost Management help you plan for and drive accountability in your organisation. They’ll help you set thresholds for expenditure and prevent budget overspending. They’ll also help you communicate with teams on spending to manage and monitor costs proactively.

    The following Microsoft article, Create and manage Azure budgets explains how to create budgets with a useful online tutorial.

    3. Recommendations

    Cost Management works with Azure Advisor to provide cost optimisation recommendations. Among its key benefits, it provides: 

    • predictive analytics to identify underused or idle resources.
    • options for cost optimisation (for example Reserved Instance Pricing) and suggestions for less expensive resource options.
    • ways to reduce redundancy and improve efficiency.

    The following Microsoft article, Optimise costs from recommendations provides another useful tutorial enabling you to learn more about using Advisor to optimise your costs.

    Architecting in the right way from the outset

    For successful and effective of Azure Cost Management, the following best practises should be adopted from day one:

    • proper naming conventions for resources
    • proper classification of resources by resource groups
    • resource tagging by appropriate values

    Properly defined naming and tagging conventions assists in finding and managing your resources efficiently. This helps Finance teams to associate cloud resource costs with individual business teams to make cost management decisions.

    Further, Azure Policy enforcement will enable you to enforce compliance and standardised approaches across your entire organisation for carrying out actions such as naming conventions, tagging resources and resource locations. You can find out more in this useful tutorial: Tutorial: Create and manage policies to enforce compliance.

    Cost optimisation options – post analysis

    Cost Analysis reports can also be used for the following:

    • removing redundant resources: to clean up orphaned disks, and efficiently identify unused resources.
    • updating resource sizing and pricing tiers: to quickly review current resource being used and compare them with your actual requirements.  Modifying the product SKU, leveraging Auto shutdown/Start are few of the cost optimisation options you can implement
    • using Azure reservations: to reduce cost by analysing your Azure resource usage and estimating the cost savings when you select the option for Reserved Instance pricing for Azure resources.
    • leveraging hybrid benefit: Your licensing strategy can play a major role in cost optimisation. The overall monthly cost impact during large scale deployments will be linked directly to your organisation’s licensing strategy.  Cost Management analysis provides deeper insights to make the right decisions when leveraging hybrid benefit or Reserved Instances.

    Azure Cost Management automation

    The options below can be leveraged to automate cost analysis and perform corrective actions:

    1. Downloading cost analysis data with regular schedules.
    2. Integrating Azure Cost Management data with third party tools.
    3. Configuring alerts and actions with Budgets.
    4. Configuring Budgets to start automated actions using Azure Action Groups.

    Contact us

    Want to make sure that you’re keeping Azure costs under control your business? Contact us for a free discussion with one of our Certified Azure technical consultants.

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      Some Useful Links

      How to use Azure Cost Management views: https://www.youtube.com/watch?v=VRJA5bn2VH0

      Azure Cost Management setup, organisation and tagging:

      https://www.youtube.com/watch?v=dVuwITdSAZ4&t=8s   (part A)

      https://www.youtube.com/watch?v=n3TLRaYJ1NY (part B)

      https://www.youtube.com/watch?v=_uQzQ9puPyM (part C)

      https://www.youtube.com/watch?v=2Vx7V17zbmk (part D)

      Published On: January 6th, 2022 / Categories: Azure / Tags: , /

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