In the wake of global geopolitical uncertainty and rising prices, many small to medium-size businesses (SMBs) may be tempted by a cost-saving move to the cloud. Microsoft Azure has several little-known options that can help.
Reflecting on last year, a Forbes article noted many small businesses expected 2022 to be the light at the end of the tunnel after two years of struggling, but rising inflation and recession fears dampened many goals. In the face of economic uncertainty, one contributor suggests that 2023 should focus on the elements of business ownership within their control.
One area where SMBs often struggle is the costly acquisition and maintenance of on-premises infrastructure. Proper maintenance – required for performance and security purposes – often requires resources and expertise beyond the reach of internal resources. Because of this, many organizations have turned to moving their compute workloads to the cloud. Here maintenance is handled by the cloud provider, data is stored in secure off-site servers, and businesses can scale to leverage the resources they need, without investing in costly equipment that could lay dormant during off-peak times.
However, while it makes sense to offset on-premises costs and reliability, the costs of cloud infrastructure can also be prohibitive if not understood and managed properly. As a result, many organizations have turned to Microsoft Azure for their cloud platform solution. A leading cloud platform, it offers flexibility, reliability, and security far beyond what a small or medium-size business could afford to build and maintain for themselves. But without understanding how to properly manage their costs on the platform, such businesses can face financial shocks.
Microsoft Azure: Little-known Cost Savings Opportunities for SMBs
Don't fret! What you may be aware of is that Microsoft has several solutions that can help save significant amounts of money on cloud utilization costs.
Azure Reservations
Azure has a "Reservations" page where an organization can pre-purchase 1-year or 3-year plans for utilizing many common Azure services such as Virtual Machines (compute), Managed Databases, Storage, and much more at a discount. And the discounts are significant – Microsoft says they can reduce resource costs by up to 72% from pay-as-you-go prices!
For example, a 1-year reservation for most common Virtual Machine sizes cuts your costs by around 41%, and a 3-year reservation cuts costs by as much as a whopping 62%! A virtual machine that used to cost $200 per month would only cost $76 per month on a 3-year reservation.
Payment can be made up-front or in monthly instalments, with no additional fees. Microsoft is also flexible on how reservations can be exchanged and re-utilized if your compute needs change, as long as the exchanged . Furthermore, Microsoft will allow an organization up to $50,000 against unused contract commitments if there is a need to break out of a term commitment.
Microsoft Savings Plans
Similar to reservations, Microsoft also offers "Savings Plans", which are in many ways more flexible, because the discount applies to any compute resource within the scope of the saving plan, not just a specific size of virtual machine. The main limitation of savings plans is that they only apply to compute resources, and the discounts are not as deep as reservations.
If your resource and workload demand fluctuate, a savings plan, based on hourly commitment, would make the most sense. But you must have a good understanding of your current utilization and resource needs, without that you could overcommit and waste resources and costs. If you have both reservations and savings plans, the reservation will take precedence. If you have multiple savings plans, the plan that offers the most savings will be used automatically.
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Compare Azure Reservations vs Savings Plans – a Microsoft Community Hub article. |
Azure Spot VM Discount
When an Azure Virtual Machine is created, there is an option for selecting a "Spot Discount". A spot instance VM allows you to buy unused resources within Microsoft's datacenters at deep discounts to run interruptible workloads. The discount can be as much as 90%! This is an amazing saving if you have test/dev machines that can be interrupted and shut down for any reason at any time without notice.
When Microsoft's resources start to run low, spot instances will be automatically shut down to free up those resources for more critical workloads. This is known as being "evicted". The eviction rate for most VM sizes is generally 0-5% but can be higher depending on demand and VM size. If your VM is evicted, you can simply turn it back on at any time.
To give you a cost savings example, at the time of writing, a Virtual Machine with the size D4as v5 (4 vcpu and 16GB RAM) would normally cost $281.78 per month, but using a spot discount, the same VM can be used for only $38.41 per month...Even less if the VM is manually shut down or is evicted.
Microsoft For Startups
Microsoft has an incredible startup program that helps growing businesses with their cloud costs. It offers a significant amount of free Azure credits – as much as $150,000 per year! - that can be used on any of Azure's services.
In addition to the free credits, Microsoft also provides free access to things like GitHub Enterprise, OpenAI credits, LinkedIn Premium, unlimited 1:1 meetings with experts, and more. Credits can be spent like cash on Azure, and can be used in conjunction with any of the other savings plans and discounts previously mentioned to make the free credits stretch even farther. This is a great opportunity for SMBs to take advantage of Microsoft's global cloud infrastructure at a fraction of the price.
Understanding Cloud Needs: The Challenges
For SMBs that are looking to eliminate on-prem costs, the Microsoft Azure discount programs can be a game changer as they move to the cloud, but as they do so they should be aware of a few pitfalls:
- Right-sizing resource needs: As previously mentioned, while Microsoft is flexible on how reservations are exchanged and re-utilized, the new reservation must be greater than the original. And while savings plans allow you to scale resources flexibly, you need to understand your current utilization to right-size demands from the outset to avoid wasting costs.
- Understand what must remain on prem: Many highly regulated industries have strict guidelines around data sovereignty, which may dictate the workloads that can be moved to the cloud. You’ll also need to understand if there are any legacy resources not compatible with the cloud. Before you make any decisions about a move to the cloud, you must be aware of what these are.
- Understand dependencies to ensure a smooth migration: Following from the previous point, when moving any resources to the cloud, you must understand critical dependencies – in respect of those resources that must remain on prem, and how things should be moved – to ensure nothing .
For companies reliant on manual processes, right-sizing resources and understanding dependencies and legal and regulatory requirements can be time-consuming and costly. With data held in systems and tools across the IT estate, they must aggregate and normalize information, working across multiple spreadsheets. This takes time and is prone to human error, which can lead to incorrectly assessing utilization needs.
There is help at hand if you implement a digital platform conductor (DPC). A DPC connects to all relevant tools and data sources and aggregates, normalizes, and analyzes your IT estate data in real-time. As you make your move to the cloud, you can leverage a DPC to:
- Easily identify which resources must remain on-prem for regulatory reasons.
- Understand interdependencies across your IT estate to identify what can be moved and when.
- See clear reports on resource utilization to right-size cloud needs for your business.
- Orchestrate IT tools and automate admin workflows to help tackle rising cloud costs as you go.
Book a demo with ReadyWorks to understand how a DPC can help you gain clarity and control across your IT estate, enabling more informed decisions to take advantage of cloud cost savings.
