Top 10 Azure Cost Optimization Checklist

‍Azure has undoubtedly strengthened its foothold in the cloud environment by offering significant benefits, such as improved data security, scalability, and a simple disaster recovery system. 

However, keeping its moving elements like computing or storage unsupervised can have dire consequences on the cost, leading to high cloud bills. This is why Azure cost optimization is needed. 

We understand that starting with Azure cost optimization can be overwhelming. Hence, we have created a comprehensive checklist to help you start the process strategically. Keep reading this blog to learn more.

Simply put, Azure cost optimization manages and reduces expenses associated with cloud services while maintaining performance, reliability, and security. 

It's crucial to understand that Azure cost optimization is not a narrow focus on reducing cloud costs. It's a comprehensive strategy that optimizes your resources so that every cent you invest in the cloud adds significant value to your business and contributes to improving your ROI. 

Implementing Azure cost optimization is a step towards empowering your business to manage costs effectively in the cloud, optimize your return on investment, and achieve greater efficiency in cloud operations. To ensure you're on the right track, it's essential to have an Azure cost optimization checklist that will guide you toward cost efficiency and financial clarity. 

Azure Cost Optimization Checklist

Now that we have established the significance of Azure cost optimization let's look at an Azure cost optimization checklist that can help you achieve your cost optimization goal of bringing value to your business. 

1. Optimizing Storage Cost

In their pursuit of Azure cost optimization, we have seen companies only focus on optimizing compute resources and overlooking the cost of storage usage and wastage. Effective Azure cost optimization strategies will provide holistic cost-related benefits when it also has storage optimization.

Why?

This is because storage contributes heavily to the overall cost. This is corroborated by a study by Virtana, titled "State of Hybrid Cloud Storage in January 2023". It was a study done on over 350 cloud decision-makers, which revealed that:

• 94% of the respondents said that their cloud storage costs were increasing.
• 54% of respondents said their storage spend increased faster than the overall cloud costs.

To understand this scenario, we at Lucidity audited some of the leading companies using Azure as their cloud service providers and found that.

• 40% of the overall cloud costs were spent on storage.

We further did an independent study on over 100 clients using Azure cloud service and discovered that

• The managed disk was a significant contributor to the overall cloud costs.
• The managed disk utilization for root volumes, self-hosted databases, and applications disk was only 35%.
• The managed disk was over-provisioned by 65%.
• Despite significant overprovisioning, organizations were experiencing at least one downtime.

Upon further investigation, it has been found that to enhance the buffer and ensure optimal system performance during times of increased or unpredictable demand, the following steps must be taken:

• Implementing three manual touchpoints—monitoring, development, and alerting—will require the DevOps team to use three separate tools to manage block storage, consuming much of their time manually.
• Certain cloud providers require a minimum downtime of 4 hours to shrink 1 TB of disk space and 3 hours for disk upgrades.
• There needs to be a wait time of at least 6 hours for the next scaling process.

Despite organizations' challenges, they often prioritize overprovisioning storage resources instead of optimizing them. This choice is frequently considered a necessary compromise due to Cloud Service Providers (CSPs) limitations. 

• The constraints imposed by CSPs necessitate the development of a custom tool, a task that can be complex and time-consuming, requiring substantial DevOps efforts. 
• Relying solely on CSP tools may lead to inefficient and resource-heavy processes, making continual storage optimization impractical for daily operations.
• Certain cloud service providers, such as AWS, Azure, and GCP, do not offer a live shrinkage process. While manual shrinkage is possible, it is labor-intensive and susceptible to errors and misconfigurations. Additionally, this manual method requires stopping the instance, creating snapshots, and mounting new volumes, which can result in downtime.
• Implementing a tool across the entire cloud infrastructure with over 1000 instances can be costly. As a result, organizations opt only to deploy tools in the production environment, thereby restricting visibility.

These reasons compel organizations to overprovision resources instead of optimizing storage. However, when you overprovision resources, you end up paying for the resources that you are not using. This is because CSPs charge you based on the resources provisioned, not the resources being used. Hence, you are escalating your cloud bill by keeping idle and unused storage resources. 

This practice of overprovisioning and the steps that lead to underprovisioning necessitates implementing cloud cost automation to identify idle/unused and overprovisioned resources. 

Why automation, you ask?

This is because manually discovering and monitoring storage environments or relying on tools can be challenging for DevOps teams. This is due to the labor-intensive efforts required and the increased expenses associated with deployment. With the growing complexity of storage environments, manual management can result in spiraling complexities and potential inefficiencies.

To free you from the complexities associated with manual discovery and monitoring tools and ensure that you never have to worry about underprovisioning and overprovisioning, Lucidity has developed a two-step solution.

Lucidity Storage Audit- to identify idle/unused and overprovisioned resources.

Lucidity Block Storage Auto-Scaler- To automate shrinkage and expansion of storage resources.

Lucidity Storage Audit

Lucidity Storage Audit is a user-friendly, executable, and agentless tool that automates auditing to simplify operations and eliminate complexities. 

It will provide you valuable insights into your managed disk health and utilization effortlessly, enabling you to optimize expenses and proactively address potential downtime risks.

Utilizing the cloud service provider's internal services, Lucidity Storage Audit securely gathers storage metadata such as storage utilization percentages and managed disk sizes. This ensures thorough oversight without compromising customer privacy or sensitive data. With Lucidity Storage Audit seamlessly operating within your cloud environment, rest assured that your resources are safeguarded and operational continuity is preserved.

Using Lucidity, you can easily access critical information with just a few clicks:

• Overall Disk Spend: Evaluate your managed disk costs for the best billing strategy. The goal is to reduce expenses by 70%. Discover areas for improvement and implement tactics to save significantly.
• Disk Wastage: Uncover the root causes of waste, such as idle volumes and over-provisioning, and develop effective strategies to address them.
• Disk Downtime Risks: Proactively prevent potential downtimes to minimize financial losses and protect your reputation.

The Lucidity Storage Audit provides several advantages:

• Streamlined Process: Automating identification and removing the need for manual efforts and complex monitoring tools makes the auditing process more efficient.
• Comprehensive Insights: This service offers in-depth knowledge of managed disk health and utilization, providing valuable insights for optimizing spending and preventing downtime. It allows for clear visibility into your storage environment.
• Optimized Utilization: Utilize Lucidity Storage Audit to analyze storage utilization percentages and disk sizes for informed decision-making. This can lead to better resource allocation and increased efficiency.

Lucidity Block Storage Auto-Scaler

Auto-scaling is a crucial cost optimization strategy for Azure. It automatically adjusts resources based on workload demands. This dynamic scaling capability eliminates manual intervention, ensuring resources scale up or down as needed. 

Automating the scaling process is essential to avoid overprovisioning, resource wastage, or performance bottlenecks commonly seen with traditional scaling methods. 

Lucidity's Block Storage Auto-Scaler is the industry's first autonomous orchestration solution. It shrinks and expands block storage to match changing requirements and reduce hidden cloud costs associated with storage wastage.

The Lucidity Block Storage Auto-Scaler effortlessly adjusts block storage capacity based on changing requirements. This feature-rich tool offers:

• Effortless Deployment: With just three clicks, onboard the Lucidity Block Storage Auto-Scaler and revolutionize your storage management process.
• Storage Optimization: Instantly increase storage capacity and maintain a 70-80% utilization rate for optimal efficiency and cost savings.
• Highly Responsive: Quickly respond to traffic or workload spikes by expanding or shrinking storage capacity within minutes, ensuring seamless operations during demand fluctuations.
• Efficient Performance: The highly optimized Lucidity agent consumes less than 2% CPU and RAM usage, minimizing the impact on instance resources.

Lucidity Block Storage Auto-Scaler has the following benefits.

• Automated expansion and shrinkage: Lucidity Block Storage Auto-Scaler is skillfully crafted to automatically regulate disk scaling in 90 seconds, enabling smooth handling of large data. Unlike traditional Managed disk volumes, which have a maximum throughput of approximately ~8GB per minute (125MB/sec), the Block Storage Auto-Scaler maintains a solid buffer to efficiently handle sudden increases in data, ensuring it stays within the Managed disk throughput limit.
• Ensure storage savings by 70%: With automated shrinkage and expansion of storage resources, you no longer have to pay for resources that you are not using. This leads to you saving a significant 70% on the storage costs.
• Calculate Your Potential Savings with the ROI Calculator: Utilize our ROI Calculator for custom estimates. Simply choose your cloud provider (Azure or AWS) and input your monthly or annual spending, disk usage, and growth rate information.

• Zero Downtime: Unlike the manual scaling process, which leads to downtime, Lucidity Block Storage Auto-Scaler automates the shrinkage and expansion of storage resources as the requirements fluctuate, leaving no room for downtime. You can also utilize the "Create Policy" feature to customize policies for specific situations, effortlessly increasing storage resources as per defined policies.

2. Auto-Scaling Virtual Machines

By implementing auto-scaling for your virtual machines, you can ensure a seamless balance between resource availability and demand, eliminating the risk of underprovisioning or overprovisioning. This not only optimizes costs but also guarantees optimal performance at all times.

Azure's virtual machine auto-scaling feature is crucial in cost optimization. It dynamically adjusts compute resources based on demand. This intelligent resource management ensures that the right resources are always available to handle varying workloads efficiently, thereby minimizing unnecessary costs.

During periods of low demand, the system intelligently scales down the number of virtual machines, effectively reducing costs by avoiding unnecessary resource consumption. Conversely, when demand spikes, the system automatically scales up, ensuring optimal performance without the need for manual intervention. This dynamic adjustment of resources is a key feature of Azure's auto-scaling, designed to optimize both performance and cost efficiency.

Azure's auto-scaling feature dynamically adjusts resources in real-time, helping organizations maximize cost efficiency while ensuring peak performance. This allows them to pay only for the resources they use when needed.

3. Tagging Your Resources

Tagging resources in Azure is vital for optimizing costs through increased visibility, accountability, and control over cloud spending. By utilizing tagging in Azure, you gain valuable insights into resource usage and enhance cost optimization in the following ways. 

• Tagging facilitates better cost allocation by linking specific resources with departments, projects, or cost centers. This aids in monitoring and analyzing spending, helping to identify areas of high expenditure and optimize resource usage accordingly.
• Tagging improves resource management by offering visibility into resource ownership and usage patterns, enabling informed decision-making regarding resource provisioning and optimization. 
• Tags can categorize resources based on their lifecycle stage, allowing for automated cleanup processes and cost-saving measures like identifying and removing unused or underutilized resources. 

4. Shutting Down Idle Resources

Idle resources lead to excessive Azure costs and can have the following impact on your infrastructure.

• Inefficient Spending: Unused resources still accumulate costs even when unused, resulting in organizations paying for resources that do not contribute to their operations.
• Suboptimal Use: Idle resources signify a lack of efficient infrastructure utilization. Azure services are typically charged based on usage, so when resources remain idle, the organization fails to leverage its investment fully.
• Reduced ROI: Unused resources can diminish Azure deployments' return on investment (ROI). Despite organizations' significant investment in setting up and maintaining their Azure infrastructure, idle resources can hinder the ROI.
• Challenges in cost monitoring: Idle resources can complicate organizations' accurate tracking and management of Azure costs. Without adequate monitoring and optimization strategies, costs can increase rapidly as idle resources remain undetected.
• Budget constraints: Idle resources may overrun budgets if organizations fail to manage and optimize their Azure deployments actively. Unforeseen costs related to idle resources can strain the organization's budget and financial resources.

Hence, once you have identified idle resources using Lucidity Storage Audit, shut them down.

5. Removing/Right Sizing Unused/Oversized Resources

Similar to idle resources, identifying and removing unused resources due to overprovisioning can be a wise move, potentially saving you a significant amount of money in the long term. This is because unused/oversized resources lead to the following:

• Excessive Spending: Oversized resources often result in higher costs compared to appropriately sized resources. This means organizations are paying for computing power, storage, or other resources that exceed their actual needs, leading to unnecessary expenditures.
• Underutilization: Oversized resources often lead to underutilization, where allocated resources are not fully utilized to their capacity. This results in organizations not maximizing the value they get from their Azure investments, as they are paying for idle or underutilized resources.
• Inefficient Resource Allocation: Oversized resources contribute to inefficient resource allocation practices. Instead of closely aligning resources with actual workload requirements, oversized resources allocate more than necessary, resulting in wasted capacity and increased costs.

If you don't want to remove unused/oversized resources, you can rightsize them to fit the workload requirements.

6. Understanding Azure Pricing

Businesses must thoroughly understand Azure pricing to optimize costs effectively. This knowledge and insight enable organizations to manage their cloud spending efficiently. By familiarizing themselves with Azure pricing models, businesses can make informed decisions about selecting, configuring, and utilizing resources. This ensures that they stay within budget constraints and meet operational requirements.

Understanding Azure pricing enables businesses to pinpoint optimization prospects, such as adjusting resource sizes, utilizing discounts, and adopting cost-efficient instance types. This understanding allows organizations to achieve the optimal equilibrium between performance and cost, preventing overspending on redundant resources.

Ultimately, understanding Azure pricing empowers businesses to enhance the value of their cloud investments while reducing unnecessary costs and improving financial management and resource efficiency in the cloud environment.

Azure offers a wide range of pricing models to help businesses choose the best fit for their requirements. Mentioned below are some of the commonly used pricing models

• Pay-as-you-go: If your workload is unpredictable or you are testing new services or applications, you should choose the pay-as-you model. Under this model, you will only be charged hourly for the resources you consume without committing to a plan or paying a termination fee.
• Reserved Instances: If you have a predictable workload or a long-term project, you can opt for Reserved Instances. By committing to a specific quantity of resources for a designated period, usually one or three years, you can secure a discounted rate for the resources you choose to allocate.
• Spot Instances: The pricing model allows you to bid on Azure capacity that is not in use, potentially leading to substantial cost reductions. However, spot instances are not always available, so it may be necessary to transition to another pricing model if spot instance capacity becomes unavailable.
• Hybrid Benefit: The pricing model enables the utilization of current licenses for specific Microsoft products to lower the expenses of Azure services. You can access virtual machines running these products on Azure at a discounted rate by leveraging your current Windows or SQL Server licenses.

Review the pricing above models and choose the one that best suits your requirements.

7. Using Pricing Calculator

Microsoft Azure provides a pricing calculator that estimates the cost of using Azure services based on specific requirements. The tool allows individuals and organizations to effectively plan and allocate resources for their cloud initiatives on Azure. It offers a comprehensive pricing analysis for various Azure services, including virtual machines, storage, databases, networking, etc. 

The pricing calculator tool allows you to input specific details such as service type, region, usage duration, and resource requirements. This flexibility enables you to generate a monthly cost estimate tailored to your unique needs. You can also save and share these cost estimates, which are crucial for financial planning and strategic decision-making in Azure cloud deployments.

8. Implementing Azure Cost Optimization Tools

There are many native and third-party Azure cost optimization tools available on the market that can prove to be instrumental in your Azure cost optimization best practices. These tools will help you exert control over cloud spending and budget. Some of these tools are mentioned below:

• Azure Cost Management and Billing: If you are looking for a tool to comprehensively understand your Azure usage, Azure cost management and billing is that tool. It doesn't just offer continuous cost optimization; it also recommends industry best practices, enhancing your ROI and giving you peace of mind about your Azure cost management.

Furthermore, it allows the establishment of governance policies for efficient management of enterprise cloud expenses and enhances accountability through budgeting, cost allocation and potential chargebacks.

• Azure Advisor: Azure Advisor is a personalized cloud consultant that aims to help businesses improve their resource efficiency, performance, and security by suggesting cost-optimization techniques. It offers tips and recommendations to act on, delay, or dismiss.
• Azure Cost Calculators: Azure cost calculator is a user-friendly tool that offers insight into different cloud components, such as the cost associated with virtual machines, storage requirements, and network requirements. It can calculate the cost of running different workloads in an Azure environment.

9. Optimizing Disaster Recovery Resources

Aside from application and platform feature optimization, it is crucial to optimize disaster recovery resources. This process ensures that the resources allocated to the disaster recovery processes align precisely with the requirements, eliminating unnecessary costs. The three disaster recovery approaches, hot, cold, and active-redeploy, each offer its own unique and efficient cost-related benefits.

For instance, a standby environment remains idle in a cold disaster recovery model until a disaster requires failover. Keeping the standby environment inactive minimizes the costs of computing, storage, and network operations, providing cost efficiency while maintaining readiness for potential disasters.

Active redeploy is another example of using infrastructure as code for disaster recovery purposes. In a failover situation, the secondary environment is activated using predetermined templates and scripts. 

Not having predeployed computing resources in the disaster recovery environment mitigates expenses associated with idle resources. 

Costs are only accrued during the live deployment in the event of failover, promoting effective resource distribution and financial savings until disaster recovery protocols are needed.

10. Choosing The Right Storage Tier

Choosing the right storage tier can be a game-changer, potentially saving significant costs in the long run. Let's delve into Azure's storage tier options to empower you with the knowledge to make the best decision for your data storage needs.

• Hot Tier: For files that need frequent access or updates, the Hot tier in Azure Blob Storage is likely the best choice. Although it has the highest cost per gigabyte compared to other tiers, it offers the lowest access costs and does not require a minimum retention period.
• Cool Tier: The Cool storage tier is best suited for data that does not need to be accessed or modified frequently but should remain easily accessible online. Although the cost per gigabyte is lower than the Hot storage tier, accessing data in the Cool tier comes with higher costs. 

It is essential to remember that the Cool tier enforces a minimum retention period of 30 days, requiring data to be stored for at least a month before organizations can delete it.

• Archive tier: When it comes to storing large volumes of rarely accessed data, the Archive tier in Azure Blob Storage is a reliable choice. With its low cost per gigabyte, it provides a secure and budget-friendly solution for your long-term storage needs.

Remember that accessing files from the Archive tier may take several hours due to its offline status. Additionally, data must be stored for at least 180 days before deletion in this Azure Blob Storage tier.

Optimize Azure Expenses The Right Way!

Managing costs in Azure is essential for organizations seeking to enhance their return on investment and streamline their cloud infrastructure. By following the guidelines provided in our Azure cost optimization checklist, you can identify cost-saving opportunities, adjust resource allocation, utilize cost management tools, and establish effective practices for continuous cost optimization. 

If you are struggling to manage your cloud costs and lack visibility into the reasons behind them, we suggest contacting us for a demonstration of our storage audit services. Our team specializes in assisting organizations in identifying storage usage-related inefficiencies and opportunities for enhancement. By utilizing automation, we can effectively decrease your overall cloud expenses by accurately focusing on storage usage and waste. Do not let the complexities of cost management impede your cloud endeavors; allow us to lead you toward optimized spending and improved efficiency within your Azure environment.