Many organizations spend over a million dollars per year on cloud services, but controlling cloud spend remains a significant challenge. Over 83% of surveyed enterprises report that their annual cloud spend surpasses $1.2 million, yet 55% of these companies reveal that comprehending the cost implications of software licensing is a main challenge with cloud. 

Additionally, research indicates that around 44% of executives think their organization wastes at least one-third of cloud spend per year. 

Organizations want to save on compute costs while simultaneously maximizing the value of their cloud investments. The recently announced Azure savings plan for compute from Microsoft aims to help address these challenges with a simplified approach to saving up to 65% on compute costs vs pay-as-you-go pricing models.

Below is a breakdown of everything to know about the new Azure savings plan for compute – and how to determine if it’s best for your cloud investment needs. 

Why Containing Cloud Spend is Often an Uphill Battle

Organizations frequently struggle to manage cloud costs for a number of reasons, many of them related to minimal visibility into cloud usage and infrastructure complexities. For example, in an effort to optimize their cloud environment, the majority of organizations leverage at least three different tools that only exacerbate the lack of transparency into cloud service costs.

Other challenges that often contribute to runaway cloud spend include:

  • Unanticipated expenditure for add-on tools to meet different requirements. 
  • Over-provisioning resources that aren’t necessary for the specific workloads, which can lead to sprawl. 
  • Inefficient management of fluctuations in traffic or demand.
  • Orphaned resources that don’t have ownership but still result in operational complexities, misconfiguration, and aggravated costs.
  • Absence of centralized cloud governance that can lead to data breaches, unpatched programs, regulatory fines, and abuse of privileged access.
  • Stalled implementation of automation for cloud cost optimization to minimize manual processes for creating clusters or configuration of virtual machines.

What is the Azure Savings Plan for Compute?

The Azure savings plan for compute is a streamlined means of saving on resource costs via reduced prices based on consistent use of select Azure compute resources. The discount rates are fixed according to the length of the commitment time frame rather than the commitment amount. 

As part of Microsoft’s initiative to expedite cloud adoption and respond to the increasing need for cost optimization, the savings plan basically provides a way for companies with dynamic workload patterns to benefit from reduced prices and more flexibility. 

Key features of the Azure savings plan for compute

  • Requires a commitment of one or three years for a fixed hourly amount.
  • As the services, like container instances, are used globally, the usage is included by the plan for the lowered price.
  • When usage exceeds the hourly commitment, billing shifts to a pay-as-you-go model and there’s no rollover for any unused amounts. 
  • The plan doesn’t replace Azure reserved instances, which is better for companies with steady workloads.
  • Savings begin to apply nearly instantly after purchase and benefits are applied to qualifying meters. 
  • The plan can be paid upfront or monthly.
  • Estimated savings might range between 11% and 65%. 
  • The savings can be applied throughout resource or management groups, Azure accounts, or subscriptions.
  • The plan doesn’t support Azure VMware Solutions or Azure Red Hat OpenShift instances.
  • Alternate cost savings options, such as Azure Hybrid Benefit, can also be combined with the plan.

Using the Azure Savings Plan for Compute

For organizations who want to take advantage of the new Azure savings plan for compute, a good starting point is determining the appropriate hourly amount to set for the plan according to their past compute usage. But it’s also a good idea to evaluate future needs as well when considering the hourly amount.

For example, a customer can commit to $5 an hour for one year and savings are automatically applied up to the hourly commitment. If usage is at or below the hourly commitment, then the customer will be billed at the reduced savings plan price. But if usage is above the hourly commitment, the customer will be billed at the pay-as-you-go-pricing. The customer is expected to pay the $5 amount every hour even if usage is less.

 The savings plan currently applies (with a few exclusions) to Azure Virtual Machines, Azure Container Instances, Azure App Service, Azure Dedicated Host, and Azure Functions premium plan. 

Maximize the Full Potential of Your Azure Savings Plan for Compute

It can be challenging to navigate the intricacies of cloud licensing strategies and savings plans to exploit the full impact of your cloud investment. Microsoft licensing rules are complex and it’s often difficult to stay up-to-date as licensing and features evolve and business requirements change. 

Monitoring cloud spend and addressing compliance risks, licensing program changes, product updates and updated version launches can complicate attempts for greater cloud cost efficiencies. Furthermore, there’s only a limited time available to trade in your virtual machine, App Service reservations, and Azure Dedicated Host for the Azure savings plan for compute.  

CloudServus, a recognized Gold Tier Microsoft Partner, provides expert support via a comprehensive Azure Cost Optimization Assessment to help organizations derive the most value from their Azure savings plan for compute across the lifecycle.

CloudServus’ Azure Cost Optimization Assessment leverages deep understanding of Azure best practices to help organizations uncover opportunities to control wasted spend and maximize cloud value. The assessment analyzes your cloud environment to unlock opportunities for significant cloud savings. It includes bringing transparency into the impact of cloud technologies, pinpointing unexpected cloud costs, and monitoring the effects of cloud infrastructures.  

Organizations can better understand if the savings plan is best for their needs, how the discounts are applied, and identify potential reservation trade-in options. An intentional approach via the CloudServus Azure Cost Optimization Assessment ensures that your organization can confidently leverage the Azure savings plan for compute to maximize ROI.

Contact CloudServus to start your Azure Cost Optimization Assessment to uncover areas of opportunity for substantial cloud savings.

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