With more and more organizations adopting the (Azure) cloud, Azure Cloud financial management is becoming more and more important. In these challenging times, being cost-effective and competitive is more important than ever. This article explores what Azure Cloud financial management is about, what benefits exist for organizations with proper Azure Cloud financial management, and how they can benefit from it.
What is Azure Cloud financial management?
Microsoft Azure is a cloud platform that allows organizations to develop software solutions based on resources in the Azure Cloud. For example, Azure enables you to provision websites, databases, virtual machines, B2B integration solutions, and much more. Microsoft incurs costs for the resources that are created based on the nature of the resources, the amount of processing that happens by the resources, the amount of data that is stored, etc. Keeping a close eye on the costs of your Azure infrastructure can be complex, and without proper management, your monthly Azure bill can easily be much higher than anticipated/budgeted.
Azure Cloud financial management is the process that helps prevent such surprises by monitoring, controlling, and optimizing the costs that are associated with your Azure resources. In other words, by applying proper Azure Cloud financial management, your organization will be more cost-effective, which allows your organization to innovate rather than pay higher cloud bills than necessary.
Top 8 benefits of Azure Cloud financial management
There are benefits in many ways when applying Azure Cloud financial management. This is not just in paying a lower bill but also in terms of, for example, cost control, budget management, and much more. Let us have a short look at several areas where you could benefit from proper cloud financial management.
Cost Control and Reduction
The ability to have improved insights into your Azure Cloud costs gives you better cost control. You will have more frequent and more detailed reports about all the costs that are incurred by Microsoft. You might also find areas where cost reductions can be made by properly analyzing cost reports and revalidating business requirements.
Budget Management and Cost Allocation
Detailed cost reports also allow you to segregate Azure spending into budgets for different Azure solutions and the ability to share those insights with the owners of those solutions. By providing those insights to those responsible, they will be more tempted to keep cloud costs in control and try to find areas where costs can be decreased.
Visibility and Transparency
Sharing insights of cost reports to those responsible for those costs is an example of good visibility and transparency. This should lead to better cost awareness. Especially when the monthly bill is considerable, those responsible will become interested in better monitoring, cost control, and optimization capabilities, thereby trying to lower the bill.
Also, in terms of Resource optimization, you can benefit from improved Azure Cloud financial management. By understanding resource consumption and usage patterns, you could explore how to decrease those costs.
Scalability and Flexibility
The workload of an Azure solution can differ throughout the week: during business hours, a solution might be used more than outside of business hours. Even throughout the year, the workload of the solution can be different. Depending on the workload, you can (automatically) scale your solution up or down. This way, you always have the capacity you require without having to pay too much.
Compliance and Security
Azure has ways to mark resources within your subscriptions or resource groups, that enable you to retrieve reliable cost reports of your Azure solutions. You can think of adding tags to those resources to benefit from this. Although this can be done manually, there are also ways to have those tags automatically applied to those resources.
Understanding where Azure costs are incurred can also lead to the identification of inefficient workloads and maybe even idle resources. By decommissioning idle resources, they won’t incur costs, thereby decreasing your Azure bill.
This can be done by, for example, checking if bringing such resources to a lower tier (scaling down) or (automatically) disabling them when they are not required.
It must be clear by now that by properly applying Azure Cloud Financial Management, you get more than just a lower Azure bill. In all areas, you have better visibility and control over your Azure costs and the resources of your Azure solution. All this results in your business being more agile and competitive.
How to achieve Azure Cloud financial management?
With the benefits being clear, we now need to see how Cloud financial management must be achieved. This process exists from multiple different steps, which we cover here. Below, we mainly refer to features that are available in the Azure portal; however, because of several limitations in terms of simplicity of keeping the overview of the costs of your Azure solutions, Azure cost management solutions like Serverless360 Cost Analyzer can add value.
Cost Planning and Budgeting
Without proper planning and budgeting, cloud costs can easily go out of control. However, often, it is hard to estimate expected costs and allocate realistic budgets. To help you plan Azure costs, Microsoft provides tools like the Pricing Calculator, and the Plan to Manage Azure costs article helps you to get started planning your Azure costs.
Cost Tracking and Monitoring
Once you have more clarity about the expected Azure costs, in the Azure portal, you can create budgets and set up alerts to warn you in case of any anomalies. Besides receiving alerts via, for example, emails, there are also views in the Azure portal that help you understand where your costs are going.
Other existing capabilities include programmatically creating budgets, even via Bicep and ARM templates, enabling you to make this part of your CI/CD pipelines.
Cost Optimization Strategies
When adopting cloud technologies, cost optimization should be a constant process throughout the life cycle of your Azure solutions. This starts with creating cost awareness for the team that develops your Azure solution, enabling them to design solutions that deliver the required functionalities but are also cost-effective.
Once a solution is live, you frequently want to check the incurred costs for the solution. For example, you will want to explore idle or underused resources that incur costs. Further, Microsoft also offers right-sizing recommendations to help you decide whether your resources are in the right tier. You can also purchase Azure Reservations; by doing so, you purchase predictable workloads for one-year or three-year terms. By purchasing Reservations, benefits could go up to 72%.
Cost Allocation and Chargeback
Although Azure costs are likely managed centrally, it is equally likely that different departments within your organization use these resources. If you want to charge back your Azure bill to those responsible for the costs, in the Azure portal, you can create Cost Allocation rules. The allocated costs appear in Cost Analysis; read more in the Create and Manage Azure cost allocation rules article.
Reporting, Analysis, and Optimization
When your Azure solutions are live, the workload of the solutions might vary over time. More customers might use your services, and more partners might become connected to your services. This changing workload impacts the resources you use in terms of scaling. Also, the workload might differ throughout specific periods of the year which impacts the required resources to process the workload.
Therefore, it is important to have a constant process of reporting, analysis, and optimization of Azure costs. By having such a process in place, you will maintain a good grip on the costs and innovate rather than paying more on your Azure costs than required.
To keep a grip on your Cloud costs, proper financial cloud management must take place, and cost awareness must be created throughout the teams that use the cloud solutions. By setting up such a process, the organization will be more cost-effective and benefit in terms of scalability and business agility. We hope this article helps you to understand the importance of Azure Cloud financial management and how to benefit from it.