Thanks again for joining me on this Azure Journey. This will blog entry will signify week 1 of my Azure cost optimization series. Our focus this week will be Azure Reservations, or Reserved Instancing.
Slash Costs, Not Quality
Imagine cutting down your Azure bills significantly. With Azure Reservations, you can save up to 72% compared to pay-as-you-go prices by committing to one or three-year terms for various Azure services. It’s like buying in bulk at your favorite store – the more you commit, the more you save.
Budget Bliss
Predictable costs? Yes, please! Azure Reservations make budgeting a breeze. The largest bucket of spend for the average MSP in Azure is your compute costs. By locking in your costs, you can plan your IT spending with precision, avoiding any nasty surprises. This level of predictability is a CFO’s dream come true.
Guaranteed Performance for Your Critical Apps
Securing your capacity in advance means your critical applications will run smoothly, even during peak times. You no longer have to gamble with Spot instancing to save money! It’s like reserving a VIP table at a fancy restaurant – you know you’ll always have a spot.
Eco-friendly Computing? Yes, It’s a Thing
Here’s a pleasant side effect: Azure Reservations are not just good for your wallet, they’re good for the planet. By optimizing resource usage, your business contributes to more sustainable cloud computing. That’s what we call a win-win!
How to Leverage it as a Managed Service Provider
One of the side effects of implementing Reservations on an azure resource is you will lose any sort of margin passthrough that you would be getting otherwise on that resource. This is why it’s important to have a strategy to recoup these costs, or increase your overall profitability when you make these adjustments. If you sign up and transact in the Microsoft AI Cloud Partner Program you can unlock additional incentives in rebates to help offset this.
How you go about implementing Reservations can also differ based on your Indirect Providers. I recommend talking to a trusted partner if you’re not sure where to start. This can be a great opportunity to reduce your client costs while increasing your margin holistically.
When should I consider not using a Reservation?
While there are a swath of resources you can choose to reserve, the discounts on each vary. A 1TB Premium disk for example only offers roughly a 5% discount when locked in. By doing this however you lose out on your margin which generally is more than the savings gained. If you are skilled in automation or are using a 3rd party orchestration tool to power on and off your virtual machines you’ll need to run the math to see what is better for your wallet. A general guideline is if you can keep a virtual machine de-allocated for more than 444 hours a month (Online for 300 hours) You’ll come out ahead further than if you reserved it.
Conclusion: Why Azure Reservations Are a No-Brainer
In conclusion, Azure Reservations are a smart move for businesses looking to balance cost, performance, and flexibility. Whether you’re a startup or a seasoned enterprise, these reservations can be a game-changer in your cloud strategy.
Stay tuned for more Week 2 of my Cost Optimization Series.
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