Articles | February 22, 2024

Level Up Your Cost Management with Microsoft Azure Savings Plans for Compute!

Get to know smart cloud Azure savings plans and optimize your cloud spending in 2024!

Azure savings plans

Savings – all infrastructure managers pursue them and so many still fail to avoid budget slip-ups. Cloud is no different. In 2024, public cloud spending is forecasted to grow by 20% annually, reaching nearly $680 billion. Proper allocation of cloud resources and infrastructure scaling will be especially important for companies implementing Generative AI solutions – Gartner analysts alert.

The success of implementing GenAI solutions is influenced by several factors, including the competencies of the implementation team, the tools and licensing forms used, appropriate business processes, and cost-effectiveness. The costs of such an investment can be optimized, for instance, by using properly selected algorithms that require less computing power and, consequently, generate fewer costs.

Conducting an AI Maturity Assessment is beneficial to achieve optimal conditions in these areas. As part of this assessment, an experienced team will evaluate the organization’s readiness to implement GenAI solutions and provide recommendations for future work.” – adds Marek Czachorowski, Practice Leader of Cloud Engineering at Inetum.

So how to save money on the cloud and scale it all right? One way is to take advantage of solutions from public cloud providers. In this guide, we examine solutions of the leader in public cloud services, that is Azure Saving Plans offer. Find out what they are, how they differ from Azure Reserved Instances, and how to purchase them and use them most effectively.

How to Buy and Manage Azure Savings Plans?

According to respondents to Flexera’s “State of the Cloud 2023” report, cost management is now even more important than cyber security. Over 80% of respondents surveyed say that managing the cost of the cloud is their number 1 challenge. In times of economic concerns, companies are seeking support from FinOps practices or building the Cloud Centers of Excellence. 

It’s worth knowing that Azure savings plans for computing capacities are also available. Let’s look at what public cloud leader Microsoft offers in their Azure Portal. Below we explain how to gain access to the savings plans.

What Azure Savings plan for computing is?

The idea behind the savings plan for computing is simple: you commit to spending a fixed hourly amount on compute services for one or three years and in doing so, you will be able to save up to 65% on pay-as-you-go prices.

How do you buy a savings plan?

  1. First, ensure you meet the conditions for purchasing a savings plan – check your billing plan.
  2. Note that savings plan discounts are only applicable to resources connected to subscriptions acquired through an Enterprise Agreement (EA), Microsoft Customer Agreement (MCA), or Microsoft Partner Agreement (MPA).
  3. Once done, proceed to Azure Portal, and navigate to All services, and then choose Savings plans. From there, click Add to buy a saving plan.

Azure Savings Plans Benefits Explained

Understanding Savings Plan Benefits for Compute Usage

  • Working on your terms – you decide whether to commit for one year or three years, and determine the hourly plan based on recommendations for past compute usage.  
  • Optimizing consumption of selected services  – as part of savings plans, lower prices are available for selected services, including Azure Virtual Machines, Azure App Service, container instances, Azure Functions, and more.
  • Saving even more – the longer the commitment time, the greater the benefits and savings. You can combine savings offers, such as with Azure Hybrid Benefit explained below. 
  •  Gaining flexibility – even though you cannot modify or cancel the commitment, if your usage exceeds estimated figures, you may add another savings plan to cover the extra usage for computing resources.
    Key differences between Azure Reservation vs. Savings Plan A savings plan is not the only way to save expenditures. Azure gives you various options – another s is the Azure Reservation service. How do they differ?
  • Azure Reservation – it means a commitment to a specific virtual machine type in a given cloud region. Choose reserved instances for stable workloads or if you do not expect any changes eg. to the cloud region. Azure reserved instances provide cost savings compared to pay-as-you-go pricing and ensure the availability of resources for your specific workload. It’s important to carefully consider your workload requirements and usage patterns before reserving instances.
  • Azure Savings Plan – it is a commitment to spending a fixed hourly amount in total on compute services. This option is recommended for dynamic workloads. Azure savings plan offers a pricing model that provides significant cost savings on consistent compute usage in Azure regions. By purchasing an Azure Savings plan, you can achieve savings across multiple Azure regions and select compute services covered by the plan.

Getting the most out of Azure Saving Plans

It’s a good idea to carry out thorough research on the topic before committing to a specific plan. Below are two popular options.

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Utilizing Azure Advisor to Leverage Savings Plan Discounts

Azure Advisor is available for free in the Azure Portal. Using Azure Advisor can be compared to having your cloud assistant, which with Machine Learning capabilities at its service, helps you recognize underutilized resources and ensure optimal usage of virtual machines and their scale sets. Then, the Advisor recommends shutting down or resizing given resources.

But Azure Advisor is also helpful in estimating recommendations on appropriate plans for your company.  Based on hourly and total on-demand usage costs, calculations are created to help you choose the right option.

Get inspired to save money with minimal effort and read about this powerful tool in our guide: Azure Advisor – the Microsoft Cost Management Tool.

Utilizing Azure Hybrid Benefit with Savings Plans

Azure Hybrid Benefit is a special licensing offer for Azure cloud migrations.
In simple terms,
Azure Hybrid Benefit is a program that allows new Azure customers to use their existing on-premises licenses for certain Microsoft software products. This way, they can reduce the cost of running them in the Azure cloud.

For instance, if someone already has licenses for certain Microsoft software (Windows Server or SQL Server) and wants to move their workloads to the cloud, Azure Hybrid Benefit lets them apply existing licenses and run the same product within Azure.

By utilizing Azure Hybrid Benefit with new Savings Plans, you can potentially save more money on Azure compute services.

Purchasing Azure Savings plan – summary 

A savings plan allows you to lower cloud costs and optimize selected Azure resources at the same time. These plans cannot be canceled or changed during the contract, so the choice must be well-thought-out depending on the workloads, services, and cloud regions used. Also, you need to consider any planned changes in this context in the future. While there are a lot of knowledge sources on the Microsoft Learn portal, it’s good to know the opinions of cloud migrations and cost optimization experts. You don’t have to be alone in making this decision!

Read also: Azure Cost Management 101. How to optimize cloud costs?

Contact our subject matter experts if you want to quickly choose the right plan and start saving money right away. 

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