Technologies | June 15, 2023

Azure Cost Management 101: Learn the Top 5 Most Effective Strategies for Optimizing and Managing Expenses 

Did you know that over 60% of all cloud initiatives undertaken by businesses in Europe are focused on optimizing the use and cost of the cloud? Why do so many organizations go to all this effort? What can go wrong when it comes to cloud costs? If your company is building its digital transformation strategy in the cloud, read this article on how to effectively manage expenses.


If you’re an Azure cloud user and you’re struggling with effective cost management strategies, in this article we will point out the most common mistakes and propose best practices for managing resources and services in the Azure cloud. Let’s get started! 

Why focus on the Azure cloud?  

The cloud is called “the engine of innovation”. And while we’ve been witnessing “a game of thrones” between Azure and AWS in the public cloud providers sphere for several years, there’s one clear winner in Europe. The Microsoft Azure platform, according to the Flexera State of the Cloud 2023, is used by more than 90% of all European enterprises surveyed. 


Azure offers new cloud regions in Europe 

But the cloud is not only about innovation. In the context of the rising number of cyberattacks, and geopolitical uncertainty, data storage security and compliance are a must. For those who value data security and rely on local services such as nearshoring, the big news is that Azure has launched another region in Europe. 

By the end of April 2023, Microsoft announced the launching of the first trusted cloud region of Microsoft in Central and Eastern Europe in Poland. Microsoft indicates that the brand new Poland’s cloud region presents an opportunity for businesses to conform to the European Union’s General Data Protection Regulation (GDPR) while also better securing their critical digital assets.

“A local data center is a guarantee of greater data security and availability”, confirms Inetum expert Marek Dobkowski, Cloud Principal.

Why do companies fail in terms of Microsoft Azure cost management? 

Nearly 30% of cloud capabilities go unused and companies are struggling with a phenomenon called “cloud waste”. This is especially common in mature organizations in the process of cloud transformation, as opposed to startups or new enterprises that are building everything from scratch. Why is that?  

  • Lack of Cloud Governance policies – failing to implement appropriate policies for managing costs and accesses that are an essential part of cloud strategy success.  
  • Choosing an inappropriate pricing plan – deciding to choose a high-priced plan and not using services within the plan is a common reason for so-called cloud waste. 
  • Misalignment of cloud services and needs – building cloud resources that are over-scaled. For example, creating VMs (virtual machines) that use 20% of the CPU. 
  • Storage of unnecessary resources – keeping copies of outdated datasets and old systems, even ones that have been shut down for several years. 
  • Lack of flexibility – some customers try to move existing infrastructure to the cloud exactly as it is, which generates costs. Without a partner, they don’t know what services are available, what the benefits are, and which pricing plans are the best fit.

“Decision-makers may be surprised by additional costs, such as data transfer fees between cloud servers, software subscriptions or additional cloud services that they had not previously factored into their budget”, adds Marek Dobkowski.   


Read more: 5 Hidden Costs of Cloud Computing that Affect Your Bill and How to Avoid Them

What does Microsoft offer? Best Azure cost management tools

Microsoft offers a comprehensive suite of cost management tools to help organizations effectively monitor and control their expenses within the Azure cloud platform. How to use them? “Are Azure cost management tools sufficient?

Azure Cost Analysis

The first and foremost resource for cost management in the Azure portal is the Cost Analysis tool, which provides invaluable insights into your organizational costs. With Cost Analysis, you can:

  • Visualize and analyze your organizational costs.
  • Share cost views with others using custom alerts promoting collaborative cloud cost management.
  • View aggregated costs by organization to understand where costs occur over time and identify spending trends.
  • View accumulated costs over time to estimate monthly, quarterly, or even yearly cost trends against a budget.
  • Create budgets to provide adherence to financial constraints cost management for Azure.
  • Use budgets to view daily or monthly costs and help isolate spending irregularities.

Budgets and Cost Alerts

Azure provides the capability to configure alerts based on your actual or forecasted costs, ensuring that your spending remains within the limits defined by your organization. These alerts are triggered when your budget thresholds are exceeded, providing timely notifications without affecting your resources or stopping your consumption.

The ability to use budgets in tandem with cost alerts empowers you to closely track and compare your spending against budgeted values as you analyze your costs, allowing for real-time adjustments and cost control measures.


Azure (Cost) Advisor:

Azure Advisor is a valuable tool that focuses on cost optimization. It helps you enhance cost efficiency by identifying and highlighting idle and underutilized resources. The platform provides recommendations to reduce unnecessary expenses, leading to significant cost savings.

Azure Advisor guides users through a process where underutilized Azure resources are identified, and it offers actionable steps to reduce costs. This tool is instrumental in active managing your cloud expenses, aligning your cloud resources more effectively with your actual needs.


While these Azure tools are invaluable for analyzing past and forecasted data, creating recommendations based on past utilization metrics, and utilizing built-in tools and methods, it’s essential to understand their limitations. 

How Azure tools help you? 

With Azure tools you can easily:

  • Analyze past and forecasted data 
  • Create recommendation based on:
    • past utilization resource metrics,
    • built-in tools and methods.

What Azure Tools does not help you?

  • Assess architecture
  • Will not create recommendation based on:
    • Architecture optimization,
    • Custom solution.

Get to know our ways to optimize Azure costs

At Inetum, we bring a wealth of experience and a proven track record in optimizing Azure costs, ensuring that our clients harness the full potential of cloud resources while keeping their budgets in check. Our approach encompasses various critical steps, starting with management service. We document risks and convert them into policy statements that establish clear boundaries for Azure cost management. We then set up robust processes to monitor violations and adherence to these policies. In the monitoring phase, we analyze current resource utilization and delve into the cost breakdown structure, understanding every facet of the expenses. We examine in detail solution architecture to identify optimization opportunities.

In the planning stage, we define clear cost savings targets, prepare recommendations, and prioritize actions based on their impact. Once the plan is in place, we focus on updating the cloud setup. This involves implementing quick fixes, scaling down oversized resources, and shutting down or removing resources that are no longer in use. We emphasize automation as a key strategy for efficient cost management, automating operational tasks such as auto-scaling, auto-pausing, and auto-deletion, while also defining exemption rules and processes to maintain flexibility.


“Our results speak for themselves. Notably, we are running one of the largest projects based on Azure in Europe, and thanks to our proactive actions, our client has achieved substantial cost savings. According to the end-of-year forecast, our efforts have resulted in savings of EUR 1.7 million (18%), demonstrating the tangible impact of our cost optimization activities. We are committed to helping our customers navigate the Azure cloud ecosystem efficiently, delivering cost-effective solutions without compromising on performance or scalability” – summarizes Marek Dobkowski 


What is Azure Cost Management & Billing and why is it important?

Let’s start with in-built tools that will make it easier to keep track of costs. Azure Cost Management is a set of FinOps tools. FinOps is a discipline combining cost management and operational practices that allows you to analyze, manage, and optimize the expenses of the Azure cloud. These include cost analysis and alerts. The Billing pane, in turn, provides all the tools to keep track of billing, invoices, payment methods, and so on. In the billing pane, you can see a list of the scopes in your directory, as well as switching between directories if needed. 

For a comprehensive understanding of FinOps principles and how they complement Azure cost management strategies, read our detailed article on Understanding Cloud FinOps Principles.

Overview of Azure Cost Management  

All the Azure Cost Management tools are easily accessible from the Azure portal panel. From there, you can set up your account, analyze costs and identify trends, minimize waste, and smoothly manage cloud costs.  

Why is Cost Management important to Azure users?

Today it is difficult to imagine any business functioning properly without analytical tools. They provide transparency and allow you to make informed decisions. It’s no different with the cloud.  

How can Azure Cost Management help to control spending? 

What costs can we expect over the next month? Is invoicing working as expected? With the Azure Cost Management tool, finding answers to those questions is much easier. It also facilitates cost allocation, e.g., among departments or initiatives.

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What are the key benefits of Azure Cost Management?

  • No cost – this FinOps tool is completely free. You get all insights, monitoring, and reporting capabilities at no additional expense!  
  • Integrations – with appropriate APIs you can integrate ACM with Microsoft Power BI to get even more valuable insights in a more visually appealing way. 
  • Versatility – Azure offers you a tool that comes with a bunch of capabilities. With ACM you can reduce costs, plan your Azure budget, control usage of Azure resources and simply make sure your Azure account is being properly taken care of.  

Read also: Azure Cost Management Tools: 10 Tools to Optimize Your Budget

How does Azure Cost Management fit into the overall Azure cost optimization strategy?

Azure Cost Management is one of several elements of your cost management strategy. Contrary to popular belief, a well-configured cloud will not generate additional costs.

As Marek Dobkowski says: “The implementation of the cloud is a long-term and choosing the right partner to help is an important element of the strategy that can drastically improve managing costs of cloud services.”  

Top strategies for optimizing and managing Microsoft Azure costs

By 2026, up to 75% percent of enterprises are forecasted to implement a digital transformation approach focused on cloud services as the core platform, Gartner says. If your digitization strategy is also based on the cloud, then you should be particularly interested in cost optimization and introducing good cost management practices in your company.

Strategy 1: Set up a budget and use Azure Cost Management tools 

Managing a budget doesn’t have to be complicated. There are tutorials available on Microsoft’s website that will allow you to create a budget on the Azure portal, as well as managing it using PowerShell or Azure Resource Manager. To access them, you should be granted access at least at the “read” level. Via the Azure portal, you can create any subscription budget: monthly, quarterly, or annual, and configure costs and alerts as well as plans (including for hybrid solutions, if you use Azure and AWS). 

Strategy 2: Optimize Azure costs with Azure Advisor 

Azure Advisor is a free service available in the Azure portal that allows you to identify underutilized resources. It is your “private consultant”, which will provide personalized information on availability, performance, and cost. 

Strategy 3: Utilize Azure’s pricing calculator and recommendations 

The pay-as-you-go model gives you flexibility in using cloud services. With the Azure calculator, you can estimate the monthly cost of each service.  Don’t let your expenses surprise you. Use tools to find out how much Virtual Machines, computing power or cloud storage space will cost.  

Strategy 4: Monitor and analyze your Azure service usage 

You may wonder how to monitor all the virtual machines, applications, databases, and services. In this regard, Azure Monitor comes in handy. Azure Monitor is a tool for usage monitoring that allows you to collect data, evaluate it, and swiftly react to it, no matter if you use an on-premises or cloud-based environment. This mechanism enhances the accessibility and efficiency of applications and cloud services.  

Azure Monitor collects and aggregates the data from every layer and component of your system into one data platform. It correlates data across multiple Azure subscriptions and tenants, in addition to hosting data for other services. 

Strategy 5: Maximize your cost savings with Azure Hybrid Benefit 

Over 70% of enterprises take advantage of hybrid cloud solutions. According to the State of the Cloud Report 2023, big enterprises tend to use multi-cloud FinOps tools rather than those for managing multi-cloud security. With FinOps tools like Azure Hybrid Benefit, you can optimize your hybrid environment and save even up to 85% over the standard pay-as-you-go rate. At the same time, you leverage your Windows Server and SQL Server licenses.  

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

Conclusion: Key takeaways for Azure Cost Management tools 

  • The total cost of Azure Cloud includes multiple elements, like VMs, Data Storage, cloud apps and services. For this reason, you need solutions for cost visibility like Azure Cost Management, Azure Billing, Azure Monitor, or Azure Hybrid Benefit. 
  • Cloud transformation is not limited to simply migrating to the cloud. The cloud brings benefits and savings when it is well-managed and costs and usage are optimized. Managing Azure and optimizing the use of Azure resources with a trusted IT partner is far easier since you can focus on your core business, and at the same time reduce your Azure spending.  

At Inetum, a cloud services company, we support you throughout your cloudification process and adapt to your constraints and challenges.​ Reach out to us and let’s see how we can optimize your cloud usage and boost your performance. 

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