Azure Pricing: Navigating Microsoft's Azure Cloud

Azure pricing can be complex. Azure cloud offers many advantages, yet companies migrating to the cloud can easily overspend without careful planning.
Posted February 1, 2016
By

David Needle


Microsoft may have been late to the cloud party, but steady investment and improvements to its Azure cloud have made it a worthy competitor to Amazon Web Services (AWS). Yet like most cloud platforms, Azure pricing is filled with potential complexity.

Among the many advantages of moving to the cloud for cash-strapped IT departments is saving on continued investment in on-premises infrastructure by off-loading to an off-premise cloud platform. In addition to savings in hardware costs and the real estate required to maintain a datacenter, management and security is handled to a great extent (though not completely) by the cloud provider.

Cloud systems let you pay for what you need and scale up, which is far better than guessing at, for example, how many servers you need to buy and maintain in-house and risk getting more than you need or scrambling to add as demand increases. One reason some industries – like retail – overbuy is to handle demand spikes around the holidays even though that means a fair bit of capacity will go underutilized during other parts of the year.

But cloud systems also require capacity planning. You have to estimate how much you’ll need and while you can also scale back later, it’s easy to forget what you committed to and you end up paying for services you don’t need.

“There are almost an infinite number of permutations to acquiring Azure functionality and you might buy a lot of things you don’t need,” says analyst Jeff Kaplan of ThinkStrategies. “Companies also tend to acquire capacity services for a longer duration than they need, especially in the test dev realm and they don’t turn them off later when the need isn’t there. It’s kind of like a teenager streaming a lot of data without understanding there’s a cost.” 

Also, in the age of ‘Shadow IT’ there may be more than one person, department or group buying cloud services – so simply getting a handle on who’s using what already should be a priority before you make any far-reaching purchases.

Calculating Azure Costs

As is always the case when there’s complexity and cost involved, there are consultants with expertise in this area, along with third party solutions tailored to help with specific cloud services and the mixing and matching of private and public cloud offerings.

Microsoft itself offers a handy online calculator to help estimate how much of the Azure cloud you’ll need and what it will cost.

Steven Braunschweiger, Senior Enterprise IT Architect at Kodak Alaris, says the calculator has been useful in helping his company estimates the cost of moving to Azure. Kodak Alaris is a spinoff of Kodak and has been building infrastructure that favors cloud services.

“After years of battling with the on-premises stuff, we wanted to go to the cloud in a big way for the speed and agility it offers and to trim our TCO (Total Cost of Ownership) expenses,” Braunschweiger told Datamation. “All of our new workloads are going to Azure.”

As for the calculator, Braunschweiger says it provides “pretty good transparency” as to what things will cost to within 10 percent of what’s been budgeted or forecast. He adds that any discrepancy has more to do with the difficulty of forecasting precisely than with the calculator.

Another good feature of the calculator is that Kodak Alaris can apply any Azure pricing discounts it gets as part of its enterprise agreements with Microsoft, so the pricing results are accurate and specific to what the company wants to run including virtual machines and how many days they’ll need to run.  

Third Party Azure Cloud Cost Solutions

Cloudyn is one of several companies that offer metering, monitoring and analysis to potential cloud customers both to help with the purchase decision and to monitor the deployment going forward.

Sharon Wagner, CEO of Cloudyn, says compute operations typically account for about seventy percent of what a company wants to move with database and storage at about twenty percent and the rest networks.

These costs can get tricky in the cloud because, as Wagner points out, the service options are typically “fast and cheap or slow and expensive so you have figure out what you’ll need to access and how often. The type of storage can be as important as how much.”

Wagner says Microsoft’s Azure calculator is helpful in giving companies a baseline estimate of what costs they’re likely to incur. There are many other factors to consider though. For example, you can get a better price in Azure if you pay up front (up to 5 percent savings) and commit to a certain capacity or you can pay the higher or standard rates for pay-as-you go. You may inevitably want to buy more capacity, but the closer you can get to what you can afford to pay, matched to what you need, the better deal you’ll get.

“My advice is to use on-demand to experiment and get an idea of baseline consumption,” Owen Rogers Research Director for the Digital Economics Unit at 451 Research, told Datamation. “Once you have a good idea of capacity requirements, prepay for your constant requirements and use on-demand to scale up when you need to.”

Rogers agrees Microsoft’s Azure price calculator and similar tools offered by other cloud providers are useful, though wading through the different options and refining your requirements and expected needs is time-consuming.

For companies looking at multiple cloud options, 451 Research launched a Cloud Price Index that measures the typical prices of twelve cloud services, including compute and database. “Microsoft supplies data to the index across all their global regions, and we now cover over 90% of the US IaaS market,” says Rogers.

Azure, Hybrid Clouds and TCO

Microsoft made news recently with the release of the Technical Preview of Microsoft Azure Stack, the latest advance in its hybrid cloud strategy. The idea is that Azure Stack will help organizations deliver Azure services from their own datacenter. This is a big deal given that despite all the hype around cloud computing, industry estimates are that at least 80 percent of enterprise infrastructure remains on premises.

In a blog post announcing Azure Stack, Microsoft exec Mike Neil said that “many enterprises still have business concerns around moving fully to the public cloud, such as data sovereignty or regulatory considerations. This leaves them in a complicated position, with one foot in the public cloud and one on-premises.”

If Azure Stack delivers on its promise, allowing enterprises easy two-way communication and deployment of resources between public and private cloud services, that could be a significant savings for customers. Microsoft says Azure and Azure Stack have a standardized architecture, including the same portal, a unified application model, and common DevOps tools. With Azure Stack developers in hybrid cloud environments will be able to write code once for both the public Azure cloud and their own data center.

If you want to shop strictly on price, Braunschweiger at Kodak Alaris says you can have an endless debate comparing the different cloud services and what they offer. “Total cost of ownership is the key for us. We looked at the advantage of having one supplier, since we’re already a Microsoft customer, and that translates into lower TCO. Maybe we could get a cheaper cloud deal elsewhere, but we might have to retrain people in Linux, for example, versus Windows that we already know.”




Tags: cloud computing, AWS, Microsoft, Azure, cloud costs


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