How to optimise Azure spending without compromising performance

Cloud costs can spiral out of control faster than you can say ‘auto-scaling'. Australian organisations running on Microsoft Azure face the constant challenge of balancing their cloud budget while maintaining application performance. Tridant recognises this balancing act as one of the most common challenges for businesses across all sectors. This guide provides practical steps for cloud architects, FinOps teams, IT managers, and finance stakeholders to manage Azure costs effectively without sacrificing performance.

Key Takeaways

• Use Azure Cost Management + Billing to gain visibility into your spending patterns and identify opportunities for optimisation.
• Implement rightsizing practices to match your resource allocation with actual workload requirements.
• Leverage Azure purchase options like Reserved Instances, Savings Plans, and Hybrid Benefits to reduce costs by up to 72%.
• Apply automation, proper governance, and continuous monitoring to maintain cost efficiency while preserving performance.

Understand current Azure spend

Before making any changes to your Azure environment, you need clear visibility into your current spending patterns.

Use Azure Cost Management + Billing

Azure's native cost management tools provide comprehensive insights into your spending. Set up cost analysis views to track expenses across different dimensions and configure daily or weekly exports for historical trend analysis. These exports can be directed to storage accounts for long-term data retention or Power BI for advanced analytics.

Break down costs by subscription, resource group and tags

Implementing a consistent tagging strategy is fundamental to understanding where your money goes. Create tags that map costs to specific teams, projects, environments, or business units. This granular visibility allows you to report on top cost centres and allocate expenses appropriately.

Identify high-cost services and usage patterns

Focus your analysis on identifying usage patterns and high-cost services. Look for:

• Unexpected cost spikes
• Seasonal usage patterns
• Idle or underutilised resources
• Services with the highest contribution to your bill (typically compute, storage, databases, and networking)

Define cost and performance targets

Effective cost optimisation requires clear targets that balance financial goals with performance requirements.

Set measurable KPIs

Define KPIs that tie costs to business outcomes, such as cost per workload, cost per user, or cost as a percentage of revenue. Also, establish minimum performance thresholds for latency, throughput, and availability to avoid undermining user experience.

Align budgets with business priorities

Not all workloads have equal business importance. Map your Azure resources to business priorities and allocate your budget accordingly. Mission-critical applications may warrant higher spending to maintain performance, while non-essential services can operate with tighter constraints.

Configure budgets and alerts in Azure

Set up budget thresholds in Azure Cost Management and configure alerts to notify stakeholders when spending approaches these limits. Establish clear escalation paths and response procedures for budget exceptions.

Rightsizing and instance selection

One of the most effective ways to reduce Azure costs is to match your resources to actual workload requirements.

Analyse VM and database utilisation

Review CPU, memory, disk IO, and network metrics for your virtual machines and databases. Resources consistently showing low utilisation (below 30-40%) are candidates for downsizing. Azure Monitor provides these metrics and can be used to track utilisation patterns over time.

“Many Australian organisations we work with discover they can reduce their Azure spending by 20-30% through proper rightsizing alone, without any negative impact on application performance.” – Tridant

Apply Azure Advisor recommendations carefully

Azure Advisor provides cost optimisation recommendations based on usage patterns. While helpful, these suggestions should be evaluated against your specific performance requirements before implementation. Some workloads may show low average utilisation but experience periodic spikes that justify the current sizing.

Choose correct VM series and SKUs for workload profiles

Different workloads have different resource requirements. Select VM series that match your specific needs:

• B-series for burstable workloads with variable usage
• D-series for general-purpose computing
• F-series for compute-optimised workloads
• E-series for memory-intensive applications

Purchase options: Reservations, Savings Plans and Hybrid Benefit

Azure offers several purchasing options that can significantly reduce costs for predictable workloads.

Compare Reserved Instances vs Savings Plans

For workloads with predictable resource needs, Reserved Instances (RIs) offer discounts of up to 72% compared to pay-as-you-go pricing. Azure Savings Plans provide similar discounts with greater flexibility across services. Evaluate your workload stability to determine which option offers the best value.

Leverage Azure Hybrid Benefit for Windows and SQL Server

If your organisation has existing Windows Server or SQL Server licenses with active Software Assurance, you can use Azure Hybrid Benefit to reduce the cost of running these workloads in Azure. This benefit can save up to 40% on Windows VMs and up to 55% on SQL Server.

Australia region pricing considerations

Azure pricing varies between Australian regions. While data residency requirements may limit your options, evaluate whether your workloads can run in regions with more favourable pricing without compromising compliance or performance.

Use automation and scaling to cut waste

Automation helps align resource allocation with actual demand, reducing unnecessary expenses.

Autoscaling and serverless options

Implement autoscaling for applications with variable load patterns. Azure App Service, Azure Kubernetes Service (AKS), and Virtual Machine Scale Sets can automatically adjust capacity based on demand. For suitable workloads, serverless options like Azure Functions can provide cost efficiency through consumption-based pricing.

Scheduled start/stop for non-production environments

Development, testing, and staging environments typically don't require 24/7 availability. Use Azure Automation runbooks or DevOps pipelines to automatically shut down these resources outside business hours, potentially reducing their cost by 70%.

Containerisation and orchestration for density

Containers allow you to run multiple workloads on shared infrastructure, increasing resource utilisation. Azure Kubernetes Service (AKS) or App Service can manage these containerised applications efficiently, reducing the overall footprint and cost.

Conclusion

Optimising Azure spending doesn't have to come at the expense of performance. By gaining visibility into your costs, rightsizing resources, leveraging appropriate purchase options, and implementing automation, you can achieve significant savings while maintaining or even improving application performance.

Start by running a comprehensive cost audit, prioritising optimisation opportunities based on potential savings and implementation effort, and then addressing the quick wins first. Remember that cost optimisation is not a one-time exercise but an ongoing process that requires regular attention. For organisations looking to maximise their Azure investment, Tridant offers specialised services to help identify and implement cost optimisation strategies tailored to your specific business needs and performance requirements.