Azure FinOps: Tools and Best Practices

This is part of a series of articles about FinOps

FinOps refers to the set of practices, processes, and tools that help organizations effectively manage and optimize their spending on cloud services. FinOps aims to bring together finance, technology, and business teams to make informed decisions about cloud resource allocation, cost optimization, and budget planning while ensuring the organization meets its performance, security, and compliance requirements.

In the context of Microsoft Azure, FinOps can be used to help plan and optimize the cost of using Azure services. The Microsoft Azure platform provides basic pricing and cost management tools that can help you implement some FinOps practices. However, to fully practice FinOps in the Azure cloud, most organizations turn to dedicated cost optimization solutions.

In this article:

3 Azure Native FinOps Tools

Azure provides several tools built into its cloud infrastructure, which can help you implement FinOps practices.

1. Azure Pricing Calculator

The Azure Pricing Calculator is an online tool provided by Microsoft that enables users to estimate the cost of Azure services and resources based on their specific requirements. It is a useful tool for organizations and individuals who are considering using Azure or are looking to optimize their existing Azure usage and costs.

The Azure Pricing Calculator allows users to input the specific services and resources they plan to use, such as virtual machines, storage, and networking, along with other factors such as location, usage, and duration. The tool then provides an estimated cost based on the input provided.

Some of the features of the Azure Pricing Calculator include:

  • Customizable inputs: Users can input specific usage requirements and adjust parameters such as resource type, location, and duration to get a more accurate estimate.
  • Real-time cost updates: As users make changes to their input, the tool updates the estimated cost in real-time, allowing users to see the impact of different configurations on cost.
  • Integration with Azure services: The Azure Pricing Calculator is integrated with Azure services, enabling users to easily estimate the cost of services they plan to use, such as Azure SQL Database, Azure Cosmos DB, and Azure Kubernetes Service.
  • Export and share estimates: Users can export and share their estimates with others, making it easy to collaborate and communicate about potential Azure costs.

2. Azure Cost Management

Azure Cost Management is a set of tools and services provided by Microsoft that enables organizations to monitor, manage, and optimize their spending on the Microsoft Azure cloud platform. It is designed to help organizations achieve better financial outcomes by providing visibility and control over their Azure costs.

Related content: Read our guide to cloud financial management.

Azure Cost Management includes several features and capabilities, such as:

  • Cost tracking: Users can view cost breakdowns by resource, service, and subscription, and track trends over time, allowing organizations to monitor spending across different Azure services.
  • Budgets and alerts: Users can set up budgets and alerts to monitor spending and avoid cost overruns. Azure Cost Management can send notifications when spending reaches a certain threshold, enabling users to take action to control costs.
  • Cost optimization recommendations: Users receive recommendations on how to optimize Azure costs, such as resizing underutilized resources or leveraging Azure Hybrid Benefit.
  • Cost allocation and chargeback: Users can allocate and track costs to different teams or projects, enabling them to accurately charge back costs to departments or customers.
  • Integration with other Azure services: Azure Cost Management is integrated with other Azure services, such as Azure Advisor, Azure Monitor, and Azure Resource Graph, providing a comprehensive view of Azure usage and costs.

3. Azure Advisor

Azure Advisor is a cloud-based service by Microsoft that provides recommendations and best practices for optimizing Azure resources and improving the overall performance, security, and reliability of Azure workloads. Azure Advisor uses artificial intelligence and machine learning algorithms to analyze Azure usage data and provide actionable insights to users.

Azure Advisor provides recommendations across several categories, including:

  • Cost optimization: How to optimize Azure costs, for example, by resizing underutilized resources or using reserved instances
  • Performance: How to improve the performance of Azure resources, for example, by scaling out resources or enabling caching
  • Security: How to improve the security of Azure resources, for example, by enabling multi-factor authentication or implementing network security groups
  • Reliability: How to improve the reliability of Azure resources, for example, by setting up backups or implementing redundancy

Azure Advisor provides a personalized dashboard that shows users their current Azure usage and provides recommendations based on their specific workloads and usage patterns. Users can also customize their settings and preferences to receive alerts and notifications when new recommendations become available.

Azure FinOps Best Practices

Here are some of the common best practices used to manage and conserve costs on Azure.

Use Azure Spot Virtual Machines

Azure Spot Virtual Machines (VMs) provide access to unused Azure compute capacity at a significantly discounted price. By using Spot VMs, organizations can run non-critical workloads, such as batch processing or development/test environments, at a fraction of the cost of regular VMs. However, Spot VMs are subject to capacity constraints and can be evicted at any time, so organizations should design their applications to handle interruptions.

Use Azure Savings Plans

Azure Savings Plans allow organizations to prepay for Azure compute resources and save up to 72% compared to pay-as-you-go pricing. Savings Plans provide flexibility in terms of commitment, allowing organizations to choose between one-year or three-year commitments and to switch between VM families or regions. By using Savings Plans, organizations can reduce their cloud spending and increase their cost predictability.

Use Azure Reservations

Azure Reservations allow organizations to prepay for Azure services, such as VMs, databases, or storage, at a discounted price. Reservations provide cost savings of up to 72% compared to pay-as-you-go pricing and can be used to reserve capacity for one or three years. By using Reservations, organizations can reduce their cloud spending and ensure that they have sufficient capacity to meet their workload demands.

Apply Spending Limits to Restrict Your Spending

Azure provides the ability to set spending limits on your subscriptions, so you can ensure that you don’t exceed your budget. This can be particularly useful for development and test environments, where costs can quickly spiral out of control. By setting spending limits, you can avoid unexpected bills and ensure that you stay within your budget.

Apply Tags to Identify Cost Owners

Applying tags to your Azure resources can help you identify which departments or teams are responsible for particular resources, and track their associated costs. This can help you allocate costs accurately and ensure that each team is aware of their cloud spending. By using tags, you can gain greater visibility into your costs and make more informed decisions about resource allocation.

Resize Underutilized Virtual Machines

Virtual machines are a significant cost driver in Azure, so it’s important to ensure that they are used appropriately. If your VMs are underutilized, you may be paying for capacity that you don’t need. By resizing your VMs, you can optimize your resource usage and reduce your costs. Azure provides tools such as Azure Advisor and Azure Monitor to help you identify underutilized resources and recommend appropriate resizing.

Azure FinOps with Spot by NetApp

Public cloud providers offer native tools that can help your organization grow its FinOps practice. However, they may only cover basic cost management capabilities and are siloed to their own cloud. With more organizations spreading their data across multiple clouds, this approach limits visibility into multi-cloud expenses.

Spot by NetApp’s portfolio of FinOps tools can help provide visibility, actionable insights, and automated cloud cost optimization for single- and multi-cloud environments. Spot Eco can automatically manage, optimize, and purchase reserved instances and Saving Plans, helping to maximize savings and ROI on your cloud spend.

Ready to start building your FinOps practice? Get a free Spot Eco demo to begin saving and optimizing your cloud commitments.

Learn more in our detailed guide to finops foundation, finops certification, finops tools, and finops analyst.