How to manage your Microsoft Azure costs like a pro

24 June 2021
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Digital transformation is now at cruising speed in most sectors and organizations are moving their enterprise architecture to the cloud. But these cloud environments bring about costs that can easily spin out of control if not well managed. Think about implementation, operational and maintenance costs. Luckily, as an Azure data engineer or cloud administrator there are numerous actions to manage your cloud costs at all times.

Here’s a thought to get us started: reducing costs in an existing environment of course is great, and we’ll talk about that in a minute, but even better is to incorporate a cost-cutting mindset during development. That’s what we call the difference between passive and active cost management.

What are you doing at this point? Are you taking the passive route by optimizing your initial cloud setup reactively? Or are you actively using the cost-reducing tools that Azure provides.

Let’s take a detailed look at both the passive and active ways to reduce cloud costs.

Optimize cloud efficiency

Thinking twice about the setup of your cloud environment won’t only decrease expenses, but will give you the budget for valuable improvements involving reliability, security and performance! Using well-known industry best practices, your cost efficiency can be optimized in a passive way. This will reduce the effort you put into cutting unnecessary expenses later on, that you can then allocate to more important facets. Here are two ways to help you do exactly that.

Analyze your real business needs

Tools provided by Microsoft, such as the Azure Total Cost of Ownership Calculator and the Azure Pricing Calculator, will help you plan and organize an approach that maximizes value based on the workload and business case of your project. It provides a transparent view on the costs every cloud component brings about. This will allow you to manage your budget using a smart and targeted approach.

Be agile and develop your platform in an incremental way

It’s important to note that cloud infrastructure is not a one-off rigid asset with fixed characteristics, but rather an organic unit that should grow and shrink as deemed necessary. It should transform together with the development process and the scope of the business case over time.

During development, there are typically a few phases in which changes to the platform are done. In a pilot stage, the scope size and its data are usually rather limited. At this point, it is unnecessary to implement an ‘overkill’ setup that will bloat the expenses for your pilot project. In some cases, this can even avert companies from continuing their cloud adventures, so start small.

In a further development phase, the amount of environments for testing and validation purposes can be ramped up, together with storage and compute power to speed up the implementation. Once finished and ready for go-live, costs can be re-evaluated to deduplicate environments and focus on processing power to ensure smooth operation during business use.

Cost monitoring

Create custom cost visualizations with Azure Cost Management + Billing

With the free Azure Cost Management + Billing service, cloud spending can be managed and tracked extensively across different resources, resource groups and services. By making custom graphs and visualizations, you gain insight into how your expenses are spread out across:

  • Locations
  • Customers
  • Products
  • pricing models
  • service families
  • ...

In addition, custom tags can be created to label your resources and resource groups according to the department or project they belong to. In this way, you can see how they compare in terms of costs. Moreover, Azure automatically forecasts your costs in the near future based on your past usage.

Build a personalized dashboard with Azure Monitor

With Azure Monitor, you can build dashboards to keep an eye on all your Azure services and see all data you consider as relevant at a glance. The visualizations made in Azure Cost Management can easily be incorporated into these dashboards. This way, you can raise awareness among developers and make sure they never lose the financial impact of their deployments out of sight.

Cost allocation and budgeting

Create cost allocation rules to distribute costs of shared services

You can create cost allocation rules to distribute costs of services that are shared by different departments of your company, as they often have different budgets to take into account. In a cost allocation rule, you choose the costs which have to be allocated, the targets to which they have to be allocated, and how they should be allocated (e.g. evenly distributed).

Configure budgets and alerts to play it safe

Last but not least, you can configure budgets and alerts to be sure things don't get out of hand. In a "budget", you can set the maximum amount of money that can be spend in each period (e.g. Month, quarter, year) by what is defined as the 'budget scope'. This can, among other things, be a specific resource group or service. For every budget, specific alerts can be configured to receive an email when a certain percentage of the budget has been spent.


Cost management in your Microsoft Azure implementation can be done in numerous ways, both in a passive and active manner. It is essential to keep your business case and budget in mind when designing and setting up your environment. Paying additional attention to these best practices can prevent cost-related headaches in the future.

Luckily, Azure will also actively support you in cutting expenses in your cloud environment through a plethora of built-in tools & technologies. With that in mind... shouldn’t you consider also migrating your enterprise architecture to the cloud?

Need a hand to get you started?

As an experienced Microsoft Partner, Datashift helps companies develop new data platforms in Azure using best practices regarding cost management and efficiency right from the start. We also help build your business case to migrate existing architecture towards a budget-friendly cloud environment. Our diversified team of data engineers, business consultants and analysts will translate your wishes into a cloud platform tailored to your needs. Don't hesitate to reach out for more info!