Azure Cloud Cost Optimization: Tools and Techniques

February 11, 2021

In this article, you will get to know the principles of Azure cloud cost optimization, best practices and strategies, and the tools you can use to achieve Azure cloud cost optimization.

You can achieve cloud cost optimization by using optimized processes, well designed architecture, tools and automation that enable efficient resource utilization in the cloud. You should also be aware of the areas of resource wastage resulting from cloud sprawl. On Azure Cloud you can further monitor and prevent wastage, by leveraging tools including Azure Cost Management (ACM) along with Azure Advisor and thereby achieve effective and efficient cost optimization.

Cloud Cost Optimization

Principles of Azure Cloud Cost Optimization

In order to achieve cloud cost optimization for your business, Azure Cost Management’s architecture is built on the following principles:

  1. Maintaining cost constraints
    • Identifying satisfactory boundaries on redundancy, scale, and performance against cost.
    • Assessing the initial cost.
    • Setting up budgets and alerts for various scopes to measure the cost.
  2. Aiming for scalable costs
    • Automatic scaling of the cost dynamically and linearly with the demand.
    • Determining the number of instances.
    • Selecting smaller instances for a highly fluctuating workload to provide optimum performance.
    • Making cost calculations and estimations.
  3. Paying for consumption
    • Adopting a leasing model instead of owing the resources.
    • Simplifying overall architecture by offering many SaaS and PaaS resources.
    • Including the cost of software, hardware, operations, development, data center space, and security.
    • Charging only for the resources you use by allowing you to select pay-as-you-go over fixed pricing.
  4. Identifying right resources and right size
    • Selecting the right resources to meet your business goals that can handle the performance of the workload.
    • Preventing inappropriate or misconfigured services that can impact cost.
    • Delivering certain resources as fixed-size building blocks that are adequately sized to meet expected capacity and performance without wasting the resources.
  5. Monitoring and optimizing
    • Continuous cost optimization and monitoring rather than a point-in-time activity.
    • Conducting regular cost reviews.
    • Measuring and forecasting capacity needs to help provisioning the resources dynamically to scale with demand.
    • Reviewing the cost management recommendations and actions taken.

To derive full potential from ACM architecture principles, consider making a comprehensive and upfront plan to select your cloud resources that are tailor made to suit your business needs and challenges. In turn, this will help you determine infrastructure use and maximize Azure efficiency.

Tools used in Azure Cloud Cost Optimization

Azure Cost Management and Azure Advisor are tools that you can use to optimize cloud cost for your organization.

Let us take a brief look about Azure Cost Management and Azure Advisor and their roles in cost optimization.

Azure Cost Management

ACM is designed for you to gain complete visibility and thereby control your organization’s cloud spend on both Azure and Amazon Web Services (AWS). It allows your team to plan and create budgets, manage funds, enforce compliance in governance, and develop and test builds on Azure or AWS.


ACM helps you to gain visibility into your resources that helps you to gain knowledge about the resources that are responsible for cloud spend. It makes your team accountable for the budget allocated for the respective team. It helps in optimizing the cost by identifying wastage, optimizing resource utilization, and taking advantage of Microsoft’s specific benefits such as reserved instances. For more information, see Understand Cost Management Data.


The Cost Analysis functionality of ACM allows you to explore, analyze, and review your cloud cost across parameters such as accumulated cost, actual cost, forecast, budget and accumulated granularity. You can view the total cost in pivot charts as well as customize your cost views according to your needs. For more information, see Cost Analysis.

Azure Advisor

Cost optimization is a continuous process. It must be an integral part of your organization if you utilize cloud resources. ACM makes use of the Azure Advisor service to provide cost optimization recommendations. This is achieved by monitoring key cost metrics within the selected scope. Based on the subscription scope selected for cost optimization, you can view relevant cost optimization selections. The recommendations then allow you to select a cost-effective option and verify actions thereby ensuring resource optimization. Azure Advisor also helps you to optimize and improve efficiency by identifying idle and underutilized resources.

You can view the cost optimization recommendations in Advisor recommendations from your subscription for a desired scope. It helps you to take the desired action based on the recommendations given in the Advisor recommendations. For more information, see Optimize costs from recommendations.

Best Practices and Strategies of Azure Cloud Cost Optimization

  • Visibility: ACM provides details to all the teams, right from management to development including finance, about the resource cost across the cloud for each and everyone involved in the project. This helps to monitor the cloud spend by each and every resource group on the cloud and inform them about the Azure cost incurred. They can breakdown and analyze the cost within their scope by navigating to the Scope Panel of the ACM and selecting Cost Analysis from their respective Subscriptions. It also provides data consolidation and control access to the cost information. For more information, Explore and analyze costs with cost analysis.
  • Accountability: You can drive your organizational accountability using ACM to set spending goals for the teams involved in the project by using budget as spending goals. This helps to control cost and maximize operational agility. It also supports chargeback processes that enables distributing cost accountability across the organization. You can Create and manage Azure budgets using ACM to maintain accountability.
  • Optimization: When you hold your team accountable for their budgets, you have to provide them with solutions to optimize their cloud spend. Azure Cost Management comes handy to help you and your team optimize cloud spend. ACM provides specific recommendations designed to suggest best options to purchase and utilize the cloud resources to save money.


Azure Cost Management along with Azure Advisor equips you with options to optimally plan and utilize required resources, and allocate them to specific teams as required. Additionally, ACM helps optimize resource utilization on the cloud by monitoring and suggesting to remove, modify, or turn off the idle or underutilized resources. It also helps you to plan budget and spending goals for your respective teams to bring about accountability in your organization. Thus, ACM along with Azure Advisor provides cloud cost optimization to reduce your cloud spend.