Our Microsoft Digital Employee Experience (MDEE) team is aggressively pursuing Microsoft Azure cost optimization as part of our continuing effort to improve the efficiency and effectiveness of our enterprise Azure environment here at Microsoft and for our customers.
The Microsoft Azure platform has expanded over the years with the addition of hundreds of services, dozens of regions, and innumerable improvements and new features. In tandem, we’ve increased our investment in Azure as our core destination for business solutions at Microsoft. As our Azure footprint has grown, so has the environment’s complexity, requiring us to optimize and control our Azure expenditures.
Microsoft's Journey to Cost Optimization in Microsoft Azure
Microsoft has successfully reduced its Azure costs by embracing data-driven optimization techniques, implementing robust governance, and modernizing workloads. The Microsoft Digital Employee Experience (MDEE) team is at the forefront of these efforts, ensuring our Azure environment is both efficient and cost-effective for Microsoft and its customers.
Data-Driven Optimization and Governance
By adopting data-driven cost-optimization techniques, investing in central governance, and driving modernization across our Azure environment, we’ve created a cost-efficient blueprint that customers can emulate to lower their Azure expenses.
Our digital transformation journey began in 2014 with the bold decision to migrate our on-premises infrastructure to Microsoft Azure. This move was aimed at harnessing the benefits of a cloud-based platform—agility, elasticity, and scalability. Since then, we have progressively migrated and transformed our IT footprint to what is now the largest cloud-based infrastructure in the world, hosting more than 95 percent of our IT resources in Microsoft Azure.
Expanding and Optimizing Our Azure Footprint
The Microsoft Azure platform has grown significantly, adding hundreds of services, dozens of regions, and numerous new features. As our Azure footprint has expanded, so has the environment’s complexity, necessitating optimization and cost control.
Our Azure cost-optimization efforts have become more targeted, focusing on minimizing the rising total cost of ownership due to increased migrations and business growth. We’ve invested in tools and data insights for cost optimization, utilizing Microsoft Azure Advisor, Azure Cost Management and Billing, and Azure Monitor to derive insights and implement design optimizations.
Comprehensive Cost Optimization Strategy
As the largest adopter of Microsoft Azure, we’ve developed best practices for engineering and maintenance in Azure that support cost optimization and the comprehensive benefits of cloud computing. Our Microsoft Well-Architected Framework guides Azure workload modernization and modern engineering, with cost optimization as one of its five key components, alongside reliability, security, operational excellence, and performance efficiency.
Modernizing for Cost Efficiency
Reducing dependency on legacy application architecture was crucial for our initial cost optimization. We started with a lift-and-shift approach, migrating on-premises workloads to Azure virtual machines. We then transitioned to platform as a service (PaaS) component, modernizing our infrastructure for better efficiency and cost savings.
Focus Areas for Optimization
Key focus areas for optimization included correctly sizing virtual machines and transitioning from infrastructure as a service (IaaS) to PaaS. We currently operate with an 80 percent PaaS to 20 percent IaaS ratio, utilizing modular services like Azure App Service, Azure Functions, Azure Kubernetes Service, Azure SQL, and Azure Cosmos DB, which offer better native optimization capabilities than virtual machines.
Implementing Practical Cost Optimization
Optimization recommendations from Azure Advisor are implemented at the application or solution level. Application owners manage these recommendations to ensure continued operation and account for dependencies. For instance, re-architecting a virtual lab environment using a PaaS model reduced costs by over 50 percent, while converting function apps to Durable Functions reduced costs by 82 percent.
Governance for Effective Optimization
Centralized governance is critical for effective cost optimization. Our governance model includes:
Azure Advisor recommendations and automation: Recommendations are tracked and managed through our IT service management and Azure DevOps environment.
Tailored cost insights: Dashboards identify costliest applications and business groups, providing data for optimization.
Improved budget management: A bottom-up approach involving finance and engineering teams ensures accurate budget planning and tracking.
A governance solution has enabled significant savings, such as converting Azure SQL Database instances to the General Purpose Serverless tier, reducing costs by 97 percent.
Benefits of Microsoft Azure
Ongoing optimization has allowed us to capture Azure’s value, increasing revenue and growing our business. Our annual Azure budget has remained stable since 2014, despite Microsoft’s growth of over 20 percent. Recent optimization efforts have led to substantial cost reductions across various Azure services, including:
Right-sizing virtual machines: 300+ recommendations for VM size changes saved 15 percent in costs.
Updating to latest VM sizes: Nearly 2,500 recommendations resulted in a 30 percent cost savings.
Azure Data Explorer and Cosmos DB optimizations: Hundreds of recommendations led to significant savings.
Azure Data Lake optimizations: 30+ recommendations reduced costs by 15 percent
Key Takeaways
Our cost-optimization journey in Microsoft Azure has taught us several important lessons:
Central governance with local accountability: Central audits and regular reviews align optimization efforts with business priorities.
Data-driven approach: Metrics and monitoring from Azure Monitor are crucial for making timely optimization decisions.
Proactive cost management: Implementing recommendations quickly maximizes benefits.
Modern engineering practices: Supporting reliability, security, operational excellence, and performance efficiency enhances cost optimization.
Looking Forward
We continue to refine our optimization efforts, focusing on modernizing applications and solutions to reduce costs further. Our goals include using optimal Azure services, building automated scalability, and reducing reliance on IaaS components. Improved decentralization of recommendations allows engineers and application owners to make the best choices while adhering to central governance and standards.
Microsoft Azure optimization is a continuous cycle. By learning from past efforts, we improve future practices. As our Azure footprint grows, so will our optimization efforts, ensuring we capture every benefit the Azure platform offers.