Tag: Azure

As Head of IT and Digitalization in Herlev Kommune, Kim Ladegaard moved all on-premises servers to the cloud. To assure a smooth start they used Kostner who specializes in cloud cost management.

When Kim Ladegaard, Head of IT and Digitalization at Herlev Municipality started in 2018, it was with the prospect of a room of servers, where the capacity of the servers was already utilized to its maximum. The municipality had decided to move from its present location to a new city hall on two different addresses no later than the end of 2023. Hence in 2018, the newly hired Head of IT stood with a decision to either upgrade the server room – aware that it soon after had to be moved to a new address. Or come up with an entirely new strategy – based on cloud.

With his IT and Digitalization team he worked out a solution to present to the management to move all on-premises servers to the cloud. “It didn’t make sense to me to first upgrade our on-premises servers and then later have them moved to a new address. The municipality had plans to relocate the city hall’s physical address. It would be too complicated and very expensive. Based on this, the management decided to move all servers to the cloud” says Kim Laadegard.

The need for flexibility

In the fourth quarter of 2021, all servers were in the cloud – except for one system. The key for the IT department is “flexibility” where data and systems are moved from physical servers in the basement to the virtual servers in the cloud on the Microsoft Azure platform. Moreover, throughout the last three months, more than 2.000 new entities – laptops and smartphones – have been set in use and give all employees access to exactly the systems they need.

“We’ve created a digital ecosystem, to eliminate the number of errors in the future. Hence, it is important both hardware and software are integrated. On top of the cloud transition, the employees need access to the Microsoft 365 platform and all existing computers and tablets need to be changed to Microsoft Surfaces… Our whole set-up is built on an ecosystem with Microsoft hardware and software. This means that all employees use the same Microsoft devices and have access to software and applications from Microsoft Azure and Microsoft 365” says Kim Ladegaard.

Pilot attempts before going full cloud

The municipality completed three pilot attempts before moving all servers to the cloud.

The first pilot attempt was the “Jobcenter”, with their systems being moved to the cloud.

After that, to test the devices with the new setup, the digitalization department completed a wide pilot in the organization with 45 employees from different departments – administrative personnel, sosu-assistants, physiotherapists, project leaders and nursing staff. As a management tool Herlev Municipality uses e.g. Microsoft’s Intune, which gives the option to customize the applications that the employees need.

Herlev Municipality has made an internal subscription scheme, where the departments pay for the equipment that their employees use.

“It becomes very clear for the different departments, what they get and what they pay for. There is complete transparency on the matter. On top of that we get all our devices registered and have better control over them in the future” says Kim Ladegaard.

Cloud Cost Management

In the municipality’s journey towards the cloud, Kim Ladegaard has used Kostner. He decided to bring Kostner along for the journey right from the beginning to use their FinOps service. Kostner analyze the economy in the municipality’s cloud journey and give recommendations based on this on how to keep costs down.

“As Head of IT, you risk losing the economic overview, when you give out more than 2.000 new devices to employees, who have customized access to Microsoft’s many different products, and at the same time move servers to Azure. It’s easy enough to create new servers, licenses, and services, but if you don’t manage it tightly, you risk that the economy runs wild. We have made a deal with Kostner to analyze the economy of our cloud environment once a quarter. Here they give recommendations on how we can keep our costs down.”

Head of IT and Digitalization, Kim Ladegaard.

Already at the first analysis, Kostner saved Herlev Municipality 140.000 kr. – and that was only based on the small part which they ran in the cloud at the time. “That saving came before we started using Microsoft 365 for several thousand employees” Kim Ladegaard adds.

Kostner has collected a lot of data on license agreements and costs for services in an algorithm and then crosses and compares these with the municipality’s actual usage. That way, the algorithm can find changes that can affect the costs for the municipality.

Big potential

There is a big potential in taking advantage of the options in the cloud, as it gives the option for working in new ways.

“Some ask me if it isn’t more expensive to have all servers in the cloud instead of on-premises. But I think you need to consider the whole setup and solution. Not only focus on the price of the servers. You must look at all costs and what the organization gets out of using the whole palette. In the new set-up, we are removing ourselves from the idea that one’s work must be physically tied to one place. Instead, we will look at it as an activity that can be done from anywhere. In this regard, flexibility is one of the keywords in our digital transformation” says Kim Ladegaard.

This article was first published in KITA in Danish and has been translated to English by Kostner.

Many companies experience that cloud costs grow faster than anticipated. As a result, this slows down cloud adoption and/or creates budget overrun.

A frequent reason for cost surprises is not taking full advantage of all the options for savings available in Azure and assumed in the original business case.

So, we will take a practical, financial approach. You will benefit from reading this even if you do not have a technical background.

If you are an experienced cloud cost manager, you will know the concepts. Still, you might learn a thing or two from the real-world examples and how to get it done. This includes a list of free tools like Azure Pricing Calculator, Cost Management Service, and Advisor.

Savings option #1: Azure Reservations

What are Azure Reservations?

We know, we know, you already know about reservations. Yet, even our best customers would benefit from using even more reservations.

Buying Azure Reservations (Azure Reserved Instances) is committing to purchasing a service for a one- or three-year period. Doing so will give substantial discounts, typically 60%+.

Moreover, you can exchange reservations within each of the 19 categories. So it is not like buying a specific piece of hardware. In some situations, you can even get an unused reservation refunded.

With this level of flexibility, it is essential to approach reservations in the right way. Ask not “Will this VM, Database, Disk, be running in 2 years”. Instead, ask “Will my use of ALL compute on Azure (VMs, Functions, Containers, etc.), be even just 2/3rds of what it is today in 2 years?”. If so, buy the reservation and balance them often.

It is also worth noting that the reservations now do not need to be paid upfront, so it is not a problem from a cashflow perspective.

You can read more about reservations in a recent blog post.

Reservations in the real world

Every company we have worked with uses reservations to some degree, but no one leverages the full potential:

There are a total of 19 categories of reservations, each with multiple different reservation types.
Every quarter new reservation-types are added or changed.

Add to this a few “tricks” you must know to master reservations, and you understand why.

A very cost-focused client exercised great discipline and always bought the right-sized VM, which unfortunately could not be reserved. However, a cheaper solution was to upgrade to a more expensive VM type and then get the 65% reservation discount, delivering a 45% saving compared to the cheaper, less performing VM.

A large enterprise client was shutting down servers every weekend to save costs. However, buying reservations and keeping the servers running saved them 20%.

While these examples are not hard to understand the nevertheless illustrate that your task when managing cloud costs is managing a very large number of combinations. The real challenge is not understanding what needs to be done – rather it is finding the needle in the haystack which delivers the the largest savings.

Savings option #2: Azure Hybrid Benefits

Another way to get significant savings in Azure is Azure Hybrid Benefits (AHB). This is a strategic move from Microsoft to get on-prem clients to move workload to Azure by allowing the same kind of licenses to be used on-prem in the cloud. So, this means you can leverage existing licenses with active SA. You can also benefit from renting or buying new licenses.

These savings are huge, in some instances close to 90%! Hence, understanding and leveraging this option is another must-do.

The implementation is straight forward – it is simply a checkmark in the server configuration that you are bringing your own license. Again, do make sure you own that license or rent or buy new ones before setting the checkmark.

AHB in the real world

Managing AHB is quite complex because you need a detailed understanding of licensing types and options. We often see results of non-compliance or deferred decisions.

A cloud-native startup had no on-prem licenses and thought that AHB was not an option for them. They were not aware that they could rent the server licenses from their cloud service provider and use them for AHB. This saved them 92%.

A large, global enterprise customer was leveraging AHB systematically. Based on external advice, they were about to purchase Windows Server Enterprise licenses for AHB, where Windows Server Standard would suffice. Buying the Standard edition meant a saving of 84%.

Whether you are a startup or a global enterprise customer make sure that you get external advice on licensing – and make sure it is from an independent expert who is not directly or indirectly making money on your Microsoft spend.

Savings option #3: Azure Elastic Database Pools

This is the third of the must-do savings types because the potential savings are significant, 60%+.

Nearly all customers use SQL Server in Azure. And for most customers, it’s one of the top 5 expenses.

Azure has the problem that frequently, the minimum size of the database you can buy is too big for the workload you want to run. The answer to this problem (and quite a few other problems) is elastic pools.

We will not go into the technical details here, but it is a way for you to get economies of scale and only pay for what you use.

Elastic Pools in the Real World

Elastic pools is the most important way to get some economies of scale in the cloud – make sure you understand all the options here.

A small Software-as-a-Service customer was spinning up a SQL Database for each new customer who ordered a trial. With the smallest standard database cost of €12.4 per month, that adds up. However, none of these customers use the performance available even in this, the smallest instance, and most are very rarely accessed at all. Creating a small vCore Elastic Pool saved them more than 75% of their Azure SQL Database cost and allowed them to keep adding customers with nearly 0 marginal costs.

Other Ways to Save in Azure

There are many other ways to save. To mention a few:

Use the newest version of a service. This is how Microsoft introduces lower prices. New versions are cheaper than the versions they replace.
Use Azure discounts for test and development servers. If you have Visual Studio Subscriptions for your developers, set up a Test/Dev subscription and avoid paying for Microsoft products.
Find the right model for paying for data egress (that is, data you pull out of the cloud).

And we have not even moved into how you can save by reducing how much you buy. If you are interested in diving a bit deeper into this subject, you can read our article on Finops.

The bulk of savings are made from the top three categories. Therefore, our advice is clear and simple:

“Make sure you master Azure Reservations, Hybrid Benefits, and Database Elastic Pools, and make quarterly systematic reviews of these”

What about pausing resources? Or rightsizing?

One of the intuitively great ways of savings in Azure is the ability to shut down resources when they are not in use. And there are a number of tools out there that promises you to do it without hassle.

The reasons why we do not recommend you to start here are multiple:

Of the three largest categories only virtual machines can be paused. Storage and Databases do not offer this option.
The business case is not strong because when you pause a VM your pricing is “pay-as-you-go”. Hence you need to pause the VM more than 12 hours per workday and the entire weekend to compete with a typical reservation
Pausing workloads would require sign-off from the business. The time spent having this dialogue and the management of pausing VMs must be built into your business case.

The latter point is equally true for rightsizing.

Pausing, and even more so rightsizing, should definitely be in your toolbelt (the pro version), but we do not recommend you to start here.

Pausing and rightsizing resources works best in an environment where you are using chargeback to the business and for resources driving material cost.

How to get savings done?

It should be clear that there are substantial savings opportunities in Azure, but you probably recognize one or more of these challenges:

Time and Priority: Your focus is delivering and operating cloud services, not managing costs.
Complexity and Changes: It is hard to get a complete overview of the options and new services and savings opportunities.
Knowledge: Even when you set aside enough time to identify savings, you frequently run into a question you would like to get answered before implementing it.

If so, you are not alone.

Azure tools can help you with some of the savings

Azure offers a comprehensive suite of tools that can help you to get the job done.

Azure Pricing Calculator can help you estimate the costs of a service you consider setting up. Remember to include things like Storage and Back-Up (these are not included by default)
Azure Cost Management and Billing can help you understand your utilization and cost in your environment. We haven’t touched on the benefits of saving on how much you use of each service in this blog, but it can be substantial.
A note on Azure Advisor. While this tool is supposed to include cost optimization recommendations, we find it often actually increases costs. Be careful when following the advice for cost recommendations.
Cloudyn is now free for your Azure spend, and you can get it to cover your AWS, and Google Cloud spend as a paid service.

No tool will deliver savings

… just like your bathroom scale in itself doesn’t lose you any weight.

If you google azure savings, cloud cost management, finops, or other keywords related to saving on Azure and other public clouds, you will find an endless list of tools. You will find Apptio, CloudHealth, Densify, and many more. They are all great tools!

Even if you stick to the free Azure tools it is clear that the problem is not getting data points, ideas, and recommendations.

The problem is that you don’t have the time to properly understand the recommendations or filter through the multitudes of options to find the ones that make the most sense.

So then, how do you do that?

Well, consider this. What if you were getting a service where you quarterly scheduled a couple of hours in your calendar to go through a finite list of material savings recommendations with a guide that can answer any questions or concerns, you might have? You know, like the Kostner Cloud Cost Management Service.

Final Reflection: Managing Azure Cost is just one of a New Trend

If you look around your company, you buy more and more technology “as-a-service”. There are good reasons for this, but it introduces a new paradigm for cost management that matters for everything you buy as a service. If you want to read more on this, please download our whitepaper on “Digital Transformation: Everything-as-a-Service”.

For each of these new services you are buying you will be left with the choice: Should you do it yourself or get external assistance.

Surely, you could do it yourself, but with more and more services, is managing costs really what you should be spending your time on?

Deltag i vores kursus: Microsoft licenser i Azure!

Kurset giver dig et klart overblik over:

… derudover har vi masser af tricks til, hvordan du gør det så nemt som muligt for dig selv.

Azure Hybrid Benefits (AHB) is the second most important way to reduce your costs in Azure (reservations being the most important one). A main challenge when using Azure Hybrid Benefits (AHB) has been to ensure compliance and a time-effective way to manage assigned licenses, without risking non-compliance.

Microsoft just introduced scope-level management of Azure Hybrid Benefit. For SQL-servers now but hint at expanding to other areas later. The capability allows for centralized management of AHB and removes the most common excuse for not applying AHB for SQL workload.

Why is AHB important for me?

Azure Hybrid Benefits (AHB) reduces your costs in Azure in several ways:

You can leverage licenses you already own – and have active Software Assurance (SA) on – in Azure.
You can procure additional licenses on your existing EA, EAS, SCE, or CSP agreements, often at a substantial discount compared to the prices paid in Azure Pay-As-You-Go.
For Windows Server or Core Infrastructure Suite datacenter you have dual use rights, where you can use the license on-prem and in the cloud at the same time. For other license types, it’s either or.
Windows server licenses are cheaper to buy or rent, than purchase as pay-as-you-go licenses directly in Azure. You save anywhere from 76% to 96% after the cost of the license.

AHB is the second most important price reduction mechanism in Azure after reservations and one you must apply if cost matters, and you do not like to overpay Microsoft for their services.

Why is scope level AHB important news?

Until now AHB had to be assigned at resource level, ie. each individual server, managed instance. This meant that typically the developers should assign the license by indicating AHB during configuration.

The main issues with managing AHB at resource level are:

It’s a manual process and responsibility is unclear
Difficult to get a fast answer whether there are available licenses to use for AHB
It is easy to end up in a non-compliance scenario.

With Scope-level management, you can now essentially state how many excess licenses are available for AHB to use. Scope level management allows you to assign a pool of licenses within a specified billing scope, ie. account or subscription level. You no longer need to assign each license to a specific resource.

It will in essence work just like a reservation.

Hence, the team responsible for licenses only need to manage how many licenses are available for AHB, and Azure assigns the licenses on an hourly basis to the resources, and discounts the costs. Different resources can be covered each hour.

Scope level AHB will make the lives of developers and license managers much simpler.

Who should use scope level AHB?

Scope level AHB is currently in preview with enterprise customers on most SQL resources (at the time of writing: SQL Databases, SQL Managed Instances, SQL Elastic Pools, SQL Server on Azure VMs). You can read this article about which agreement types and resources the scope-level AHB applies to.

Our recommendation would be that you take a closer look at this if you:

Have excess SQL Server Licenses today
Are not leveraging SQL AHB today
Have good, negotiated discounts on your SQL Servers + SA
Struggle with getting a robust and fast license overview in Azure

If you are a Microsoft Software Asset Manager, you will appreciate this new feature. If you are in your DevOps team you want to let your SAM know that this feature is available, so you don’t have to worry about this anymore.

What should we be aware of with scope level AHB?

Also, only SQL workload registered as such can be covered. This is automatically done for PaaS SQL services, or VMs deployed from a standardized SQL image. But for VMs with a SQL Server instance that you install, it must be flagged. This can be done using Azure’s management agent, or manually.

The one thing you must consider is how your chargeback/showback will be impacted. We know that Azure will assign licenses on an hourly basis. The method is not described in the documentation.

However, you will likely experience that the same resources will vary in hourly price – depending on whether a license has been assigned the specific resource or not. This may lead to some of the internal customers seeing varying costs – even in a stable environment. And this may lead to wasted time explaining the variations.

If you have not used AHB for SQL server before you will additionally see that the Azure price is going down – and the true software cost is sitting in a different budget.

The showback/chargeback issues can be dealt with by using blended rates, ie. fixed rates for a resource type. These are not calculated by Microsoft, but it is one of the services we offer.

How do we get started with scope level AHB?

If you are the DYI type a great place to start is this article from Microsoft: https://docs.microsoft.com/en-us/azure/cost-management-billing/scope-level/overview-azure-hybrid-benefit-scope#qualifying-azure-resources

We will discuss the options as part of Kostner’s Cloud Cost Management service, so if you are an existing customer, we will discuss this on the next decision meeting and set up implementation workshops if relevant.

Deltag i vores kursus: Microsoft licenser i Azure!

Kurset giver dig et klart overblik over:

… derudover har vi masser af tricks til, hvordan du gør det så nemt som muligt for dig selv.