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Cost Management and SLA

Cost Affecting Factors

  • Base Cost
    • Resource Types – All Azure services (resources) have resource-specific pricing models. Typically consisting of one or more metrics.
    • Services – Azure specific offers (Enterprise, Web Direct, CSP, etc.) have different cost and billing components like prepaids, billing cycles, - discounts, etc.
    • Location – running Azure services vary between Azure regions
    • Bandwidth – network traffic when uploading (inbound/ingress) data to Azure or downloading (outbound/egress) from Azure
  • Savings
    • Reserved Instances
    • Hybrid Benefits

Azure Reservations

Purchase Azure services for 1 or 3 years in advance with a significant discounts

  • Reserved instances – Azure Virtual Machines
  • Reserved capacity – Azure Storage, SQL Database vCores, Databricks DBUs, Cosmos DB RUs
  • Software plans – Red Hat, Red Hat OpenShift, SUSE Linux, etc.
  • Reservations are made for 1 or 3 years

Azure Spot VMs

Purchase unused Virtual Machine capacity for significant discount

  • How it works
    • Significant dicount for Azure VMs
    • Capacity can be taken away at any time
    • Customer can set maximum price after discount to keep or evict the machine
  • Best for interruptable workloads (batch processing, dev/test environments, large compute workloads, non-critical tasks, etc.)

Hybrid use Benefit

Use existing licenses in the cloud

  • Use existing licenses in the Azure
    • Windows Server
      • Azure VM
    • RedHat
      • Azure VM
    • SUSE Linux
      • Azure VM
    • SQL Server
      • Azure SQL Database
      • Azure SQL Managed Instance
      • Azure SQL Server on VM
      • Azure Data Factory SQL Server Integration Services

Tools

  • Pricing calculator – estimate the cost of Azure services
    • Select service
    • Adjust parameters (usage)
    • View the price
  • Total Cost of Ownership (TCO) calculator – estimate and compare the cost of running workloads in datacenter versus Azure
    • Define your workloads
    • Adjust assumptions
    • View the report

Azure Cost Management

  • A centralized service for reporting usage and billing of Azure environment
  • Self-service cost exploration capabilities
  • Budgets & alerts
  • Cost recommendations
  • Automated exports

Minimizing Costs in Azure

  1. Azure Pricing Calculator to choose the low-cost region
    • Good latency
    • All required services are available
    • Data sovereignty/compliance requirements
  2. Hybrid use benefit and Azure Reservations
  3. Azure Cost Management monitoring, budgets, alerts and recommendations
  4. Understand service lifecycle and automate environments
  5. Use autoscaling features to your advantage
  6. Azure Monitor to find and scale down underutilized resources
  7. Use tags & policies for effective governance

SLA

Service Level Agreement (SLA) is a formal agreement between a service provider and a customer.

SLA is a promise of a service’s availability (uptime & connectivity). Availability is a measure of time that a service remains operational.

  • Each Service has its own SLA
  • Ranges from 99% to 99.999%
  • Free services typically don’t have an SLA
  • Broken SLA means service credit return (discount)
SLA Monthly Downtime
99% 7h 18m 17s
99.5% 3h 39m 8s
99.9% 43m 49s
99.95% 21m 54s
99.99% 4m 22s
99.999% 26s

Formulas

Logical AND - adding dependency

Availability of S1 AND S2 = Availability(S1) * Availability(S2)

Scenario - Azure website with SQL backend db

  • Availability = Availability(web) app * Availability(sql)
  • Availability = 99.95% * 99.95%
  • Availability = 0.9995 * 0.9995
  • Availability = 0.99900025
  • Availability ~ 99.9%

Logical OR - adding redundancy

Availability of S1 OR S2 = 100% - ( Unvailability(S1) * Unvailability(S2) )

Scenario - Two redundant web apps behind a load balancer

  • Availability(both-web) = 100% - ( Unvailability(web1) * Unvailability(web2) )
  • Availability(both-web) = 100% - ( 0.05% * 0.05% )
  • Availability(both-web) = 1 – ( 0.0005 * 0.0005 )
  • Availability(both-web) = 1 – 0.00000025
  • Availability(both-web) = 0.99999975
  • Availability(both-web) ~ 99.9999%

Key Items

  • Formal agreement between Microsoft & the customer
  • Calculated as a percentage of service availability (uptime & connetivity) (a promise)
  • Breaking the SLA provides a discount from the final monthly bill (Service Credit)
  • Higher tier services offer better SLAs
  • Free services typically have no SLA (0% SLA)
  • Preview services have no SLA
  • Composite SLA is a combined SLA of all application components

Service Lifecycle

  • Every service in Azure follows its own service lifecycle
  • Public preview is a ‘beta’ stage of the service available to general public use
  • Features can also be in preview stages
  • Designed for testing, not production solutions
  • General availability is a ‘production’ release of the service

Public Preview Key Info

  • No SLA
  • Some services have no support coverage
  • Limited region availability
  • Limited functionality
  • Pricing changes
  • Direction changes
  • Azure Portal Previews (https://preview.portal.azure.com)