FinOps in Azure: Unleashing Business Value through Cost Optimization Strategies Francisco Teles – Azure Specialist at Microsoft Bern, May 16th

What is your top cloud challenge? All: N=753, Enterprise: N=621, SMB: N=132 Source: Flexera 2024 State of the Cloud Report (Figure 30) 84% 81% 78% 78% 76% 75% 70% 68% 68% Managing cloud spend Security Lack of resources/expertise Managing software licenses Governance Compliance Cloud/business responsibility balancing Managing multi-cloud Cloud migration

What is your estimated wasted cloud spend? All: N=753 Source: Flexera 2024 State of the Cloud Report (Figure 32) 73% 27% Efficient spend Self-estimated wasted spend

Do you have a FinOps team? All: N=753 Source: Flexera 2024 State of the Cloud Report (Figure 32) 51% Yes, FinOps team does some/all of these tasks 20% 20% 7% 2% No, but planning for the next 12 months No No, but planning beyond 12 months Don’t know

The origin of FinOps before Cloud (b.C) after Cloud (a.C) CapEx OpEx I WANT … Business Finance FULL CONTROL FULL INSIGHTS FULL VISIBILITY CENTRALIZED FIXED COST SLOW Business Finance NO CONTROL NO INSIGHTS NO VISIBILITY DECENTRALIZED VARIABLE COST FAST

What is FinOps? Business Finance Business Finance FinOps Engineering NO CONTROL NO INSIGHTS NO VISIBILITY DECENTRALIZED VARIABLE COST FAST FULL CONTROL FULL INSIGHTS FULL VISIBILITY DECENTRALIZED VARIABLE COST FAST FULL ACCOUNTABILITY

What is FinOps? FinOps is an operational framework and culture practice which: Creates financial accountability through collaboration between engineering, finance and business teams Maximizes business value of cloud Enables timely data- driven decision making Official definition of FinOps Foundation Technical Advisory Council

What is not FinOps? FinOps is NOT about spending LESS FinOps is about spending BETTER Get maximum business value from every dollar spent Spend vs Waste Spend vs Value

The FinOps Framework © 2024 FinOps Foundation Project a Series of LF Projects, LLC.

FinOps in Azure Cost Transparency Data analysis and showback Cost Allocation Managing shared costs Measuring unit costs Chargeback and finance integration Rate Optimization Managing commitment-based discounts Usage Optimization Resource utilization & efficiency Workload Management & Automation Managing anomalies Financial Controls Budget Management Forecasting Managing Anomalies Cloud policy and governance Chargeback and finance integration Capabilities Capabilities Capabilities Capabilities

Let’s go shopping! DALL-E 3: “Grocery shopping in Switzerland with the brand of Azure cloud, a Swiss mountain in the background, and a Microsoft Azure logo on some grocery items”

FinOps in Azure Cost Transparency Price Tag Clarity Rate Optimization Discount and Voucher Hunting Usage Optimization Meal Planning and Shopping List Financial Controls Budget Management 1 2 3 4

FinOps in Azure Cost Transparency Price Tag Clarity Rate Optimization Discount and Voucher Hunting Usage Optimization Meal Planning and Shopping List Financial Controls Budget Management 1 2 3 4

Azure Bill: $10 000 Project A: $3000 Project B: $5500 Project C: $500 Project D: $1000 Leverage Azure Governance There is no clarity without structure Use Tags Workload? Project? Owner? Cost Center? Enforce and Inherit Tags Azure Policy to avoid missing tags Allocate Shared Costs Distribute costs based on resource usage Recommendations

Azure Governance IT Department Development Invoice Invoice Billing Account Billing profile 1 Invoice section Production Invoice section Entra ID Tenant Root Management Group IT - Development IT - Production Subscription Dev Subscription Spoke RG A RG B SQL DB VM OT Department Development Invoice section Billing profile 2 Production Invoice section OT - Development OT - Production Subscription Dev Subscription Spoke Subscription Hub costcenter: 1234 project: B costcenter: 1234 project: B owner: Joe env: prod env: prod Enforce tag(s) Inherit tag(s) Subscription Hub

FinOps in Azure Cost Transparency Price Tag Clarity Rate Optimization Discount and Voucher Hunting Financial Controls Budget Management 1 3 4 Usage Optimization Meal Planning and Shopping List 2

Monitor Resource Usage Avoid oversized resources Monitor Unused Resources Avoid resource waste Automate Dev/Test workloads Auto-start/shutdown, IaC provisioning, etc Azure Bill: $10 000 Unattached Disks - $500 Redundant Data - $250 Inefficient containerization - $300 Overprovisioned VMs - $300 Recommendations

Azure Advisor Analyses configurations and usage telemetry and offers recommendations to optimize resources for reliability, security, operational excellence, performance, and cost. Copilot for Azure Enable natural language conversation based on usage and telemetry in your Azure tenant Cost Optimization workbook Dashabord with cost-relevant insights and recommendations aligned with WAF NEW Copilot Preview Tools available

FinOps in Azure Cost Transparency Price Tag Clarity Rate Optimization Discount and Voucher Hunting Usage Optimization Meal Planning and Shopping List Financial Controls Budget Management 1 2 3 4

Spot VMs (up to 90%) unused compute capacity at significant cost savings Saving Plans (30-35%) Committing an hourly spend for Azure compute Reserved Instances (50-65%) Committing 1Y/3Y plans for multiple products Dev/Test Subscriptions (30-55%) dev/test workloads with discounted rates Azure Hybrid Benefit Use licenses you already own for your workloads Microsoft Azure Consumption Commitment Azure Bill: $10 000 Project A: 24h/7 Project B: 8h/5 Project C: Sandbox Project D: Development Recommendations

Reservations Reservation Scope SKU Family Region Terms Length Billing Res. Group Subscription Man. Group Shared DSv3 Series BS Series W Europe East US 1 Year 3 Years Monthly Upfront North CH … … F Series Safety Mechanisms Instance Flexibility Possibility to cover all the SKU in the same family based on CPU counts Exchange Possibility to change a reservation with another one higher in value (grace period until Jun 24) Refund Possibility to cancel reservation and get refund up to 50k USD in 12 months. G Series North IT Quantity

Saving Plans Scope Terms Length Billing Res. Group Subscription Man. Group Shared 1 Year 3 Years Monthly Upfront Characteristics Saving plans are applied on top of Reserved instances They apply only to compute No Exchange, Refund or Cancellation is possible Hourly Commitment Savings Plans

FinOps in Azure Cost Transparency Price Tag Clarity Rate Optimization Discount and Voucher Hunting Usage Optimization Meal Planning and Shopping List Financial Controls Budget Management 1 2 3 4

Define budgets per workload And set alert to help monitor your costs Analyze and forecast spend Be proactive on anticipating cost changes Use cost anomaly insights To identify atypical usage patterns Visualize Costs Use Cost Management or PBI as the source of visualization of your Azure Costs Azure Bill: $10 000 Project A: $3000 Project B: $5500 Project C: $500 Project D: $1000 Budget A: $3000 Budget B: $4500 Budget C: $600 Budget D: $100 ANOMALY Recommendations

Costs Visualization FREE READY TO BE USED LIMITED CUSTOMIZATION LICENSE BASED CUSTOM BUILT FULL CUSTOMIZATION Cost Management Portal Suite of FinOps tools that help organizations analyze, monitor, and optimize their Microsoft Cloud costs. PowerBI Dashboards Customizable FinOps dashboards built on PowerBI

FinOps is an iterative practice that involves many personas Tools are available in Azure for any phase of the FinOps framework 2 1 3 Key take aways FinOps is about maximizing business value from cloud spend

What’s next? Ramp up on FinOps Leverage existing content available online from Microsoft and FInOps Foundation to get acquainted with the framework

What’s next? Ramp up on FinOps Leverage existing content available online from Microsoft and FInOps Foundation to get acquainted with the framework Azure FinOps Review Use FinOps guidance to assess your organization’s capability gaps. Get recommendations for maximizing cloud business value

What’s next? Ramp up on FinOps Leverage existing content available online from Microsoft and FInOps Foundation to get acquainted with the framework Azure FinOps Review Use FinOps guidance to assess your organization’s capability gaps. Get recommendations for maximizing cloud business value Azure FinOps Toolkit Automate and extend the Microsoft Cloud with starter kits, scripts, and advanced solutions to accelerate your FinOps journey. NEW microsoft.github.io/finops-toolkit

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Thank you! Francisco Teles Azure Specialist at Microsoft franciscoteles