It is easy for a seasoned salesperson to demonstrate that Microsoft Azure is more expensive than a private cloud or an alternative cloud provider by 40% or even more. As an example, we rarely pay attention to hardware utilization once it’s already deployed and scheduled for depreciation by our financial teams – it makes no difference to our bottom lines. The consumption model works very differently: it can be more expensive for short-term deployments, but it is a double-edged sword, though.
At Hicron Software House, it is easy for us to show how your Azure bill can be potentially reduced by 20% when compared to private cloud providers, or even other hyper scalers such as Amazon or Google Clouds.
To make the read a little more compelling for a non-technical audience, let’s apply reverse psychology and pretend that we try to make Azure look expensive.
Azure Calculator is Microsoft’s primary tool to quote Azure. It allows us to buy any virtual machines – including those from 2015 or earlier.
To make Azure expensive, we shall apply virtual machines (VMs) with the smallest possible digit in their naming convention, for example, Dv2, Ev2. These machines today are 3 generations behind, yet still available for purchase today – with pricing levels from 2015.
It is important because Gordon Moore observed that – simply put – every 2 years, the speed of computer processors double, while the price is halved (see Wikipedia). In fact, Intel just announced its 14th generation of processors, to be called Meteor Lake (link).
Today, in Microsoft Azure, the latest VM generation is represented by the number 5, so we can easily calculate that the cost of today’s VM is halved – three times. We also know that the power of VMs increased 3 times. So, it’s easy to demonstrate that the price of VMs can be up to 6 times higher than someone’s latest hardware infrastructure.
If we order takeaway food, we can drive a car that we own to pick it up. We don’t think about delivery cost, because the car is paid for. But there are other delivery options: the restaurant’s own service, Uber, a taxi, a truck – it all depends. The same applies to VMs: different VM types are designed for speed, memory, storage, high performance or generally speaking for non-production environments.
The selection of VM type doesn’t really affect our cost if deployed on our depreciation hardware – it doesn’t generate additional cost. But it does in the hyperscale clouds. So, the new way to contain our costs is to fine-tune the VM types to optimize our costs.
Of course, we shouldn’t do it to prove our Azure cost is high.
It doesn’t matter in private data centers, because running workloads on the client’s own infrastructure generates additional costs. In a consumption model though it’s different. Every organization runs a multitude of VMs used for non-production environments, seasonal bursts such as payroll, batch processing, or reporting. The point here is that traditionally, there is no saving benefit in switching them off in private clouds. So, to inflate the cost of the public cloud, we need to ensure these machines are never switched off.
Long time commitment in the cloud is called reservations, meaning a generous discount for a promise of using a specific set of virtual machines long-term. Originally, that was created to allow upfront payment for the whole term – similar to buying hardware. Today, Microsoft allows monthly payments and rarely charge penalty fees for breaking the term early. It’s easy to get caught when using this method to inflate the price, it’s the most common method to show Microsoft discounts.
Yes, it’s correct: Azure Calculator still offers the most expensive way to buy Windows and SQL licenses. Recently Microsoft introduced options to reduce the cost by using the 1 year or 3 years subscription that is similar to the reservation mechanism mentioned below. For example, it is now possible to buy a Windows Server license at approx. 30% of 3 years commitment. Luckily, this is slightly confusing for customers and a definite must when inflating Azure price.
There’s no need for a number of license types to be repurchased when moving to Microsoft Azure – as long as the customer pays Software Assurance or equivalent under a model called Hybrid Benefit. It is particularly useful for Windows and SQL Server. Also, if your customer owns older versions of Windows and SQL, it’s very important they don’t find out that Microsoft still supports their versions at no additional cost. Therefore, if you want to show that Azure is expensive, it’s critically important that your buyer doesn’t talk to a licensing specialist.
For private clouds, solution architects must prepare the hardware infrastructure for maximum performance demand – including additional space, just in case the demand is even higher within the next 3-5 years.
It is definitely possible to design Azure in a similar way and – yes – it will keep the price high. Simply ignore scaling mechanisms for vertical and horizontal ad-hoc outbursts Hopefully, our buyer won’t have an appetite to learn about it.
Everyone today guarantees 99.5% uptime guarantees, minimum – meaning offline potential of roughly 3 hours and 30 minutes a month without anyone wearing consequences – see this uptime calculator here.
The way to achieve these SLAs outside the public cloud is to build contingency plans – everything is doubled, at minimum. Microsoft calls it High Availability. For example, the way to achieve 99.9% for a SQL Server is to double the amount servers and buy an enterprise license, which is over twice as expensive as a standard edition.
The secret to keeping is that your customer may no longer need the ‘high availability’ setup to keep their 99.9 uptime guarantee, they just need to keep the Premium disk to achieve the same result (link). Neither should they ever find out about the constrained VM to limit the number of licensed cores per VM.
Don’t forget to ignore the other points from the above.
This is an old way to keep the price up: instead of going Microsoft 365, bring customer’s Office licenses under a licensing model called SPLA – just make sure it is licensed ‘per user’ – the other options are not compliant on Azure.
Not only the license is going to be expensive, with less features. You’ll also need to add virtual machines and a remote desktop service such as RDS, which is already outdated, but still expensive.
Don’t tell your customer to move their old versions of Windows and SQL Servers to Azure, they’ll get another 3 years longer and get support.
We still didn’t maximize the price fully – make sure you position ‘lift and shift’. To make it simpler, explain that it is just like ‘copy and paste’ as the easiest way to move things using automated tools and live it that way.
Your biggest enemy at this point is the Cloud Adoption Framework. So, if your customer uses phrases like ‘modernizing’ or ‘refactoring’, the easiest way to neutralize them is to show how difficult it is to redesign storage or backup solutions. Luckily, there’s a multitude of new options on Azure that are simply impossible elsewhere – with enough amount of detail in your proposal, it will be enough to create confusion.
Hyperscale clouds are ever-changing consumption models. They also come with massive research and development budgets to add new features to our service continuously. It’s important because our scarce technical resources can focus on staying up to date with the latest industry innovations, keeping our cybersecurity score high, or applying ‘best practices’ – rather than taking their time to experiment on their own.
Microsoft clouds are not limited to infrastructure alone though. Certainly, it brings a multitude of tools to accommodate for cost optimization and our role at Hicron is to demonstrate how cost-effective it can be. But really Azure only sets a foundation for what’s possible for our businesses.
Apart from Azure, it comes with a set of other types of cloud that bolt on, making future modernization alternatives easier. This includes modern work solutions, DevOps and application development, artificial intelligence, business applications and security. In fact, Microsoft is currently a leading security vendor, as per Gartner’s magic quadrant (link).
Contact Hicron Software House to build a boardroom-ready business case for Microsoft Cloud.
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