Finding the Best : Azure Savings Plan vs. Azure Reservations

Vijay Borkar (VBCloudboy)
5 min readJul 9, 2024

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Identify workload patterns that best align to savings options…

There is always a big concern to Cloud Architects that which option will be the better choice to go with… when it comes to Azure Reserved Instances OR Azure Savings Plan.

So here are my few cents on the latest findings, which will help you to get more clarity on the both the offerings. Let me start with a story with a fictitious company and give you more clearer picture about both service offerings.

Story-1: Transforming IT Operations with Azure Savings Plan

In the bustling city of Innovatech , the IT department of a leading global enterprise, TechSolutions, was facing mounting pressure to optimize costs while maintaining high performance and flexibility. The team, led by CTO Alex, decided to explore the Azure Savings Plan for Compute to address their diverse needs.

  1. Centralized Budgeting and Procurement : Alex and the finance team were thrilled with the centralized budgeting and procurement capabilities of the Azure Savings Plan. By committing to a fixed hourly spend for one year, they could streamline their budgeting process, ensuring predictable costs and simplifying procurement. This allowed them to allocate resources more efficiently and avoid unexpected expenses.
  2. Dynamic Workloads : TechSolutions operated on a global scale, with teams working around the clock. The dynamic workloads, especially the follow-the-sun model, required a flexible and cost-effective solution. With the Azure Savings Plan, they could seamlessly manage their compute resources across different time zones, optimizing costs while ensuring that their applications ran smoothly 24/7.
  3. Actively Evolving IT Roadmap: As TechSolutions continued to innovate, their IT roadmap was constantly evolving. The Azure Savings Plan provided the flexibility they needed to adapt to changing requirements. Whether they were scaling up for a new project or adjusting resources for ongoing initiatives, the plan allowed them to stay agile and responsive to business needs.
  4. Automated Cost Optimization Across Multiple Services: One of the most significant benefits of the Azure Savings Plan was the automated cost optimization across multiple services. By leveraging Azure’s intelligent cost management tools, TechSolutions could automatically allocate their committed spend to the most cost-effective resources. This not only reduced manual intervention but also ensured they were getting the best value for their investment.

By implementing the Azure Savings Plan for Compute, TechSolutions transformed their IT operations, achieving significant cost savings while maintaining the flexibility and performance needed to drive innovation. Alex and the team could now focus on strategic initiatives, confident that their IT infrastructure was optimized for success.

Azure savings plan for compute : Most flexible savings for dynamic workloads while accommodating for planned or unplanned changes

Story-2 : Streamlining IT Costs with Azure Reserved Instances.

In the vibrant city of Techville, the IT department of a mid-sized enterprise, InnovateCorp, was on a mission to optimize their cloud spending. Led by CIO Emma, the team decided to explore Azure Reserved Instances to address their specific needs.

  1. Distributed Budget Management : InnovateCorp had a unique structure with multiple departments managing their own budgets. Azure Reserved Instances provided the perfect solution for distributed budget management. Each department could purchase reserved instances based on their specific requirements, ensuring cost predictability and accountability. This decentralized approach allowed each team to manage their own resources while contributing to overall cost savings.
  2. No Planned Changes to IT Architecture: Emma and her team had a stable IT architecture with no major changes planned in the near future. Azure Reserved Instances were ideal for this scenario, as they offered significant cost savings for long-term, predictable workloads. By committing to one- or three-year terms, InnovateCorp could lock in lower prices and maximize their return on investment without worrying about frequent architectural changes.
  3. Preference for Manual Cost Optimization: The IT team at InnovateCorp preferred a hands-on approach to cost optimization. With Azure Reserved Instances, they could manually select and manage their reserved instances, tailoring their strategy to match their specific needs. This level of control allowed them to fine-tune their cost optimization efforts, ensuring they were always getting the best value for their money.
  4. Price Sensitive: As a price-sensitive organization, InnovateCorp was always on the lookout for ways to reduce expenses. Azure Reserved Instances offered substantial discounts compared to pay-as-you-go pricing, making it an attractive option for their budget-conscious approach. By carefully planning their reserved instance purchases, they could achieve significant savings while maintaining the performance and reliability of their IT infrastructure.

By implementing Azure Reserved Instances, InnovateCorp successfully streamlined their IT costs, achieving substantial savings while maintaining control and flexibility. Emma and her team could now focus on driving innovation and growth, confident that their cloud spending was optimized for success.

Azure Reserved Instances : Greatest cost savings for stable, predictable workloads with no planned changes

Now the Comparison!

# Considering the savings from PAYG model

→ Azure savings plan for compute can save up to 65%

→ Azure Reserved Instance can save up to 72%

# If we see the commitment required before opting these options.

→ In Azure Savings plan you can easily spend a fixed hourly dollar amount on compute services collectively.

→ In Azure Reserved Instances it depends on usage of a specific virtual machine type in a particular Azure region

# How we can apply savings..?

→ In Azure Savings plan you can apply across participating services globally, up to the hourly commitment

→ In Azure Reserved Instances you can apply directly to the identified compute service in a particular region.

# While choosing these plans whats the ideal duration..?

→ Both Azure Savings plan & Azure Reserved Instances comes with 1 or 3 year term plan.

# What is the payment options available?

→ In both Azure Savings plan & Azure Reserved Instances you can make upfront or monthly payment.

# How about canceling these Plan? will I be charged..?

→ In Azure Savings plan you cannot do an early cancellation.

→ In Azure Reserved Instances you can cancel or repurchase or pay an upfront payment as penalty one time of $50,000 USD.

References: If you are still interested to learn and understand it in more details, do refer the links shared below as a video guidance to know the service in detail.

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Vijay Borkar (VBCloudboy)

Assisting Microsoft partners in elevating their technical capabilities in AI, Analytics, and Cybersecurity.