Azure pricing can be confusing...
Paying for what you use is typically a great concept, but many companies are struggling to understand how to get their best deal when running Azure workloads. In this article, we’ll discuss the three major ways to get a programmatic discount on Azure. These include Windows Server Hybrid Use Benefit, SQL Server Hybrid Use Benefit and Reserved Instances.
About a year ago, Microsoft announced a price cut on Azure which made the licensing pricing between the various licensing vehicles all similar. Then they also gave guidance to their sales teams not to discount Azure until the customer commitment was in the millions. So, it is critical to take advantage of these programmatic discounts to get the best deal possible.
Windows Server Hybrid Use Benefit
Microsoft has a relatively unknown benefit called Hybrid Use Benefit (HUB). If you already own active Windows Servers with Software Assurance (SA), you can use that license to run workloads in Azure on Windows without paying for the Windows subscription costs in Azure. For those that license Windows Servers utilizing the Data Center version, you can continue to use that Windows Server to run on-premises workloads, as well as different workloads in Azure with the same license. This allows you to double the functionality of each Windows Server Data license. What you’re basically getting is free licensing for Azure. The benefit was built so that you could move workloads to Azure and reuse the licensing, but the Data Center option has no restriction on the workload. So, the same license can properly cover two totally unrelated workloads, as long as, one is running in Azure and one is still on premises!
Functionally, this means that customers utilizing this benefit will pay the base compute rate (Linux rate) for their Azure virtual machines. Through leveraging HUB, some clients are seeing savings of up to 50% off their virtual machine costs.
A Few Important Facts:
- Both versions of Windows Server — Standard and Datacenter — license with Software Assurance are eligible for the Hybrid Use Benefit
- A Windows Server Standard Edition license cannot be used simultaneously in on-premises deployments while utilizing Hybrid Use Benefit in Azure
- Windows Server Datacenter licenses can utilize the Hybrid Use Benefit and continue to be deployed in parallel on-premises
- The HUB benefit is only available in Azure, not AWS or any other hosted offering
- Customer can create new virtual machines with the benefit, migrate existing machines, or upload custom virtual machines
- Example: A Windows Server Licensing with 16 Cores Covered with SA, you could run either two virtual machines with up to 8 cores or one virtual machine with up to 16 cores
SQL Server Hybrid Use Benefit
Fundamentally, SQL Server HUB works in a similar way to the Windows Server benefit. Existing licensing still needs active Software Assurance. However, SQL does not have the long term dual usage rights like Windows Server Data Center Edition. With SQL, Microsoft does allow customers to use both licenses both on premises and in the cloud for up to 180 days to facilitate migration. The cool part is that you can use both benefits – Windows Server and SQL Server at the same time. Thus saving additional monies.
For Azure SQL Database:
- If you have Standard edition per core licenses with active Software Assurance, you can get 1 vCore in the General Purpose service tier for every 1 license core you own on-premises
- If you have Enterprise edition per core licenses with active Software Assurance, you can get 1 vCore in the Business Critical service tier for every 1 license core you own on-premises.
- If you have highly-virtualized Enterprise edition per core licenses with active Software Assurance, you can get 4 vCores in the General Purpose service tier for every 1 license core you own on-premises. This is a unique virtualization benefit available only on Azure SQL Database.
For SQL Server in Azure Virtual Machines:
- If you have Enterprise edition per core licenses with active Software Assurance, you can get 1 core of SQL Server Enterprise edition in Azure Virtual Machines for every 1 license core you own on-premises
- If you have Standard edition per core licenses with active Software Assurance, you can get 1 core of SQL Server Standard edition in Azure Virtual Machines for every 1 license core you own on-premises
- If you don’t have Software Assurance on your Windows or SQL Servers, but still want the best price for Windows and SQL running in Azure, talk to us about CSP Server subscriptions
The idea of Reserved Instances (RI) is simple-the longer you commit to running a virtual machine (VM) in Azure, the better price you will get for the compute portion of that VM. Microsoft claims that Reserved Instances can save up to 72% over the pay as you go model when reserving for three years. A VM in Azure is comprised of three things – the operating system, any application software, and the compute. Hybrid Use for Windows covers the OS (if Windows), SQL Hybrid Use can cover the database, and Reserved Instances offers discounta on the compute.
Often, the discount for your commitment is so great that it is less expensive to buy the Reserved Instance than it is to just run the VM for 3-6 months under the Pay as You Go model. So even if you have a short-term need, you should consider Reserved Instances for cost savings. Plus, by locking in the virtual machine cost, that makes budgeting easier.
AWS has offered reserved instances for some time now, but is relatively new to Microsoft Azure, but when you combine RI’s with HUB, that is where Microsoft separates itself.
A few important facts:
- Reserved Instances are offered in 1 and 3-year terms, with 3 years offering a greater discount than a 1 year and a 1 year offering a greater discount than Pay as you go
- Billed upfront for the term of your Reserved Instance — 1 or 3 years, but they don’t automatically co-term to your existing volume license agreement, so your RI’s may extend past your expiration date
- You can also use a Reserved Instance as a way to get utilization out of your monetary commitment (if you have one on your Enterprise Agreement or Server and Cloud Enrollment Agreement) before it expires
- Reserved Instances can be exchanged for a different size VM, both up and down, and from region to region, so you will be refunded the unused time of the original RI then charged for the new RI
- You can cancel a Reserved Instance with a 12% cancellation fee
- When combining Reserved Instances with Hybrid Use Benefit, you can save up to 80% over the pay as you go price
How can Interlink help?
Interlink can help companies cut down to some real big savings by understanding the nuances of Azure licensing and the different programs—Hybrid Use Benefits for Windows, SQL and reserved instances. In addition, we will help with sizing the workloads appropriately by utilizing our Path to Azure Assessment methodology. Plus, we will work hard to find programs at Microsoft that can cover or reduce the cost of these engagements.