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Azure Reserved Instances

Microsoft have announced, as of November 17, 2017, the availability of Azure Reserved Instances. This concept has existed with Amazon AWS for some time, so it’s interesting see Microsoft now adding this to their Azure repertoire.

What is it?

Currently available only to Enterprise Agreement (EA) customers, Azure Reserved Instances (RIs) allow you to pre-purchase Azure VMs for a one or three-year term, in a single upfront payment. Microsoft say purchasing Azure in this way can result in savings of up to 72%.

How does it work?

You pick a Virtual Machine (VM) type (D4 v2 for example) and a datacentre region (UK, US etc.). You don’t need to specify whether it will be Windows or Linux upfront, that can be decided later.

Reserved Instances can be assigned at the Subscription or Enrollment level, which gives some flexibility around where the reservations are used.

Assigning instances at the Enrollment level means they can be used by anyone within your organisation, while assigning them to a specific subscription means only that group (for example the Finance dept.) can use them.

Paying for Windows Server Reserved Instances

You have 2 options:

Azure Hybrid Benefit or the newly introduced Windows Server Hourly Meter.

Azure Hybrid Benefit

If you have Windows Server licenses with active Software Assurance, you already have this benefit. The Azure Hybrid Benefit allows you to use existing volume licenses to cover the Windows Server portion of the VM, resulting, according to Microsoft, in savings of up to 40%. Combining the Hybrid Benefit with the new Reserved Instances (RI), can give savings of 82%.

Windows Server Hourly Meter

If you can’t use the Hybrid Benefit with your Reserved Instance VMs, that’s when the Hourly Meter comes into play. It will charge you for Windows Server 2016 usage while the VM is active – based on the number of cores in the VM.

Program Flexibility

Although Azure Reserved Instances require an upfront payment in total, there is flexibility to allow for program and strategy changes.

Exchanging

When you want to change the type of reservation you’ve made, you can perform an exchange. This gives a prorated refund of the remaining amount, which is then used to fund the new purchase. The new purchase can be of a different VM family and/or in a different region.

Cancelling

If it is decided that the Reserved Instance is no longer required, it can be cancelled for a prorated refund, minus a 12% cancellation fee.

Example:

£100,000 purchase

£62,000 used

Refund = £33,400

There is, however, a cancellation maximum of $50,000 per customer per year.

This is a different approach than that taken by Amazon. AWS customers instead must list unwanted Reserved Instances on a public marketplace.

Interestingly, the refund maximum and cancellation fee both match limits found within Amazon AWS too.

Availability

All VMs have Reserved Instances available, other than:

  • A-series
  • A_v2 series
  • G-series

RIs are currently available in all regions except:

  • Azure Government
  • Germany
  • China

Conclusion

Organisations with long term, stable workloads should be able to make some significant savings utilising Azure Reserved Instances. For example:

A D4 v2 Virtual Machine costs $1.306 per hour

D4v2 VM Pay As You Go 1 Year RI 3 Year RI
  $955.99 $500.54 (48% saving) $425.21 (56% saving)

In this case, an organisation could make an annual saving of $6369.36 using Azure Reserved Instances.

Further reading

 

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About Rich Gibbons

Rich has been in the world of IT and software licensing since 2003, having been a software sales manager for a VAR, a Microsoft licensing endorsed trainer, and now an ITAM analyst looking at software licensing and cloud.

A Northerner renowned for his shirts, Rich is a big Hip-Hop head, and loves travel, football in general (specifically MUFC), baseball, Marvel, and reading as many books as possible. Finding ways to combine all of these with ITAM & software licensing is always fun!

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