With the announcement of the Microsoft Azure Reserved VM Instances (RIs), Microsoft is competing with the traditional hosted cloud providers (MSP). With this program every Total Cost of Ownership (TCO) comparison for MSP Virtual Machines (VMs) hosting, or in the public cloud, can go straight into the archive… This is why….
What are Microsoft Azure Reserved VM Instances (RIs)?
Until now, Microsoft Azure has only been able to reserve VMs based on a Pay-as-you-go model. An alternative has now been launched on this model. In a nutshell, Microsoft offers up to 82% savings off hosting of VMs when customers commit to a fixed purchase of Virtual Machines in Azure. This commitment can be 1 or 3 years.
It is more than just a cost reduction.
- Due to the upfront commitment it is much better to calculate in advance how the costs will be in 1 or 3 years.
- Priority capacity is given to the workload because it is reserved.
- There remains flexibility in the applicability of this commitment.
How high are the discounts really?
Just as with the average advertisement, it is only possible to see if this percentage is feasible. If you are charged, you will see a price difference of around 40% for 1 year and about 60% less for 3 years. As can also be seen in the above picture, the Azure Hybrid Benefits give up to 10% extra cost reduction on the total. So at 1 year, the 50% discount is realistic!
Microsoft is going to take the battle with the MSP’s to a higher level. This is going to be a race that will not only set the established order sharp, but will seriously challenge it.
How do you as an organization guarantee that you will not pay too much?
In one word ‘advice’. The number of choices for customers is getting bigger and more complex by the day. This flexibility creates opportunities but also risks. This makes it very important to set up a cloud strategy and to get advice on this. You should think about a Cloud Coach 🙂 (just give me a ping)
Some examples why this is important:
- What possibilities does the (Public) Cloud offer?
- Which workloads can be moved to the Public Cloud and which are not?
- How does GDPR play a role in the Cloud Strategy?
- How do you ensure that the budgets are spent optimally and disinvestment’s are prevented in advance wherever possible?
- Which services are needed in addition to the VMs hosting?
Many of these questions must be answered before the services can be taken. With a good strategy and the arrival of the new Microsoft Azure service, a new door has been opened to significantly reduce costs and ensure flexibility in the future.
Useful links for more information
Azure Reserved VM Instances – Calculator
Announcement Azure reserved VM instances