Optimizing your cloud environment with Microsoft Azure
In this article
The evidence is clear: Unmanaged sprawl has led to organizations spending more than they planned in the cloud.
In fact, the Flexera 2025 State of the Cloud report found that managing cloud spending has become a problem for 84 percent of organizations. Around 27 percent, of that spend is going to waste. That's not okay.
There's good news, however. With a few steps, organizations can bring cloud costs under control without affecting overall application performance.
What it takes to optimize your cloud environment
Cloud cost optimization begins with a change of thinking.
For many organizations, after all, moving from the data center meant replicating the same strategy, infrastructure and processes they used before, without considering the very different nature of cloud economics.
Highly variable per second billing in the cloud brings the potential for massive, unexpected cloud bills where accountability and clear policies are lacking.
Here are the 3 pillars upon which you can begin to optimize your cloud environment:
Cloud efficiency
Provision cloud resources only when you need them to improve performance and avoid unnecessary spending. Make a point of decommissioning unused or underused resources so that they stop showing up on your cloud invoice.
Accountability for cloud costs
For businesses that work across many applications, handling large volumes of data, the cost of running in the cloud can add up quickly. Cloud cost optimization takes tracking your costs, allocating them back to the right projects or business units and making smarter decisions around your spending.
Scaling for your needs
In the on-prem data center, most organizations build their data estate to anticipate and accommodate peaks in demand. In the cloud, this approach leads to wasted spend. Right sizing your cloud environment goes a long way toward optimization.
4 steps to an optimized cloud environment
To integrate those pillars into your cloud strategy, start by following these 4 steps:
Don't use it if you don't need it
In the cloud, you pay for what you use. If you're not using it, don't turn it on.
Cloud costs accrue on a metered basis, so the more you use, the more cloud costs you will accrue. It's possible to automatically schedule times to deallocate a specific resource, though, if you know it's not going to be in use. When a virtual machine (VM) is deallocated, for example, you're not paying for it, but you can reactivate it when necessary.
Because some resources may only actively run a couple of days a month, this can lead to significant savings. In fact, you can automate the provisioning of resources to be active only when a workload needs it. Or take advantage of auto-scaling to optimize resource sizing when it is most needed.
Get control over your cloud usage (and costs)
Sprawl happens when you don't have control over your cloud usage or costs. Exerting control, then, starts by understanding where you're spending your cloud resources. Continuously monitor and govern your services to stop over-allocating resources to tools that don't add value to your business.
Then put controls in place to only allow authorized provisioning of resources, based on business need. Take advantage of cost optimization options based on your forecasted needs. And apply features like auto-scale to scale cloud services up or down to right-size based on your usage.
Understand and optimize your cloud resources
There are a range of optimization techniques organizations can use to get more from their cloud performance. For instance, matching instance types and sizes to workload and capacity requirements, turning off idle instances and right-sizing instances that don't meet the workload. Understanding the options available and introducing proper governance over your cloud usage will let you begin to make optimization a part of your cloud strategy.
Keep going with a cloud governance program
To truly optimize your cloud usage, though, you can't just go through the three steps above and stop there. Cloud cost optimization isn't a "one-and-done" affair. Rather, you need to commit to a discipline of optimization, with a continuous loop of monitoring and optimizing your cloud usage. Only through full visibility into your cloud environment and the right processes in place can you continue to build new efficiencies into your cloud landscape.
Knowing how to use the optimization tools and techniques that apply to your cloud platform of choice is essential here.
Built-in optimization tools within Microsoft Azure
Microsoft has built Azure with scalability and flexibility in mind. That includes investing significant efforts into the cost management and optimization tools they offer. Together, solutions like these can help you cut costs and get more from your cloud environment.
Azure Advisor
Azure Advisor makes recommendations on how to optimize your cloud investments. It identifies resources you can shut down, points out underutilized resources and helps you right-size your environment to reduce costs.
Microsoft Cost Management
Microsoft Cost Management keeps track of cloud cost details, forecasts and reports. It continuously monitors your Azure portal, so that you can make the best spending decisions for your organization.
Autoscaling
Azure allows you to dynamically auto-scale your cloud resources based on your performance requirements. It will scale the capacity of a resource up or down depending on your needs, or add or remove instances as needed.
Reserved instances and Savings Plans
Microsoft allows you to purchase and reserve virtual machine instances with upfront one-year or three-year terms. If your organization keeps to a service catalog of specific VM sizes, this helps reduce costs by up to 72 percent compared to pay-as-you-go pricing.
Azure Savings Plans are a cost optimization offering that allow you to significantly reduce cloud spend by committing to a consistent usage level of compute services over a one- or three-year term. Unlike Reserved Instances, Savings Plans are more flexible as they automatically applying discounted rates to eligible usage across a wide range of services—including virtual machines, App Service Environments, and Azure Kubernetes Service—regardless of region, size, or operating system. This makes them ideal for dynamic workloads that still maintain a predictable baseline. By aligning your commitment with your expected usage, Azure Savings Plans can help you achieve substantial savings while retaining the agility of on-demand pricing.
Azure Spot Virtual Machines
You can use Azure unused capacity in a cost-effective manner using Azure Spot Virtual Machines. These allow non-critical workloads to benefit from inexpensive compute costs when capacity is available.
Azure Hybrid Benefit
The Azure Hybrid Benefit lets you optimize your hybrid environment by applying existing licenses to the cloud. This can save on licensing costs. For example, Microsoft reports savings of up to 76 percent on SQL server licenses compared to a standard pay-as-you-go rate.
How we help you get more out of Microsoft Azure
Our team can help you build a cloud center of excellence (CCOE) based on deep experience and Microsoft certification, including as an Azure Expert MSP.
Take advantage of our cloud governance offering, including an online dashboard that helps manage cloud costs and ongoing cost optimization management services. Azure sales experts can help you choose the best Azure programs for your needs.
Conclusion
Optimizing your cloud environment has never been more critical, with rising costs and wasted spend continuing to challenge organizations worldwide. Microsoft Azure offers the depth, flexibility, and governance capabilities needed to maximize value, reduce inefficiencies, and ensure every investment delivers measurable outcomes.
By applying best practices in cost management, performance optimization, businesses can take full advantage of Azure's evolving ecosystem. In doing so, they not only eliminate unnecessary waste but also position themselves to innovate faster, scale smarter, and thrive in an increasingly competitive digital economy.