When the global pandemic first set in, we spoke to many customers who have looked to accelerate their migration to cloud to either provide remote working to their employees or to expand their resources. With this comes a very different way of working, and not just for your technical teams – as many are finding out, financial management also works very differently in the cloud.
Much like Netflix, where you simply pay every month to use their service and can cancel it whenever you want, your Azure infrastructure works on what’s known as an operational cost model. This means that you use what you need and only pay for what you use.
This can create a bit of a headache for finance teams as often you may feel you’re losing control of your monthly spend when switching to this cost model – and if you’re not careful your monthly costs can start to spiral out of control. To compound the issue, cloud pricing structures can be complicated to navigate which means you could be spending more than you need to. Azure Hybrid Use Benefit is a good example of this.
Cost reduction with Hybrid Use Benefit
Most organisations with infrastructure in Azure will have virtual machines running to power their infrastructure and services, and as these VMs are powered on with their compute resources, they are consuming spend – but what if that spend is not all about compute?
When running Windows OS in Azure, we can start to take advantage of a discount programme known as Hybrid Use Benefit, or HUB for short. When you power on your Windows Azure VM, the cost of that VM is allocated, not just to the compute resources, but also to the cost of running a Windows OS licence. With HUB you can remove this cost from your Azure VM spend as long as you have an active Software Assurance agreement with Microsoft for your Windows Server OS licences, reducing your overall spend.
Think of it this way - that Netflix subscription we talked about; you wouldn’t pay for two subscriptions to watch the same TV show on your TV (think on-premises OS licencing) and device (think cloud OS licencing), so why pay for your OS licencing twice? Essentially, we’re simply avoiding paying twice for the same thing.
How does it work?
With your licencing under Software Assurance, there are certain conditions to be aware of to ensure that you apply HUB correctly.
For each existing 16-core OS licence set with active Software Assurance, it is possible to deploy up to two 8-core Azure virtual machines, or one 16-core virtual machine. Any remaining cores in the licence set cannot be used by additional virtual machines. For example, one 16-core licence set can be used by two 2-core virtual machines however the remaining 12 cores in the licence set cannot be used by a third virtual machine.
Windows Server Datacentre licences can be used on-premises in parallel with Azure virtual machines. However, Windows Server Standard licences can only be used in one location at a time or for up to 180 days of concurrent usage if that VM is being migrated from on-premises. Licences can be stacked to run larger virtual machines in Azure. For example, to run a 32-core virtual machine in Azure, two 16-core licences can be used to cover the cost of the OS.
But I’ve already built the Azure VMs?
HUB can be applied as you build your Windows-based Azure VMs, but it can also be applied to existing Windows-based VMs. In this scenario, the change and reduction in cost will happen from the moment you apply it, and if you apply it accidentally, don’t worry you can also remove it at any time.
Ok, but what does this look like in the real world?
A good question! So, let’s show what this looks like for real. Let’s take some common Azure VM sizes that are used and apply a ‘before’ and ‘after’.
As an example, a D2v3 VM size* gives us 2 vCPUs and 8GB RAM – running in UK west, 24/7. Without the Windows OS based HUB being applied (so we’re paying for everything) this VM would cost £113.20 per month for the compute as well as the OS license. With HUB enabled and eligible? £63.15 – a saving of around £50 a month.
Then we have larger workloads that are used for scenarios like heavy application usage – so let’s take that as a D16v3* VM size which gives us 16 vCPUs and 64GB RAM – same region and 24/7. Without the Windows OS based HUB this VM is costing £905.38 a month for the compute as well as the OS license, but applying the HUB if eligible gives us a significant reduction to £504.94 – a £400 a month saving!
So why the difference between the two savings? This is because HUB is percentage based of the overall VM compute cost – so it’s always worth applying it to your larger VMs first.
*VM sizes and costs based on region and PAYG pricing from March 2020. All pricing can change at any time and are shown here as examples.