Financial Management Migration

Microsoft Reservations Offer Customers Enhanced Flexibility and Choice

Reservations, also referred to as Reserved Instances, are regarded as one of the most significant ways to save money in the cloud. They allow users to make a commitment to utilize specific resources for a 1 or 3-year term, in return for a discount on their compute costs. 

As a refresher…

In November 2017, Microsoft joined the reservation game and released Azure Reserved Virtual Machine (VM) Instances. Reservations apply to a deployed resource based on attributes. Some attributes (deployment type, performance tier, etc.) will vary by resource, but all reservations have a subscription, scope, and term of 1 or 3 years. The subscription, otherwise known as the payment method, includes a Microsoft Enterprise Agreement, pay-as-you-go rates, or payment through a Cloud Solution Provider (CSP). The reservation scope narrows the benefit of the reservations to either a single resource group, a single subscription, or shared across more than one subscription. 

Microsoft’s reservations initially took a simplistic approach in order to drive customer adoption and have since evolved to provide customers with greater flexibility and purchasing options. For example, reservations used to be available as an All Upfront commitment option and this September they became available as a monthly payment. Not only that, but Microsoft has released additional reservations including SQL Database reserved capacity, Cosmos DB reserved capacity, and SQL Data Warehouse reserved capacity. 


To further extend the reservation savings, Azure users can take advantage of the Microsoft Hybrid Benefit which is a pricing discount for customers who have existing on-premises licenses with Software Assurance. This is applicable to Virtual Machines and SQL Databases, increasing the potential savings to up to 80%.

Managing Azure Reservations

Microsoft has tried to make the reservation management process as straightforward as possible by giving Azure customers the flexibility to:

  • Change the scope (e.g. single subscription to shared)
  • Split reservations to apply to multiple subscriptions
  • Exchange for another region, deployment type, performance tier, or term as needed
  • Cancel at any time for an adjusted refund

The only caveat is that you must have owner access on the Reservation Order to exchange or refund an existing reservation, unless you add additional users to roles on the order. 

Despite Microsoft’s efforts to reduce the complexity of managing reservations, it’s still a manual and time-consuming process. Planning reservation purchases requires extensive analysis of your existing utilization and leaves you spending a lot of time in spreadsheets. Not only that but post-purchase you’ll have to continuously monitor the resources to ensure a positive return on your investment and eliminate waste. CloudHealth takes the hassle out of Reserved Virtual Machine Instance management by enabling you to: 

  • Easily model out reservation purchases to understand the ROI and make the best decisions
  • Keep an eye on underutilized reservations you can exchange or cancel
  • Identify areas with high on-demand usage which indicate opportunities for additional savings with reservations
  • Stay on top of expiring reservations