Cost Optimization for SAP on Azure
Reduce SAP on Azure costs with Reserved Instances, Savings Plans, right-sizing, non-production snoozing with Automation runbooks, constrained vCPU VMs for SAP licensing, Azure Hybrid Benefit, and Cost Management tools.
Making SAP affordable
🔧 Aisha opens the cost report. “TradeCorp’s SAP environment costs over 50,000 USD per month — production HANA, application servers, non-production systems, storage, networking, and backups. Carlos wants to cut that by 30 percent without impacting performance or availability.”
Carlos confirms. “The CFO is asking hard questions. We need a cost optimization plan that the finance team can understand.”
Think of it like reducing your household electricity bill.
You can negotiate a fixed-rate contract (Reserved Instances) instead of paying variable rates. Turn off lights in rooms you are not using (snooze non-prod VMs). Replace old appliances with energy-efficient ones (right-size VMs). Use a smart meter to see where the money goes (Cost Management). And if you have solar panels from another house (Windows Server licenses), bring them with you (Hybrid Benefit). Each saves a bit — together they save a lot.
Reserved Instances and Savings Plans
| Feature | Reserved Instances (RI) | Savings Plans |
|---|---|---|
| Commitment | Specific VM size and region | Hourly compute spend (any VM size/region) |
| Discount | Up to 72 percent (3-year) | Up to 65 percent (3-year) |
| Flexibility | Exchange or cancel with restrictions | Automatically applies to cheapest eligible resource |
| Best for | Production SAP VMs that will not change size | Dynamic workloads or VMs that may be resized |
| Term | 1-year or 3-year | 1-year or 3-year |
| SAP recommendation | HANA production VMs (M-series — stable size) | Application servers (may scale up/down) |
🔧 Aisha calculates. “Our production HANA M192ms will not change for at least 3 years. That is a perfect fit for a 3-year Reserved Instance — saving us about 60 percent on compute. The application servers might be resized as user count changes, so Savings Plans give us more flexibility there.”
Exam tip: RI for stable, Savings Plans for dynamic
The exam tests whether you know when to recommend Reserved Instances vs Savings Plans. The key: RI locks you to a specific VM size for maximum discount. Savings Plans commit to a spend level with flexibility to change VM sizes. For SAP HANA (stable size), RI is ideal. For app servers (may scale), Savings Plans work better.
Right-sizing with monitoring
Right-sizing means matching VM resources to actual workload demands:
- Collect data — use AMS and Azure Monitor to track CPU, memory, and I/O utilization over 30+ days
- Identify over-provisioned VMs — if a VM consistently uses less than 50 percent CPU and 60 percent memory, it may be too large
- Check Azure Advisor — Advisor flags under-utilized VMs with specific resize recommendations
- Validate with SAP sizing — before resizing, verify the smaller VM still meets SAPS requirements
- Resize during maintenance — resizing requires VM deallocation (brief downtime)
Right-sizing caution for HANA
Never right-size HANA VMs based on CPU alone. HANA is memory-bound — even if CPU utilization is low, the VM needs enough memory for the entire database plus overhead. Right-sizing application servers is safer because they are compute-bound and can be validated against SAPS benchmarks.
Snoozing non-production VMs
Non-production SAP systems (dev, QA, training) often run 24/7 but are only used during business hours. Snoozing saves 50-70 percent on these VMs.
Azure Automation runbooks:
- Schedule start/stop operations based on business hours
- Tag VMs with schedule groups (e.g., “business-hours-nz” for 8 AM to 6 PM NZST)
- Runbooks can stop SAP services gracefully before VM deallocation
- Deallocated VMs incur no compute charges (only disk storage)
🔧 Aisha sets up the schedule. “TradeCorp’s dev and QA systems now run 10 hours a day instead of 24. That is a 58 percent savings just from snoozing. And weekends? Completely off.”
SAP licensing optimization
SAP licenses can be a bigger cost than Azure infrastructure. Two Azure features help:
Constrained vCPU VMs (covered in Domain 2) — same memory, fewer active cores. SAP licenses that charge per-core cost less. Example: M64-32ms has 32 cores instead of 64, with the same 1.7 TB memory.
Azure Hybrid Benefit (AHUB) — if TradeCorp owns Windows Server or SQL Server licenses with Software Assurance, those licenses can be reused on Azure VMs. This eliminates the Windows/SQL license cost from the Azure bill (up to 40 percent savings on Windows VMs).
Storage optimization
Storage costs add up across a large SAP landscape:
- Right-tier storage — use Standard SSD for non-production instead of Premium SSD
- Delete orphaned disks — VMs leave behind unattached disks when deleted
- Premium SSD v2 — pay for actual IOPS/throughput instead of over-provisioning capacity
- Archive tier for old backups — move backups older than 90 days to cheaper tiers
- Review ANF tier — use Standard ANF for non-production shared storage
Azure Cost Management
Azure Cost Management provides SAP cost visibility:
- Cost analysis — break down costs by resource group, tag, or meter
- Budgets — set spending limits with alerts at 80 percent, 90 percent, 100 percent thresholds
- Cost allocation — allocate shared costs (networking, Bastion) across SAP SIDs
- Exports — automated cost reports for Carlos’s finance meetings
Knowledge check
TradeCorp's production HANA M192ms VM will run for at least 3 years. Which cost commitment gives the deepest discount?
Carlos wants to reduce non-production SAP costs by 50 percent without deleting any systems. What should Aisha implement?
TradeCorp has existing Windows Server licenses with Software Assurance. How can Aisha reduce Azure costs for Windows-based SAP application servers?
Summary
You now have a comprehensive cost optimization toolkit: Reserved Instances for stable HANA VMs, Savings Plans for dynamic app servers, right-sizing based on monitoring data, snoozing non-production during off-hours, constrained vCPU for SAP licensing, Hybrid Benefit for Windows licenses, storage optimization, and Cost Management for visibility. Together these can reduce SAP Azure costs by 30-50 percent.
Next and final module: SAP operations lifecycle — the ongoing care and feeding of SAP systems on Azure.
🎬 Video coming soon