Calculating Chargebacks for Business Units/Projects Utilizing a Shared Azure OpenAI Instance
Azure OpenAI Service is at the forefront of technological innovation, offering REST API access to OpenAI's suite of revolutionary language models, including GPT-4, GPT-35-Turbo, and the Embeddings model series. Enhancing Throughput for Scale As enterprises seek to deploy OpenAI's powerful language models across various business units, they often require granular control over configuration and performance metrics. To address this need, Azure OpenAI Service is introducing dedicated throughput, a feature that provides a dedicated connection to OpenAI models with guaranteed performance levels. Throughput is quantified in terms of tokens per second (tokens/sec), allowing organizations to precisely measure and optimize the performance for both prompts and completions. The model of provisioned throughput provides enhanced management and adaptability for varying workloads, guaranteeing system readiness for spikes in demand. This capability also ensures a uniform user experience and steady performance for applications that require real-time responses. Resource Sharing and Chargeback Mechanisms Large organizations frequently provision a singular instance of Azure OpenAI Service that is shared across multiple internal departments. This shared use necessitates an efficient mechanism for allocating costs to each business unit or consumer, based on the number of tokens consumed. This article delves into how chargeback is calculated for each business unit based on their token usage. Leveraging Azure API Management Policies for Token Tracking Azure API Management Policies offer a powerful solution for monitoring and logging the token consumption for each internal application. The process can be summarized in the following steps: ** Sample Code: Refer to this GitHub repository to get a step-by-step instruction on how to build the solution outlined below : private-openai-with-apim-for-chargeback 1. Client Applications Authorizes to API Management To make sure only legitimate clients can call the Azure OpenAI APIs, each client must first authenticate against Azure Active Directory and call APIM endpoint. In this scenario, the API Management service acts on behalf of the backend API, and the calling application requests access to the API Management instance. The scope of the access token is between the calling application and the API Management gateway. In API Management, configure a policy (validate-jwt or validate-azure-ad-token) to validate the token before the gateway passes the request to the backend. 2. APIM redirects the request to OpenAI service via private endpoint. Upon successful verification of the token, Azure API Management (APIM) routes the request to Azure OpenAI service to fetch response for completions endpoint, which also includes prompt and completion token counts. 3. Capture and log API response to Event Hub Leveraging the log-to-eventhub policy to capture outgoing responses for logging or analytics purposes. To use this policy, a logger needs to be configured in the API Management: # API Management service-specific details $apimServiceName = "apim-hello-world" $resourceGroupName = "myResourceGroup" # Create logger $context = New-AzApiManagementContext -ResourceGroupName $resourceGroupName -ServiceName $apimServiceName New-AzApiManagementLogger -Context $context -LoggerId "OpenAiChargeBackLogger" -Name "ApimEventHub" -ConnectionString "Endpoint=sb://<EventHubsNamespace>.servicebus.windows.net/;SharedAccessKeyName=<KeyName>;SharedAccessKey=<key>" -Description "Event hub logger with connection string" Within outbound policies section, pull specific data from the body of the response and send this information to the previously configured EventHub instance. This is not just a simple logging exercise; it is an entry point into a whole ecosystem of real-time analytics and monitoring capabilities: <outbound> <choose> <when condition="@(context.Response.StatusCode == 200)"> <log-to-eventhub logger-id="TokenUsageLogger">@{ var responseBody = context.Response.Body?.As<JObject>(true); return new JObject( new JProperty("Timestamp", DateTime.UtcNow.ToString()), new JProperty("ApiOperation", responseBody["object"].ToString()), new JProperty("AppKey", context.Request.Headers.GetValueOrDefault("Ocp-Apim-Subscription-Key",string.Empty)), new JProperty("PromptTokens", responseBody["usage"]["prompt_tokens"].ToString()), new JProperty("CompletionTokens", responseBody["usage"]["completion_tokens"].ToString()), new JProperty("TotalTokens", responseBody["usage"]["total_tokens"].ToString()) ).ToString(); }</log-to-eventhub> </when> </choose> <base /> </outbound> EventHub serves as a powerful fulcrum, offering seamless integration with a wide array of Azure and Microsoft services. For example, the logged data can be directly streamed to Azure Stream Analytics for real-time analytics or to Power BI for real-time dashboards With Azure Event Grid, the same data can also be used to trigger workflows or automate tasks based on specific conditions met in the incoming responses. Moreover, the architecture is extensible to non-Microsoft services as well. Event Hubs can interact smoothly with external platforms like Apache Spark, allowing you to perform data transformations or feed machine learning models. 4: Data Processing with Azure Functions An Azure Function is invoked when data is sent to the EventHub instance, allowing for bespoke data processing in line with your organization’s unique requirements. For instance, this could range from dispatching the data to Azure Monitor, streaming it to Power BI dashboards, or even sending detailed consumption reports via Azure Communication Service. [Function("TokenUsageFunction")] public async Task Run([EventHubTrigger("%EventHubName%", Connection = "EventHubConnection")] string[] openAiTokenResponse) { //Eventhub Messages arrive as an array foreach (var tokenData in openAiTokenResponse) { try { _logger.LogInformation($"Azure OpenAI Tokens Data Received: {tokenData}"); var OpenAiToken = JsonSerializer.Deserialize<OpenAiToken>(tokenData); if (OpenAiToken == null) { _logger.LogError($"Invalid OpenAi Api Token Response Received. Skipping."); continue; } _telemetryClient.TrackEvent("Azure OpenAI Tokens", OpenAiToken.ToDictionary()); } catch (Exception e) { _logger.LogError($"Error occured when processing TokenData: {tokenData}", e.Message); } } } In the example above, Azure function processes the tokens response data in Event Hub and sends them to Application Insights telemetry, and a basic Dashboard is configured in Azure, displaying the token consumption for each client application. This information can conveniently be used to compute chargeback costs. A sample query used in dashboard above that fetches tokens consumed by a specific client: customEvents | where name contains "Azure OpenAI Tokens" | extend tokenData = parse_json(customDimensions) | where tokenData.AppKey contains "your-client-key" | project Timestamp = tokenData.Timestamp, Stream = tokenData.Stream, ApiOperation = tokenData.ApiOperation, PromptTokens = tokenData.PromptTokens, CompletionTokens = tokenData.CompletionTokens, TotalTokens = tokenData.TotalTokens Azure OpenAI Landing Zone reference architecture A crucial detail to ensure the effectiveness of this approach is to secure the Azure OpenAI service by implementing Private Endpoints and using Managed Identities for App Service to authorize access to Azure AI services. This will limit access so that only the App Service can communicate with the Azure OpenAI service. Failing to do this would render the solution ineffective, as individuals could bypass the APIM/App Service and directly access the OpenAI Service if they get hold of the access key for OpenAI. Refer to Azure OpenAI Landing Zone reference architecture to build a secure and scalable AI environment. Additional Considerations If the client application is external, consider using an Application Gateway in front of the Azure APIM If "streaming" is set to true, tokens count is not returned in response. In that that case libraries like tiktoken (Python), orgpt-3-encoder(javascript) for most GPT-3 models can be used to programmatically calculate tokens count for the user prompt and completion response. A useful guideline to remember is that in typical English text, one token is approximately equal to around 4 characters. This equates to about three-quarters of a word, meaning that 100 tokens are roughly equivalent to 75 words. (P.S. Microsoft does not endorse or guarantee any third-party libraries.) A subscription key or a custom header like app-key can also be used to uniquely identify the client as appId in OAuth token is not very intuitive. Rate-limiting can be implemented for incoming requests using OAuth tokens or Subscription Keys, adding another layer of security and resource management. The solution can also be extended to redirect different clients to different Azure OpenAI instances. For example., some clients utilize an Azure OpenAI instance with default quotas, whereas premium clients get to consume Azure Open AI instance with dedicated throughput. Conclusion Azure OpenAI Service stands as an indispensable tool for organizations seeking to harness the immense power of language models. With the feature of provisioned throughput, clients can define their usage limits in throughput units and freely allocate these to the OpenAI model of their choice. However, the financial commitment can be significant and is dependent on factors like the chosen model's type, size, and utilization. An effective chargeback system offers several advantages, such as heightened accountability, transparent costing, and judicious use of resources within the organization.
Enhanced API Developer Experience with the Microsoft-Postman partnership
Application Programming Interfaces (APIs) have emerged as the foundational technology powering application modernization. As developers move to modern applications and embrace an API-first world, an easy-to-use API management platform is the need of the hour. At Microsoft, we are on a mission to build a comprehensive and reliable API management platform that’s enabling developers to streamline and secure APIs at scale. Today, at Microsoft Ignite, the Azure API Management team is excited to announce our partnership with Postman, a leading API testing and development platform used by 20M+ developers worldwide. This partnership is aimed at both simplifying API testing and monitoring using the Postman platform for Azure API developers and making the Azure platform readily available to deploy APIs for Postman developers. “This announcement is great news for organizations that recognize APIs as fundamental business assets critical to digital transformation,” said Abhijit Kane, Postman co-founder. “By uniting the world’s top API platform and a leading cloud provider, our two companies have taken a significant step in giving customers the comprehensive set of tools they need for accelerating the API lifecycle.” Boost developer productivity and achieve faster time to market with the Azure API Management and Postman Integrated platform These integrations provide developers all the support they need to test their APIs on Postman and deploying them back on Azure. It takes away unnecessary friction and enables developers to spend more time on writing and shipping software. Let’s take a closer look at how Azure API Management platform and Postman platform integrate to offer developers a fast path to build, test, deploy and iterate on APIs. Test Azure APIs faster with an integrated Postman platform Azure API developers have instant access to the Postman API testing, monitoring, and development platform for rapid iteration on API changes. The integration support includes: Postman-initiated import from Azure API Management with the ability to import OpenAPI definitions from Azure API Management Azure API Management-initiated export of APIs into Postman using “Run in Postman” Accelerate the path to deployment for Postman tested APIs on Azure Once the APIs are designed, tested and ready to go, the integration makes it easy to deploy them on Azure. The integration support includes: Export of OpenAPI definitions from Postman to Azure API Management With over a million APIs published on Azure API Management platform today - it is a battle-hardened, production ready, and highly scaled platform that stretches from on-premises to multi-cloud. Over the past few years, Azure API Management platform has expanded to support every stage of the API lifecycle - enhancing the overall experience for API developers, consumers, operators, and policymakers. Postman partnership is making this even more frictionless, as Smit Patel, head of partnerships at Postman, said, “We’re very proud because this is Postman’s first bidirectional product alliance with a major cloud provider. Aligning with a cloud leader like Microsoft is terrific for our mutual customers and also boosts Postman’s status as the enterprise grade solution for the API-first world.” The Azure API Management team welcomes Postman to the Microsoft partner ecosystem, and together we look forward to enabling our developers embrace an API-first culture to deliver innovations faster, create new revenue streams, and generate value for their end users. Check out Azure integration docs and Postman integration docs for more details. To learn more about this news, read Postman’s press release and Postman’s blog.From Timeouts to Triumph: Optimizing GPT-4o-mini for Speed, Efficiency, and Reliability
The Challenge Large-scale generative AI deployments can stretch system boundaries — especially when thousands of concurrent requests require both high throughput and low latency. In one such production environment, GPT-4o-mini deployments running under Provisioned Throughput Units (PTUs) began showing sporadic 408 (timeout) and 429 (throttling) errors. Requests that normally completed in seconds were occasionally hitting the 60-second timeout window, causing degraded experiences and unnecessary retries. Initial suspicion pointed toward PTU capacity limitations, but deeper telemetry revealed a different cause. What the Data Revealed Using Azure Data Explorer (Kusto), API Management (APIM) logs, and OpenAI billing telemetry, a detailed investigation uncovered several insights: Latency was not correlated with PTU utilization: PTU resources were healthy and performing within SLA even during spikes. Time-Between-Tokens (TBT) stayed consistently low (~8–10 ms): The model was generating tokens steadily. Excessive token output was the real bottleneck: Requests generating 6K–8K tokens simply required more time than allowed in the 60-second completion window. In short — the model wasn’t slow; the workload was oversized. The Optimization Opportunity The analysis opened a broader optimization opportunity: Balance token length with throughput targets. Introduce architectural patterns to prevent timeout or throttling cascades under load. Enforce automatic token governance instead of relying on client-side discipline. The Solution Three engineering measures delivered immediate impact: token optimization, spillover routing, and policy enforcement. Right-size the Token Budget Empirical throughput for GPT-4o-mini: ~33 tokens/sec → ~2K tokens in 60s. Enforced max_tokens = 2000 for synchronous requests. Enabled streaming responses for longer outputs, allowing incremental delivery without hitting timeout limits. Enable Spillover for Continuity Implemented multi-region spillover using Azure Front Door and APIM Premium gateways. When PTU queues reached capacity or 429s appeared, requests were routed to Standard deployments in secondary regions. The result: graceful degradation and uninterrupted user experience. Govern with APIM Policies Added inbound policies to inspect and adjust max_tokens dynamically. On 408/429 responses, APIM retried and rerouted traffic based on spillover logic. The Results After optimization, improvements were immediate and measurable: Latency Reduction: Significant improvement in end-to-end response times across high-volume workloads Reliability Gains: 408/429 errors fell from >1% to near zero. Cost Efficiency: Average token generation decreased by ~60%, reducing per-request costs. Scalability: Spillover routing ensured consistent performance during regional or capacity surges. Governance: APIM policies established a reusable token-control framework for future AI workloads. Lessons Learned Latency isn’t always about capacity: Investigate workload patterns before scaling hardware. Token budgets define the user experience: Over-generation can quietly break SLA compliance. Design for elasticity: Spillover and multi-region routing maintain continuity during spikes. Measure everything: Combine KQL telemetry, latency and token tracking for faster diagnostics. The Outcome By applying data-driven analysis, architectural tuning, and automated governance, the team turned an operational bottleneck into a model of consistent, scalable performance. The result: Faster responses. Lower costs. Higher trust. A blueprint for building resilient, high-throughput AI systems on Azure.
Running Self-hosted APIM Gateways in Azure Container Apps with VNet Integration
With Azure Container Apps we can run containerized applications, completely serverless. The platform itself handles all the orchestration needed to dynamically scale based on your set triggers (such as KEDA) and even scale-to-zero! I have been working a lot with customers recently on using Azure API Management (APIM) and the topic of how we can leverage Azure APIM to manage our internal APIs without having to expose a public IP and stay within compliance from a security standpoint, which leads to the use of a Self-Hosted Gateway. This offers a managed gateway deployed within their network, allowing a unified approach in managing their APIs while keeping all API communication in-network. The self-hosted gateway is deployed as a container and in this article, we will go through how to provision a self-hosted gateway on Azure Container Apps specifically. I assume there is already an Azure APIM instance provisioned and will dive into creating and configuring the self-hosted gateway on ACA. Prerequisites As mentioned, ensure you have an existing Azure API Management instance. We will be using the Azure CLI to configure the container apps in this walkthrough. To run the commands, you need to have the Azure CLI installed on your local machine and ensure you have the necessary permissions in your Azure subscription. Retrieve Gateway Deployment Settings from APIM First, we need to get the details for our gateway from APIM. Head over to the Azure portal and navigate to your API Management instance. - In the left menu, under Deployment and infrastructure, select Gateways. - Here, you'll find the gateway resource you provisioned. Click on it and go to Deployment. - You'll need to copy the Gateway Token and Configuration endpoint values. (these tell the self-hosted gateway which APIM instance and Gateway to register under) Create a Container Apps Environment Next, we need to create a Container Apps environment. This is where we will create the container app in which our self-hosted gateway will be hosted. Using Azure CLI: Create our VNet and Subnet for our ACA Environment As we want access to our internal APIs, when we create the container apps environment, we need to have the VNet created with a subnet available. Note: If we’re using Workload Profiles (we will in this walkthrough), then we need to delegate the subnet to Microsoft.App/environments. # Create the vnet az network vnet create --resource-group rgContosoDemo \ --name vnet-contoso-demo \ --location centralUS \ --address-prefix 10.0.0.0/16 # Create the subnet az network vnet subnet create --resource-group rgContosoDemo \ --vnet-name vnet-contoso-demo \ --name infrastructure-subnet \ --address-prefixes 10.0.0.0/23 # If you are using a workload profile (we are for this walkthrough) then delegate the subnet az network vnet subnet update --resource-group rgContosoDemo \ --vnet-name vnet-contoso-demo \ --name infrastructure-subnet \ --delegations Microsoft.App/environments Create the Container App Environment in out VNet az containerapp env create --name aca-contoso-env \ --resource-group rgContosoDemo \ --location centralUS \ --enable-workload-profiles Deploy the Self-Hosted Gateway to a Container App Creating the environment takes about 10 minutes and once complete, then comes the fun part—deploying the self-hosted gateway container image to a container app. Using Azure CLI: Create the Container App: az containerapp create --name aca-apim-demo-gateway \ --resource-group rgContosoDemo \ --environment aca-contoso-env \ --workload-profile-name "Consumption" \ --image "mcr.microsoft.com/azure-api-management/gateway:2.5.0" \ --target-port 8080 \ --ingress 'external' \ ---env-vars "config.service.endpoint"="<YOUR_ENDPOINT>" "config.service.auth"="<YOUR_TOKEN>" "net.server.http.forwarded.proto.enabled"="true" Here, you'll replace <YOUR_ENDPOINT> and <YOUR_TOKEN> with the values you copied earlier. Configure Ingress for the Container App: az containerapp ingress enable --name aca-apim-demo-gateway --resource-group rgContosoDemo --type external --target-port 8080 This command ensures that your container app is accessible externally. Verify the Deployment Finally, let's make sure everything is running smoothly. Navigate to the Azure portal and go to your Container Apps environment. Select the container app you created (aca-apim-demo-gateway) and navigate to Replicas to verify that it's running. You can use the status endpoint of the self-hosted gateway to determine if your gateway is running as well: curl -i https://aca-apim-demo-gateway.sillytreats-abcd1234.centralus.azurecontainerapps.io/status-012345678990abcdef Verify Gateway Health in APIM You can navigate in the Azure Portal to APIM and verify the gateway is showing up as healthy. Navigate to Deployment and Infrastructure, select Gateways then choose your Gateway. On the Overview page you’ll see the status of your gateway deployment. And that’s it! You've successfully deployed an Azure APIM self-hosted gateway in Azure Container Apps with VNet integration allowing access to your internal APIs with easy management from the APIM portal in Azure. This setup allows you to manage your APIs efficiently while leveraging the scalability and flexibility of Azure Container Apps. If you have any questions or need further assistance, feel free to ask. How are you feeling about this setup? Does it make sense, or is there anything you'd like to dive deeper into?
OpenAI at Scale: Maximizing API Management through Effective Service Utilization
Harnessing Azure OpenAI at Scale: Effective API Management with Circuit Breaker, Retry, and Load Balance Unlock the full potential of Azure OpenAI by leveraging the advanced capabilities of Azure API Management. This guide explores how to effectively utilize Circuit Breaker, Retry, and Load Balance strategies to optimize backends and ensure seamless service utilization. Learn best practices for integrating OpenAI services, enhancing performance, and achieving scalability through robust API management policies.
