Provider-Managed Azure Subscriptions: Cost Control and Commitment Clarity
As a Microsoft Cloud Solution Architect supporting enterprise customers, I occasionally encounter a specific scenario where customers with an Enterprise Agreement (EA) or Microsoft Customer Agreement (MCA-E) allow a service provider (SP) to manage one or more of their Azure subscriptions via the SP’s tenant. This setup has notable implications for cost and commitment management, which I’ll explore in this article. Recommended prerequisite reading: Microsoft Cost Management: Billing & Trust Relationships Explained Scenario Overview A customer signs a contract with a service provider to outsource the management of certain resources. The customer retains full control over resource pricing and expects the usage of these resources to contribute towards their Microsoft Azure Consumption Commitment (MACC). To achieve this, the customer associates one or more Azure subscriptions with a Microsoft Entra ID tenant owned and managed by the SP. In our example, this is “Subscription B.” The SP gains full RBAC access to the subscription and its resources, while the billing relationship remains tied to the customer’s billing account (EA) or billing profile (MCA-E). Let’s have a look at the implications from both the customers and the service providers perspective: Customers perspective Cost & Pricing All cost in Subscription B that occurs because of resource usage are tied and therefore billed to the customers billing account (EA) or billing profile (MCA-E). The prices used for the usage are based on the negotiated customer price list associated with the billing account (EA) /profile (MCA-E). The Azure resource consumption of Subscription B plus any eligible Marketplace offer consumption within the subscription contributes to the MACC of the customer. Customer has full cost visibility of Subscription B via Azure Cost Analysis on the billing account/billing profile level. Commitments (Reservations / Savings Plans) Shared commitments at the billing account/billing profile level are utilized by matching resources in Subscription B. Commitments scoped to Subscription B or lower can only be purchased by the customer, if the customer has RBAC rights on the subscription and the global billing policy allows purchases for subscription owner / reservation purchasers. Service Provider Perspective Cost & Pricing The service provider is responsible for managing Subscription B’s resources and the associated costs. Subscription B’s actual and amortized cost view is limited for the service provider as they have only access at the subscription level. The service provider has no direct access to the customer price (Price Sheet) or invoice information. Commitments (Reservations / Savings Plans) The service provider can purchase commitments scoped at Subscription B or lower (resource group) if the global customer’s billing policy allows purchases for subscription owners / reservation purchasers. The associated costs of the commitment are attributed to the customer’s billing account/profile. Shared or management group scoped commitments purchased by the service provider based on their own billing account / billing profile do not apply to Subscription B. Key take aways Decoupled Ownership: Customers can separate subscription management from billing ownership, enabling flexible operational models. Cost Control: Customers retain full visibility and control over pricing, cost allocation, and commitment utilisation—even when subscriptions are managed by a service provider. Governance and Policy Alignment: Successful implementation depends on clear billing policies and RBAC configurations that align with both customer and provider responsibilities.What’s new in FinOps toolkit 12 – July 2025
This month, you’ll find support for FOCUS 1.2, autostart in FinOps hubs which can reduce your hub costs, a new page in the Cost summary Power BI report, and various small fixes, improvements, and documentation updates across the board. Read on for details.Understanding the Total Cost of Ownership
Whether you're just beginning your journey in Azure or are already managing workloads in the cloud, it's essential to ground your strategy in proven guidance. The Microsoft Cloud Adoption Framework for Azure offers a comprehensive set of best practices, documentation, and tools to help you align your cloud adoption efforts with business goals. One of the foundational steps in this journey is understanding the financial implications of cloud migration. When evaluating the migration of workloads to Azure, calculating the Total Cost of Ownership (TCO) is a crucial step. TCO is a comprehensive metric that includes all cost components over the life of the resource. A well-constructed TCO analysis can provide valuable insights that aid in decision-making and drive financial efficiencies. By understanding the comprehensive costs associated with moving to Azure, you can make informed choices that align with your business goals and budget. Here is a breakdown of the main elements that you need to build your own TCO: 1. Current infrastructure configuration: Servers: details about your existing servers, including the number of servers, their specifications (CPU, memory, storage), and operating systems. Databases: information about your current databases, such as the type, size, and any associated licensing costs. Storage: type and amount of storage you are currently using, including any redundancy or backup solutions. Network Traffic: Account for outbound network traffic and any associated costs. 2. Azure Environment Configuration: Virtual Machines (VMs): appropriate Azure VMs that match your current server specifications. This has to be based on CPU, memory, storage, and region. Storage Options: type of storage (e.g., Standard HDD, Premium SSD), access tiers, and redundancy options that align with your needs. Networking: networking components, including virtual networks, load balancers, and bandwidth requirements. 3. Operational Costs: Power and Cooling: Estimate the costs associated with power and cooling for your on-premises infrastructure. IT Labor: Include the costs of IT labor required to manage and maintain your current infrastructure. Software Licensing: Account for any software licensing costs that will be incurred in both the current and Azure environments. Once you have more clarity of these inputs you can complement your analysis with other tools depending on your needs. The Azure Pricing Calculator is well suited to providing granular cost estimation for different Azure services and products. However, if the intent is to estimate cost and savings during migrations, Azure Migrate business case feature should be the preferred approach as it will allow the user to perform detailed financial analysis (TCO/ROI) for the best path forward and assess readiness to move workloads to Azure with confidence. Understand your Azure costs The Azure pricing calculator is a free cost management tool that allows users to understand and estimate costs of Azure Services and products. It serves as the only unauthenticated experience that allows you to configure and budget the expected cost of deploying solutions in Azure The Azure pricing calculator is key for properly adopting Azure. Whether you are in a discovery phase and trying to figure out what to use, what offers to apply or in a post purchase phase where you are trying to optimize your environment and see your negotiated prices, the azure pricing calculator fulfills both new users and existing customers' needs. The Azure pricing calculator allows organizations to plan and forecast cloud expenses, evaluate different configurations and pricing models, and make informed decisions about service selection and deployment options. Decide, plan, and execute your migration to Azure Azure Migrateis Microsoft’s free platform for migrating to and modernizing in Azure. It provides capabilities for discovery, business case (TCO/ROI), assessments, planning and migration in a workload agnostic manner. Customers must have an Azure account and create a migration project within the Azure portal to get started. Azure Migrate supports various migration scenarios, including for VMware and Hyper-V virtual machines (VM), physical servers, databases, and web apps. The service offers accurate appliance based and manual discovery options, to cater to customer needs. The Azure Migrate process consists of three main phases: Decide, Plan, and Execute. In the Decide phase, organizations discover their IT estate through several supported methods and can get a dependency map for their applications to help collocate all resources belonging to an application. Using the data discovered, one can also estimate costs and savings through the business case (TCO/ROI) feature. In the Plan phase, customers can assess for readiness to migrate, get right-sized recommendations for targets in Azure and tools to use for their migration strategy (IaaS/PaaS). Users can also create a migration plan consisting of iterative “waves” where each wave has all dependent workloads for applications to be moved during a maintenance window. Finally, the Execute phase focuses on the actual migration of workloads to a test environment in Azure in a phased manner to ensure a non-disruptive and efficient transition to Azure. A crucial step in the Azure Migrate process is building a business case prior to the move, which helps organizations understand the value Azure can bring to their business. The business case capability highlights the total cost of ownership (TCO) with discounts and compares cost and savings between on-premises and Azure including end-of-support (EOS) Windows OS and SQL versions. It provides year-on-year cash flow analysis with resource utilization insights and identifies quick wins for migration and modernization with an emphasis on long-term cost savings by transitioning from a capital expenditure model to an operating expenditure model, paying only for what is used. Understanding the Total Cost of Ownership (TCO) is essential for making informed decisions when migrating workloads to Azure. By thoroughly evaluating all cost components, including infrastructure, operational, facilities, licensing and migration costs, organizations can optimize their cloud strategy and achieve financial efficiencies. Utilize tools like the Azure Pricing Calculator and Azure Migrate to gain comprehensive insights and ensure a smooth transition to the cloud.News and updates from FinOps X 2024: How Microsoft is empowering organizations
Last year, I shared a broad set of updates that showcased how Microsoft is embracing FinOps practitioners through education, product improvements, and innovative solutions that help organizations achieve more. with AI-powered experiences like Copilot and Microsoft Fabric. Whether you’re an engineer working in the Azure portal or part of a business or finance team collaborating in Microsoft 365 or analyzing data in Power BI, Microsoft Cloud has the tools you need to accelerate business value for your cloud investments.FOCUS: An open specification for cloud cost transparency
When it comes to FinOps, the data is of the utmost importance. Data is the key to understanding your cloud cost and usage patterns, and pivotal to making smart decisions about your cloud strategy and operations. This is why Microsoft is proud to be a founding member of the FinOps Open Cost and Usage Specification (FOCUS) project and why we’re dedicated to defining and evolving the specification alongside our customers, partners, and industry peers. And with FOCUS 1.0 support in Cost Management exports being announced at FinOps X 2024, you may be wondering what FOCUS is, why you should care, and where to get started. Look no further. I’ll give you a crash course in FOCUS 1.0.
