Microsoft Solutions Partner insights: What are Azure reservations, which systems qualify and how to mitigate risks – this is how to cut your Azure costs for better cloud spend in South Africa.

Cloud costs creeping up?

You’re not alone: 82% of IT managers cite managing cloud spend as a top priority. And currency volatility isn't helping us here in South Africa: Azure costs climbed by 15% in 2022, another 12% in 2024 to align with currency fluctuations (we, of course, buy in dollars!) and a further 5% in 2025 for most enterprise-level solutions.

We’re often powerless against rising Azure costs in SA. With its seamless integration with existing office and dev tools, strong hybrid support and ability to re-use licenses and local hosting, making it a natural POPIA-compliance fit, Microsoft Azure (as opposed to Google or AWS cloud) is a natural cloud computing option for established businesses here in SA – especially regulated Health, Finance, Government, etc. industries.

But what if you could cut those cloud costs by up to 72%, without re-architecting a single system?

According to Kohde’s Competency Lead: Software Engineering, Richard Bailey, that’s exactly what Azure Reservations offer — a powerful way for IT teams to cut Azure costs by committing to predictable workloads.

Here’s how it works:

What Are Azure Reservations?

Azure Reservations are Microsoft’s way of rewarding long-term commitment. Instead of paying month-to-month for compute or database services, you pre-commit to using those resources for 1, 3, or even 5 years — and in return, Microsoft gives you a substantial discount on Azure costs.

“These aren’t new resources, you’re reserving what you already use; just locking in a better rate. One client working with Kohde dropped their VM spend from R20,000/month to R3,700/month by reserving a single machine — a 72% cloud cost cut for a system they were already running." - Richard Bailey

Which Systems Qualify for These Azure Savings?

Not everything in Azure is eligible, but many of the workhorse systems most IT environments rely on do qualify: Virtual Machines (e.g., D-series, B-series, E-series), SQL Databases (on specific pricing tiers), app services and select storage and networking services.

Lower-tier or consumption-based services, like SQL S0 tiers, Azure Functions on the free plan or log analytics, typically don’t qualify.

“Basically, if your systems are on all the time or you have predictable usage patterns, reservations are a perfect fit”, says Richard.

How Much Can Azure Reservations Actually Save You?

It depends on the term length and the specific service, but real-world Azure cost savings are often substantial: Three-year-plus commitments unlock the biggest discounts (up to 72%). One-year terms offer more flexibility with lower discounts, and there are monthly or upfront billing options available at smaller discounts.

In one case, a SQL reservation alone saved a Kohde client R7,000/month in cloud costs, freeing up budget for new development work.

What About the Risk of Long-Term Commitment?

IT managers are understandably cautious about locking into contracts, especially when uptime and stability are at stake. Early cancellation could incur penalties or even require you to settle the full amount owing on the contract (exact policy depends on how you purchase — via Microsoft or a Cloud Solutions Partner [CSP] like Access).

But Microsoft does allow you to exchange reservations, so they’ll recalculate costs if you scale up or down. The other option is, of course, monthly billing, but then your discounts are reduced.

“Timing does matter, though”, says Richard. “Activating a reservation mid-month charges the full month upfront, so it’s best to plan around billing cycles.”

When Do Azure Reservations Make Sense?

Azure Reservations are ideal if:

• You have workloads that run 24/7 (e.g., prod VMs, critical SQL instances)
  
• You’ve been on Azure long enough to see usage patterns
  
• You want to reduce operating expenses (OPEX) without risking system stability
  
• You’re working with a CSP or partner who can help navigate the activation and exchange process

If your current cloud costs feel unpredictable — or your CFO’s asking questions — it’s worth exploring.

Want Help Reducing Azure Costs?

At Kohde, we’re a Microsoft Solutions Partner, and we’ve helped companies like African Unity and others activate Azure Reservations with zero downtime and immediate cost savings. We’ll review your current usage, identify where reservations make sense, and handle the technical side so you don’t need to worry about missed steps or unexpected bills.

To see how much you could save, chat with Richard and the team.