Understanding Azure Cost Management and Azure Advisor

As soon as you start monitoring your Azure expenses, you’ll come across both Azure Cost Management and Azure Advisor. Often, teams treat these tools as simply two different tabs to check, leading to inefficiencies and unnecessary costs. According to Turbo360’s State of Azure FinOps 2026, it appears that an average Azure environment experiences around 35% waste. Organizations lacking a FinOps practice report inefficiencies between 32% and 40%, while those with mature programs reduce waste to 15-20%. The discrepancy between these figures isn’t just about having access to free tools; it’s about using them collaboratively. Azure Cost Management explains where your money has been spent, while Azure Advisor provides actionable recommendations for improvement. In this guide, we will explore the distinct roles of each tool, their areas of overlap, and how to effectively use them together.

Key Takeaways

• Azure Cost Management serves as the reporting and control layer, providing insights into cost analysis, budgets, anomaly alerts, exports, and cost allocation. It answers the question: “Where did the money go?”
• Azure Advisor acts as the recommendation engine, identifying idle and oversized resources and suggesting reservations and savings plans. Together, these tools form a cohesive workflow.

What is Azure Cost Management?

Azure Cost Management (known officially as Microsoft Cost Management) is Azure’s no-cost, built-in service for monitoring, analysing, and controlling cloud spending across various billing accounts, management groups, subscriptions, and resource groups. Essentially, it serves as your primary resource for keeping track of your Azure expenses. Anyone with the relevant access can utilise this service.

Its scope is broader than it appears. Cost Management can access billing data like an EA enrollment or an MCA billing profile, which Azure Advisor cannot, making it the only native tool that can provide a comprehensive spending summary for an entire enrollment. Here’s what it offers:

• Cost Analysis: Break down spending by service, resource group, tags, or location, with options to toggle between actual and amortized views when reservations are considered. Explore our step-by-step Azure Cost Analysis guide for detailed navigation through each view.
• Budgets: Set spending limits with alerts for actual or forecast expenses.
• Anomaly Detection: Identify unusual spending patterns using smart views at the subscription level. To create anomaly alerts, you’ll need the Cost Management Contributor role or higher.
• Exports: Schedule detailed usage and charges data to be sent to a storage account for utilisation in Power BI or your financial analytics stack.
• Cost Allocation: Split costs across different teams effectively.
• Advisor Cost Recommendations: Access these recommendations directly within Cost Management, eliminating the need to switch between portals.

However, Cost Management primarily reflects the past and provides imminent warnings. It does not provide specific recommendations on which VMs to resize or which disks to remove—this is where Azure Advisor comes into play.

What is Azure Advisor?

Azure Advisor is another complimentary Azure service that reviews your resource configurations and usage to provide targeted recommendations aimed at reducing expenses while enhancing security, reliability, performance, and operational excellence. While Cost Management focuses on analytics, Azure Advisor offers prescriptive recommendations tailored to your deployed resources.

Recommendations are organised into five categories, aligned with the Azure Well-Architected Framework. For FinOps teams, the Cost category is particularly vital, covering:

• Shutdown and resizing recommendations for VMs and scale sets based on CPU, memory, and network usage.
• Suggestions for reservation and savings plan purchases for steady workloads.
• Identification of idle or unused resources that continue to incur costs.
• Recommendations for burstable SKUs for workloads that experience variable demands.

Each suggestion comes with an estimated monthly saving figure that captures attention during discussions. However, it’s essential to treat these estimates with caution.

Adjusting the Lookback Period

By default, Advisor evaluates a VM’s performance based on its last seven days of activity. However, you can configure it to analyse 14, 21, 30, 60, or even 90 days of data. Keep in mind that it may take up to 48 hours for the recommendations to refresh after changing the lookback period. This is particularly important for applications linked to payroll or those experiencing spikes in resource usage during month-end processing.

Understanding Advisor Score

Azure Advisor aggregates recommendations into an Advisor Score, ranging from 0 to 100%. While useful for monitoring progress, there’s a caveat. Resources that are postponed or dismissed are excluded from the score calculations, which may lead to an inflated Cost score while your actual expenses remain unchanged. Therefore, consider a rising score as a prompt to revisit dismissed recommendations rather than as concrete evidence of savings.

How Azure Cost Management and Azure Advisor Differ

Azure Cost Management highlights your expenditure and warns you about any unexpected increases, whereas Azure Advisor focuses on what changes should be made to reduce costs. To put it succinctly: Cost Management acts as the financial meter, while Advisor serves as the electrician who identifies inefficiencies.

Collaborating Between Azure Cost Management and Azure Advisor

There is a seamless connection between Azure Cost Management and Azure Advisor which enhances their usability. Within Cost Management, you can view Advisor’s cost recommendations without switching tools. Start by identifying cost troubles in Cost Management, before transitioning to Advisor for specific modifications. Microsoft clearly states that Cost Management accompanies Azure Advisor to offer cost optimisation suggestions.

Practical Steps to Use Both Tools Effectively

1. Identify an issue in Cost Management, be it a budget alert or an abnormal trend.
2. Switch to Advisor recommendations within the same scope for streamlined navigation.
3. Examine the recommendations critically to ensure they are valid and applicable.
4. Act on applicable recommendations through options like Quick Fix, resizing, or purchasing reservations.
5. Return to Cost Management to verify the impact of implemented changes.

Steps one and five revolve entirely around Azure Cost Management, whilst steps two to four centre around Azure Advisor. Both halves are crucial; neglecting either means forfeiting actionable insights or leaving recommendations untracked.

Deciding Which Tool to Use for FinOps Tasks

In general, utilise Cost Management for inquiries regarding past spending or limits on future expenses. Reserve the use of Azure Advisor for changes relating to resources:

Limitations of Azure Advisor Cost Recommendations

While Advisor’s cost recommendations provide a valuable starting point, they should not be taken as definitive answers. Potential issues include:

• Estimates often rely on retail rates, which may not reflect your contractual discounts.
• Recommendations can overlap; acting on one can affect the savings of another.
• The default seven-day lookback period may not accurately capture typical resource usage.
• Advisor fails to indicate which team owns each resource, complicating accountability.

Working Around Limitations

A practical workaround is to utilise Azure Resource Graph. Microsoft provides sample queries to summarise monthly savings based on cost recommendations across accessible subscriptions. This can help you build a framework for ownership tracking, although keep in mind that figures may still rely on retail rates.

Limitations of Azure Cost Management

Although Cost Management effectively demonstrates where your money has gone, it has its shortcomings:

• Data is typically delayed by a day, which may lead to delayed alerts for substantial spending spikes.
• Budgets do not halt spending; they merely alert you once thresholds are exceeded.
• Anomaly detection is restricted to subscription levels, complicating oversight across multiple subscriptions.
• Cost allocation is dependent upon effective tagging, and untagged spend can lead to confusion.

Example: Using Both Tools Together

In practice, you may find that Advisor’s recommended savings figure significantly decreases once adjustments for a longer lookback period, negotiated rates, and overlapping recommendations are taken into account. Here’s a hypothetical scenario involving a single production subscription:

• Setup: In the subscription of sub-ecommerce-prod, the monthly budget is set at £40,000 on an EA with a 15% discount.
• Step 1: Mid-month budget alerts trigger; projected spend shows £42,000. A cost analysis reveals that resource group rg-checkout has risen £3,100 due to six D8s_v5 VMs used for load testing.
• Step 2: Advisor presents three cost recommendations for this subscription, totaling potential savings of £5,300.
• Step 3: Upon adjusting for the 30-day lookback, retail rates, and overlapping recommendations, the savings figure drops to £3,638.
• Step 4: Using Cost Management, track the following month’s performance against this revised figure, ensuring the verification of actual savings achieved.

When to Consider More Than Native Tools

Once multiple teams share an Azure environment, using native tools alone may lead to complications. Azure Advisor cannot specify resource ownership, while Cost Management cannot suggest action steps. As a solution, consider adopting Turbo360, an Azure-native FinOps platform designed to bridge both gaps. Turbo360 offers enhanced functionalities:

• Ownership tracking: Resources are grouped according to team or project, ensuring that recommendations align with the correct stakeholders.
• Customisable recommendations: Flexibility in adjusting rightsizing thresholds for CPU and memory usage.
• Speed: Cost anomalies are flagged in real-time, providing immediate insights rather than delaying until month-end.
• Contextual support: AI-driven tools assist non-FinOps specialists in understanding and actioning recommendations.

If you’re considering the shift from native tools to a dedicated platform, our detailed comparison of Turbo360 with Azure Cost Management could help clarify your options.

Conclusion

Azure Cost Management and Azure Advisor serve different purposes, yet they complement each other beautifully. While Cost Management tracks historical expenditure, Advisor provides actionable insights on resource modifications. If used individually, you risk generating reports that are overlooked or recommendations that are unaddressed. Instead, integrate the two: spot issues in Cost Management, act on suggestions via Advisor, and return to Cost Management to confirm actual savings. Extend your lookback for VMs, recalibrate rightsizing estimates to align with your rates, and avoid treating the Cost tab totals as independent values. Properly employed, both tools become invaluable assets, and when your Azure environment expands, it might be time to consider a more comprehensive solution.

For a firsthand experience of how to optimise resource recommendations aligned with team responsibilities, consider scheduling a demo.