What is Azure On-Demand Capacity Reservations?

It's no secret that businesses need to be agile and adaptable. One of the key aspects of this is ensuring that your infrastructure can handle the demands of your operations. This is where Azure’s On-demand Capacity Reservation comes into play.

Azure’s On-demand Capacity Reservation is a feature that allows you to reserve compute capacity in an Azure region or an Availability Zone for any duration of time. Unlike Reserved Instances, you don't have to sign up for a 1-year or a 3-year term commitment. You can create and delete reservations at any time and have full control over how you want to manage your reservations.

Understanding the Basics

When you create a Capacity Reservation, the resources can be used immediately. The capacity is reserved for you until you delete the reservation. Each reservation has some basic properties that are always defined at the time of creation:

• VM size: Each reservation is for one VM size. For example, Standard_D2s_v3.
• Location: Each reservation is for one location (region). If that location has availability zones, then the reservation can also specify one of the zones.
• Quantity: Each reservation has a quantity of instances to be reserved.

To create a Capacity Reservation, these parameters are passed to Azure as a capacity request. If Azure doesn't have capacity available that meets the request, the reservation deployment fails. Your deployment fails if you don't have an adequate subscription quota. Request a higher quota or try a different VM size, location, or zone combination.

Once Azure accepts your reservation request, it's available for VMs with matching configurations. To consume Capacity Reservation, the VM has to specify the reservation in its properties. Otherwise, the Capacity Reservation isn't used. One benefit of this design is that you can target only critical workloads to reservations and other non-critical workloads can run without reserved capacity.

Benefits of Capacity Reservation

Azure’s On-demand Capacity Reservation comes with a host of benefits that make it a valuable tool for businesses. Some of these benefits include:

1. Availability: Once deployed, capacity is reserved for your use and always available within the scope of applicable SLAs.
2. Flexibility: Can be deployed and deleted at any time with no term commitment.
3. Cost-effective: Can be combined automatically with Reserved Instances to use term commitment discounts.

SLA for Capacity Reservation

Understanding the Service Level Agreement (SLA) for Capacity Reservation is crucial. Any claim against the SLA requires calculating the Minutes Not Available for the reserved capacity.

For example, suppose an On Demand Capacity Reservation has a total Capacity of five Reserved Units. If the deployment of VMs encounters failures resulting in two Reserved Units accumulating Minutes Not Available, this downtime will impact the calculation of Service Credit.

The Percentage Uptime is calculated, and if it falls below the threshold, the Reserved Unit qualifies for Service Credit. This mechanism ensures that you are compensated for any downtime that might occur.

Limitations and restrictions

Despite its advantages, it's also important to note the limitations and restrictions of Azure’s On-demand Capacity Reservations. These include:

• Creating capacity reservations requires quota in the same manner as creating virtual machines.
• Creating capacity reservation is currently limited to certain VM Series and Sizes.
• Support for some VM series isn't currently available.
• Only the subscription that created the reservation can use it.
• Reservations are only available to paid Azure customers. Sponsored accounts such as Free Trial and Azure for Students aren't eligible to use this feature.

These limitations emphasize the need for proper planning and understanding of your business needs before implementing Capacity Reservations.

Pricing and Billing

One of the most critical aspects of any service is its pricing structure. With Azure On-demand Capacity Reservations, you are billed based on the underlying VM size that you've reserved. For instance, if you create a reservation for 10 D2s_v3 VMs, you'll be billed for 10 D2s_v3 VMs, whether the reservation is being used or not.

Once you deploy a D2s_v3 VM and specify the reservation property, the Capacity Reservation gets used. At this point, you pay for only the VM and not the Capacity Reservation. Both used and unused Capacity Reservations are eligible for Saving Plan and Reserved Instances term commitment discounts. This flexible pricing model makes it a cost-effective solution for organizations.

Difference between On-demand Capacity Reservation and Reserved Instances

While both On-demand Capacity Reservations and Reserved Instances are applicable to Azure VMs, they differ in several ways:

• Term: On-demand Capacity Reservations do not require a term commitment and can be created and deleted as per customer requirements. Conversely, Reserved Instances necessitate a fixed term commitment of either one year or three years.
• Billing discount: On-demand Capacity Reservations are charged at pay-as-you-go rates for the underlying VM size, while Reserved Instances offer significant cost savings over pay-as-you-go rates.
• Capacity SLA: On-demand Capacity Reservations provide a capacity guarantee in the specified location (region or availability zone), whereas Reserved Instances do not provide a capacity guarantee.
• Region vs Availability Zones: On-demand Capacity Reservations can be deployed per region or per availability zone, while Reserved Instances are only available at the regional level.

Working with Capacity Reservation

All reservations are created and managed as part of a Capacity Reservation Group. This group specifies the Azure location and sets the region in which all reservations are created. It also sets the eligible zones.

To consume Capacity Reservation, specify the Capacity Reservation Group as one of the VM properties. If the group doesn’t have a reservation matching the size and location, Azure returns an error message. The quantity reserved for reservation can be adjusted after the initial deployment by changing the capacity property.

Capacity Reservation Lifecycle

When a reservation is created, Azure sets aside the requested number of capacity instances in the specified location. You can track the state of the overall reservation through various properties such as capacity, virtualMachinesAllocated, and virtualMachinesAssociated.

The Capacity Reservation exists until explicitly deleted. To delete a Capacity Reservation, first dissociate all the VMs in the virtualMachinesAssociated property. Once disassociation is complete, the Capacity Reservation can be deleted, and you will no longer be billed for it.

Frequently Asked Questions

• What’s the price of on-demand Capacity Reservation?

The price of your on-demand Capacity Reservation is the same as the price of the underlying VM size associated with the reservation. You'll be charged for the VM size you selected at pay-as-you-go rates, whether the VM has been provisioned or not.

• Will I get charged twice, for the cost of on-demand Capacity Reservation and for the actual VM when I finally provision it?

No, you only get charged once for on-demand Capacity Reservation.

• Can I apply Reserved Virtual Machine Instance (RI) to on-demand Capacity Reservation to lower my costs?

Yes, you can apply existing or future RIs to on-demand capacity reservations and receive RI discounts. Available RIs are applied automatically to Capacity Reservation the same way they're applied to VMs.

• What is the difference between Reserved Virtual Machine Instance (RI) and on-demand Capacity Reservation?

Both RIs and on-demand capacity reservations are applicable to Azure VMs. However, RIs provide discounted reservation rates for your VMs compared to pay-as-you-go rates as a result of a 1-year or 3-year term commitment. Conversely, on-demand capacity reservations don't require a commitment. You can create or cancel a Capacity Reservation at any time.

• Which scenarios would benefit the most from on-demand capacity reservations?

Typical scenarios include business continuity, disaster recovery, and scale-out of mission-critical applications.

Azure On-demand Capacity Reservations offer a flexible and reliable solution for businesses to manage their infrastructure needs. By understanding its features, benefits, and limitations, organizations can leverage this service to ensure that their critical workloads always have the necessary capacity.