Azure spot instance- Scaler Topics

Overview

Azure Spot Instances are a compelling option in Microsoft Azure, providing substantial cost savings of up to 90% compared to regular On-Demand instances. They are ideal for workloads with interruption tolerance, such as batch processing, data analytics, rendering, and large-scale distributed computing. These instances are particularly well-suited for tasks that can distribute work across multiple VMs to ensure overall job completion, even in the event of instance eviction. Spot Instance in Azure is also excellent for non-production environments, like development, testing, and CI/CD pipelines, where you can scale resources economically. Azure Spot Instance Advisor offers recommendations and insights for optimal usage.

What are Spot Instances in Azure?

Azure Spot Instances are a cost-saving option for running virtual machines (VMs) in Microsoft Azure. These instances provide access to unused Azure capacity at significantly reduced prices, often up to 90% less than regular On-Demand instances.

The key distinction is that Spot Instances are ephemeral and can be preempted with short notice when Azure needs the capacity for other purposes. They are most suitable for workloads that can handle interruptions, making them ideal for batch processing, data analytics, rendering, and large-scale distributed computing tasks. Azure provides tools like Azure Spot Instance Advisor to help users select the right Spot Instances and capacity pools for their workloads.

Spot Instance in Azure is suitable for workloads that can withstand interruptions and handle instance evictions gracefully. Examples include batch processing, rendering, and data analysis.
Azure Spot Instances are a cost-effective choice for large-scale, distributed computing workloads, such as Hadoop, Spark, and Kubernetes clusters. These workloads can distribute tasks across multiple VMs, ensuring that overall job completion is not affected by individual instance interruptions.
Development and testing environments can benefit from Azure Spot Instances, as you can provision more VMs for a limited budget, accelerating development cycles while staying cost-effective.
Spot Instances can be used for building, testing, and deploying applications as part of a CI/CD (Continuous Integration/Continuous Deployment) pipeline. This allows you to quickly scale up resources during testing and reduce costs when not in use.
Low-priority workloads, such as non-production systems, can run on Spot Instances. These workloads may not have strict SLAs and can leverage the cost savings provided by Spot VMs.
Azure Spot Instances are suitable for building fault-tolerant architectures. You can deploy multiple instances across different Azure Spot capacity pools to reduce the risk of simultaneous instance evictions.
Azure provides tools like Azure Spot Instance Advisor, which helps you select the right Spot Instances for your workloads. It provides historical pricing data, eviction rates, and recommendations to optimize your workload's performance and cost.
You can use Azure Spot Instances in conjunction with other Azure VM instance types to create hybrid deployments that balance cost-effectiveness with guaranteed resources.

How do They Work?

Azure Spot VMs are a unique offering within Microsoft Azure, serving as a cost-efficient option for users across various regions. The process of working with Azure Spot VMs involves a few key steps and considerations.

To initiate the utilization of Spot VMs, users are presented with multiple avenues for creation and deployment, including the Azure Portal, Azure PowerShell, Azure CLI, or Azure Resource Manager Templates. This flexibility ensures users can choose their preferred method for accessing this cost-effective resource.

Upon creating a Spot VM, users have the critical task of defining eviction policies and establishing price controls. The default eviction mode for Spot VMs is the "stopped-deallocated" state, which means that when evicted, the VM is merely paused and can be resumed later when additional compute capacity becomes available. However, users can opt to change the eviction policy to "delete," resulting in the permanent removal of the VM if eviction occurs.

Eviction of Spot VMs can transpire in two ways: based on the availability of compute capacity or in accordance with the maximum price limit determined by the user. The pricing of Azure Spot VMs is influenced by supply and demand factors; when other customers request more compute resources, the spot pricing increases. By setting a maximum price, users establish a safeguard, ensuring that their VMs will be terminated if the cost surpasses the predefined threshold.

Once deployed, Azure Spot instances operate much like standard Windows or Linux VMs, rendering them easy to manage. They function in a manner similar to pay-as-you-go or reserved instances, affording users the capacity to run a wide array of workloads that can gracefully handle interruptions. In this way, Azure Spot VMs provide a practical and economical solution for diverse computing needs in the Azure ecosystem.

Considerations

When contemplating the use of Spot VMs to reduce operational expenses, several essential factors should be taken into account:

Lack of SLA: Azure Spot VMs do not come with a Service Level Agreement (SLA). This means that users should be aware that there is no guaranteed uptime or availability assurance, making them more suitable for workloads that can tolerate interruptions.
Short Termination Notice: One critical aspect is the brevity of the termination notice. Spot VMs can be terminated with just a 30-second warning. Therefore, applications running on Spot VMs must be designed to handle sudden interruptions gracefully.
Termination Criteria: The termination of Spot VMs is determined by two primary factors: capacity availability and the maximum price you have configured. If capacity becomes constrained, your VM might be preempted. Similarly, if the spot price exceeds the limit you've set, your VM could be terminated.
Variable Capacity: The availability of Spot VM capacity can fluctuate depending on the region, VM size, and time of day. Users should consider these variations when planning and deploying workloads on Spot VMs, as it can impact workload performance and availability.

Limitations

Azure Spot Instances offer significant cost savings, but they come with certain limitations that may not make them suitable for all use cases:

Potential Interruptions: Spot Instances can be preempted with little notice if Azure needs the capacity for on-demand or reserved instances. This makes them unsuitable for applications that require continuous, uninterrupted operation.
Unpredictable Pricing: The pricing for Spot Instances is variable and can fluctuate based on supply and demand. This makes it challenging to predict exact costs, and it might not be ideal for budget-sensitive or cost-predictable workloads.
Not Suitable for Mission-Critical Workloads: Due to the possibility of interruptions, Spot Instances are not recommended for mission-critical applications, real-time systems, or services that cannot tolerate downtime.
Limited Instance Types: The Availability of Spot Instances is restricted to a subset of VM types, which may not match the specific requirements of all workloads.
Short-Term Workloads: They are better suited for short-term, stateless, or batch processing workloads rather than long-running, stateful applications.
Complex Management: Managing Spot Instances can be complex, involving bidding strategies, handling interruptions, and ensuring high availability. This complexity might be a barrier for some users.
Limited Regions: The availability of Spot Instances may vary by region, and they might not be available in all Azure regions, limiting their geographic applicability.

Pricing

Azure Spot Instances offer a cost-efficient cloud computing option for a wide range of workloads. Their pricing model is based on the concept of surplus capacity, which may vary over time. Here's a breakdown of how pricing for Azure Spot Instances works:

Variable Pricing: Azure Spot Instances come with variable pricing, making them more affordable than on-demand instances. The price fluctuates based on the supply and demand of unused Azure capacity.
User-Defined Max Price: Users specify the maximum price they are willing to pay for a Spot Instance in U.S. dollars (USD) with precision up to five decimal places. For instance, a maximum price of 0.98765 USD means you won't pay more than $0.98765 per hour for that instance.
Bid-Based System: Azure users place bids on Spot Instances, indicating the maximum price they are willing to pay. Instances are allocated to the highest bidders while prices remain below their specified max price.
No Interruption at or Below Max Price: If the current market price remains at or below your defined maximum price, your Spot Instances continue to run without interruptions.
Possible Interruptions Above Max Price: If the market price exceeds your set maximum price, your Spot Instances may be interrupted. Azure provides a 30-second eviction notice, allowing time to save work or perform a controlled shutdown.
Lower of Spot or On-Demand Price: If the current spot price surpasses your maximum price, you'll be charged the lower of the spot price or the standard on-demand price. This ensures cost-efficiency.

Azure VM Pricing Models

Azure provides a spectrum of pricing models for virtual machines (VMs), offering customers the flexibility to select the one that best aligns with their specific needs. These models encompass Azure Spot VMs, pay-as-you-go, and reserved instances, each with its set of advantages and trade-offs. The determination of which pricing model to employ hinges on your workload requirements, and it's essential to strike a balance between performance and cost efficiency. It's even possible to blend these options to suit your distinct workload dynamics, all while ensuring that the underlying compute capacity remains consistent across these models.

Azure Spot VMs:

Azure Spot VMs present an intriguing proposition, marked by the potential for substantial cost savings, often reaching up to 90% less than pay-as-you-go rates. These VMs are drawn from a surplus pool of capacity, delivering cost-efficiency. Nevertheless, this financial advantage is tempered by a caveat: Azure retains the right to reclaim these Spot VM instances with minimal notice if there's a surge in demand or if instances are required to serve reserved or pay-as-you-go customers. While Azure Spot VMs offer remarkable cost-effectiveness, they may not be the ideal choice for mission-critical, production-oriented workloads that cannot tolerate service interruptions.

Pay-as-You-Go:

The pay-as-you-go pricing model embodies a high degree of flexibility, allowing you to adjust compute resources without any long-term commitments or upfront payments. With this approach, you pay for the resources you consume, measured down to the second. While pay-as-you-go might appear more costly compared to other Azure pricing models, it shines in scenarios where unpredictable workloads demand agility. This makes it an excellent fit for mission-critical applications characterized by variable resource demands, ensuring you can swiftly adapt to changing requirements while maintaining financial control.

Azure Reserved Virtual Machine:

Azure's reserved virtual machine instances offer a different cost-efficient avenue, allowing customers to acquire compute capacity at a substantial 72% discount in comparison to pay-as-you-go pricing. This cost reduction is unlocked through a commitment of one or three years to a specific VM instance within a designated region. Reserved VMs are particularly well-suited for predictable workloads and long-term applications that necessitate uninterrupted, round-the-clock operation. This pricing model provides cost predictability and stability, making it an optimal choice for workloads with consistent resource needs over an extended duration.

Difference Between Spot VMs and Low Priority VMs

Feature	Azure Spot VMs	Azure Low-Priority VMs
Cost Savings	Offers cost savings up to 90% compared to On-Demand instances.	Provides significant cost savings, typically 60-80% less than On-Demand VMs.
Usage Intent	Best for workloads that can tolerate interruptions and are willing to trade cost for flexibility.	Suited for workloads that are not time-sensitive and can handle interruptions, like batch processing and rendering.
Pricing Model	Prices fluctuate based on Azure's available spare capacity and demand, making them highly variable.	Prices are predictable, but still lower than On-Demand instances, and they may be preempted if needed by higher-priority workloads.
Preemption	Highly susceptible to preemption. Azure can reclaim Spot VMs with very short notice when capacity demands increase.	Can also be preempted but generally with slightly longer notice compared to Spot VMs, making them suitable for short-lived tasks.
Use Cases	Suitable for fault-tolerant and distributed computing workloads like Hadoop, Spark clusters, Kubernetes, and CI/CD pipelines.	Appropriate for workloads that can tolerate interruptions, including rendering, encoding, and testing.
Capacity Pools	Can be provisioned across various capacity pools and regions for more resilience and workload distribution.	Assigned to specific low-priority capacity pools, limiting the choice of regions and potentially increasing the risk of preemption.
Price Predictability	Prices can vary significantly, making budgeting challenging. Azure Spot Instance Advisor helps predict costs and optimize usage.	Prices are relatively more predictable than Spot VMs but may still fluctuate slightly.
Spot Instance Advisor	Azure Spot Instance Advisor provides historical pricing data and recommendations for optimizing workload performance and cost efficiency.	Not as comprehensive as the Spot Instance Advisor, as it primarily assists in selecting the right instance type rather than focusing on pricing insights.
Resource Flexibility	Offers more flexibility in terms of available instance types, sizes, and regions.	May have limited instance type and region availability, depending on the chosen capacity pool.
Scaling	Can be used in conjunction with Azure Auto Scaling features to dynamically adjust the VM count based on workload demands.	Can also be integrated with Azure Auto Scaling but with limited scaling options compared to Spot VMs.

Conclusion

Azure Spot Instances are cost-effective virtual machines (VMs) that provide significant cost savings by allowing users to access surplus Azure capacity at reduced prices, suitable for interruption-tolerant workloads.
Azure Spot Instances provide access to spare Azure capacity at reduced prices. They can be preempted when needed for higher-priority workloads, making them ideal for interruption-tolerant tasks.
Considerations for Azure Spot Instances include workload interruption tolerance, capacity pool choices, and the use of Azure Spot Instance Advisor for cost optimization to ensure cost-effective and resilient operations.
Limitations of Azure Spot Instances include the potential for interruptions, limited instance type availability, and restrictions on certain types of workloads that require guaranteed resources and low-latency performance.
Azure Spot Instances pricing is based on supply and demand, fluctuating with available spare capacity. They offer significant cost savings but can vary widely, impacting budget predictability.
Azure VM pricing models include On-Demand (pay-as-you-go) for flexibility, Reserved Instances for cost savings with commitments, and Spot Instances for cost-effective, interruptible workloads with variable pricing.
Spot VMs are short-term, cost-effective Azure virtual machines (VMs) that use spare capacity. Low-priority VMs are Azure VMs with lower priority, suitable for non-critical workloads, and offer even lower costs.