Why Reserved Instances Fail to Deliver for Most Enterprises

The InfraEdge | A CloudLattice Publication

This article outlines how Azure Reserved Instances often fail to deliver savings at enterprise scale—not due to technical flaws, but because of misalignment across engineering, finance, and procurement—and how CloudLattice helps organizations manage RI strategy as part of a smarter, architecture-driven cost control model. If you are already using Microsoft Azure to host computing infrastructure, this article may be of help. This is with the assumption that you do not have capacity within your environment to host your own workloads, or there is a net benefit regarding savings on Microsoft licensing.

It happens quietly, often behind the scenes. An enterprise makes a well-intentioned move to save money on Azure by purchasing Reserved Instances (RIs). The math is simple: commit to a one- or three-year term, and save up to 72% compared to pay-as-you-go pricing. It is a compelling offer.

And yet, for many large organizations, those savings never fully materialize. In fact, RIs can unintentionally become a source of waste—locking in unused capacity, distorting budget forecasts, and leaving engineering teams handcuffed by rigid infrastructure commitments.

So, what goes wrong?

The Issue Is not the Tool—It is the Disconnect

Azure Reserved Instances are well-designed. Microsoft’s documentation makes that clear: shared scopes allow flexibility across subscriptions, size-flexible SKUs enable vertical scaling, and the potential for upfront discounts is substantial.

But RIs do not exist in a vacuum. Their effectiveness depends entirely on the organization’s ability to plan, align, and adapt across three very different but interconnected functions: engineering, finance, and procurement.

Too often, we see scenarios like these:

• Engineering resizes VMs or shifts regions to meet performance needs, unintentionally invalidating RI coverage.

• Procurement teams purchase RIs based on peak usage instead of normalized workload trends.

• Finance tracks costs in aggregate, missing gaps in RI utilization because there's no clear ownership or accountability.

  
  

This is not a technical failure. It is a structural one.

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The Pitfalls of Siloed Decision-Making

In our work, we have identified several recurring pitfalls that large enterprises face with RIs:

1. Buying based on current state, not future change

   RI commitments don’t flex easily with workload shifts. If you commit to the wrong VM series or region, rebalancing requires manual intervention and occasionally service disruption.

   
   

2. Lack of governance around scope and spend

   Many teams do not use shared scopes, missing the opportunity to spread benefits across workloads. Others fail to set up alerts or dashboards that highlight RI underutilization.

   
   

3. No feedback loop between cost and architecture

   Without a system to track the impact of architectural changes on RI coverage, finance and engineering teams operate blind to each other’s decisions.

   
   

And perhaps most importantly:

4. No one is accountable for the inefficiency.

   
   

The Fix Is not Buying More—It is Managing Smarter

At CloudLattice, we believe Reserved Instance strategy is really infrastructure strategy. You cannot bolt it on. It must be embedded in the way you design, deploy, and evolve your cloud environment.

We help clients:

• Analyze real usage patterns across time using Azure Resource Graph and Cost Management APIs.

• Match workload behavior to eligible VM SKUs that maximize RI flexibility.

• Scope RIs across the right billing context to balance savings with agility.

• Build alerts and automated dashboards that track utilization, gaps, and opportunities.

• Rebalance RI portfolios quarterly, adapting to business needs.

  
  

It is not about quick wins. It is about predictable cloud spend without sacrificing innovation.

A Word About Us

CloudLattice is a new firm. We do not have logos to show or case studies to reference (yet). But we are building something grounded in real engineering experience and an honest view of how enterprises use the cloud.

If you are a technology leader, a financial manager, or an engineer trying to make RIs work better in your environment—we would love to talk. Our goal is to bring clarity at the intersection of architecture, automation, and financial control.

Ready to see where your Reserved Instance strategy stands?

Book a no-pressure, 30-minute strategy call with CloudLattice. We will review your RI usage trends and help identify what’s working, what’s not, and what you can do about it.

Schedule your free consultation

About CloudLattice

CloudLattice empowers enterprise finance and technology leaders to scale governance across Microsoft Azure, and hybrid computing infrastructure. Led by Stuart Goings, we deliver hands-on implementation of policy automation, FinOps best practices, and cross-cloud reporting designed to reduce chaos and improve control.

Led by enterprise cloud computing consultant Stuart Goings, CloudLattice solutions that scale with complexity — and make governance practical again.

A Note on Trust:

The practices, frameworks, and examples described in this publication reflect the expertise and methodology developed by CloudLattice. While these services have not yet been implemented under the CloudLattice brand, they are grounded in years of hands-on experience in enterprise cloud architecture, automation, and governance. We are engaging with forward-thinking organizations ready to apply these solutions.