What’s changing, and what isn’t? 

Until now, you could exchange a reservation for a better fit if a workload moved or shrank. That safety net gave plenty of organisations the confidence to commit, knowing they could adjust later. 

You can still exchange existing reservations as often as you like until 1 February. After that date, each one gets a single final exchange, and the net disappears for most compute and database services. Microsoft processes a late exchange as a cancellation and a new purchase. Because that purchase falls under the 2027 rules, it can’t be exchanged again. 

You can still trade any reservation in for a savings plan, and the cancellation policy isn’t changing either. Instance size flexibility for virtual machines is unaffected. Azure VMware Solution is excluded altogether because savings plans don’t cover it. 

As savings plans expand to more services, reservations for those services will lose exchange rights too. That detail is easy to miss, but it means the list of affected services will keep growing. 

In 2022, Microsoft announced that exchanges would end for reservations bought after January 2024, then held off. This time the date is written into the product documentation, so we’d expect it to stick.

Why does this hit the public sector harder? 

Most public sector budgets are set a year at a time, yet cloud commitments often run for three. Priorities can shift with every settlement or spending review. 

Multi-academy trusts take on new schools mid-year, and NHS trusts consolidate systems after mergers or a new electronic patient record. Blue light services are sharing more platforms across force and service boundaries. None of these changes are driven by IT, but IT must absorb them. 

Without exchange rights, a reservation that no longer fits becomes much harder to justify. Section 151 officers and auditors will want to know why it was bought, and rightly so. Every pound tied up in unused cloud capacity is a pound that isn’t reaching frontline services.

Should you choose reservations or savings plans? 

Reservations and savings plans both trade a commitment for a discount, but they ask you to commit to different things. A reservation ties you to a specific resource type in a specific region for one or three years. You get the deepest discount, but you carry the risk if your needs change. A savings plan commits you to a fixed hourly spend instead, which applies across services and regions. The discount is smaller, and so is the risk. 

A finance system that won’t change for years suits a reservation, as does a long-running business application. Anything linked to a migration or a reorganisation belongs on a savings plan. Most public sector organisations need some of each. 

Treating it as all or nothing is the mistake we see most often, and it costs money either way. Commit too much and you pay for capacity you don’t use. Commit too little and you miss savings you could have had.

What should you do before 1 February? 

Your first step is to check how well each reservation has been used over the last few months. Any that are underused are the ones to exchange now, while exchanges are still unlimited. 

Then sit IT and finance down together to map out the next three years. Finance often knows about changes IT doesn’t, and the other way round. Include planned migrations and contract renewals, as well as any data centre exits or structural changes. 

These questions help test each commitment before you make it: 

• Will this workload stay the same size, in the same region, for the full term? 

• Is anything on the roadmap likely to change it? 

• How much do we trust our consumption forecast? 

• Are our existing reservations fully used? 

If you’re planning to buy reservations anyway, buying before 1 February keeps that one final exchange. That’s a good reason to review when you buy. It isn’t a reason to buy something you don’t need. 

How can Phoenix help? 

Our cloud cost optimisation and FinOps team helps public sector organisations get this balance right. It starts with a review of your Azure estate and how well your current commitments are being used. From there, we look at your plans and recommend the right mix of reservations and savings plans. We can also benchmark your cloud financial management and help you put good governance in place. For organisations that want ongoing support, we’ll keep reviewing your commitments as your estate changes.