ASOS implements cost optimization to fashion innovation for the future

Throughout its history, ASOS has often been on the forefront of emerging technologies, investing in the future of the business and balancing costs as it grows. However, like retailers across the globe, it wasn’t immune to the effects of COVID-19. In 2020, as the organization was hit with the financial impacts of the pandemic, it needed to assess where it could optimize its costs. ASOS worked closely with Microsoft to implement the guiding principles of the Azure Well-Architected Framework in order to find ways to reduce and manage costs.

ASOS is a digital pioneer

Founded in 2000, ASOS launched its online-only retail company headquartered in London. With fashion and cosmetics targeted at a young, digitally savvy generation, ASOS became a true trailblazer for industry disruption brought on through digital transformation. It was doing it long before those terms even entered the standard lexicon.

With the ongoing implementation of bleeding-edge technologies as the hallmark of its continued success, ASOS has grown exponentially, expanding into a global organization. Believing it had no strong case for cost optimization, it never prioritized monitoring and implementing spending policies across its technology platforms and infrastructure over investing in new features.

“We started off in Azure about seven years ago,” says Ian Margetts, Infrastructure Services Lead at ASOS. “We wanted to experiment with it, start building out some features, and we just fell into that way of usage. We didn’t really have any concept of assigning costs back to the teams. As a result, teams continued to focus on what they know best, delivering great features for ASOS without awareness of the cost implications of their work. Azure helped accelerate us in many areas, but we weren’t building out a cost model that was sustainable from a governance perspective.”

ASOS had not set up a system or any internal practices to assign costs back to the platform, so it had no way of accurately tracking the spend and usage. “It was a weird situation where the platforms teams had the power and control for spinning up assets, but central operations own the budget for those assets,” Margetts explains. “The two were totally disconnected. Operations had no clue what engineering were doing, and engineering weren’t really aware that they were spending all this money.”

Development of features to support the growing business continued to be the priority and as such, cost efficiency in Azure was not a real area of focus for many teams. However, because of the financial impact of COVID-19, the organization’s cost management practices were about to change.

It was time for change, and Microsoft was there to help

The retail industry was one of the most impacted by the pandemic, and ASOS was no exception. It was faced with difficult choices in order to remain financially stable. Implementing a cost optimization strategy in tech spend would be key to manage costs effectively and reduce the number of staff that would be affected by furlough. ASOS identified this as a pivotal moment from the top down that it was going to change its culture as a company, and actively pursue methods to be more efficient and responsible with its technology spend. Knowing that it would accomplish more, faster, it engaged with Microsoft.

With Microsoft there to consult on how to apply the best practices now known as the Azure Well-Architected Framework, ASOS started with the low-hanging fruit to get the fastest route to the biggest impact. “We started by looking at which environmental machines weren’t being used,” Margetts explains. “We quickly looked at the utilization of machines and large storage accounts. These things were costing us high amounts of money and weren’t being used very often or at all.”

At first, there was concern from employees that a reduction on spend would mean a reduction on usage and how it may stifle their creativity. In reality, however, the opposite ended up being true. ASOS ended up benefiting from the efficiencies without having to give up much in return. “It’s just a different framework, a different mentality,” reports Margetts. “People just need a little bit of discipline each day, and it happened very quickly, within a couple of weeks. We saw a drastic change, and teams haven’t felt the pinch they were expecting after implementing better practices. They see the long-term benefits, so the culture has changed.”

During the cost optimization process, ASOS implemented a hybrid approach with a variety of tools—in-house tooling that utilizes Azure Cost Management and Billing APIs, ingesting data into a SQL database, applying its own rules and business logic, and then surfacing data and insights through Power BI. It complemented this custom solution by using Azure tools like Azure Advisor to find and take action on cost optimization recommendations. In the future, the organization is planning to implement solutions that quickly identify abnormal cost behavior to gain better cost predictions.

The financial impact was immediate and significant—far bigger, in fact, than it had initially predicted. Kristina Moln-Page, Head of Finance at ASOS, reports that initially the organization was expecting something in the 5 to 10 percent range, but in actuality, it “achieved a 15 to 20 percent benefit on the annual spend as a result of that housekeeping.” She continues, “No one realized that the fruit of that was that big, which has meant that we’ve been able to put these better practices in place for the long term. Now, we have the kind of visibility across that system that we can pinpoint the action of increased spend on a platform.” It didn’t just stop there, though. The organization had already started working with Azure Virtual Machine Reserved Instances but also increased focus on this to maximize the benefits from this solution. “I see cloud economics as our route of opportunity. We spend a lot of money in the cloud, so it’s one of those things that has a huge impact,” says Moln-Page. “Our cloud cost optimization has already saved us 25 to 40 percent.”

A more balanced approach into the future

With this shift and cost optimization now embedded across the ASOS culture, Moln-Page and Margetts continue to pursue smarter ways to approach cloud cost management. Moln-Page believes that even with such a big impact in cost savings, the organization hasn’t completely bottomed out its base level. She’s pursuing ways to increase its cost efficiency through smarter automation tactics, spend versus growth comparative analysis, and forecasting to understand what cost drivers are.

Margetts, meanwhile, asserts that this new approach won’t keep ASOS from exploring new technologies. He believes that the two can go hand-in-hand, especially as it looks to incorporate machine learning for monitoring and cost management into its systems. ASOS looks toward a future where its ongoing teamwork with Microsoft will yield tremendous results.