Azure cost optimization involves implementing strategies to enhance resource utilization, minimize waste, and align spending with organizational financial goals without compromising performance. Effective management is crucial due to the "pay for what you use" model, which can lead to rapid cost increases if not properly handled. Techniques include understanding usage patterns, utilizing Reserved Instances and Savings Plans to avoid over- or under-commitments, and leveraging autoscaling to adjust resources dynamically based on demand. External tools like Harness Cloud Cost Management (CCM) offer machine learning and AI features to optimize costs, automate resource management, and improve efficiency, helping organizations strategically manage their investments in Azure cloud services.