Since you are seeing impact your service it is likely that you are hitting the disk IO or throughput limit, other VM limits are also a possibility.
The first thing I would check are the disk metrics for the VM. This should tell you whether the limit is caused by IO or throughput. Please note that there are limits for both the disk itself and the VM. If you are hitting the disk limit, you can increase the performance of the disk by increasing the size of the disk or by changing to a different disk type. If you are hitting the VM limit, you will need to change the VM size to resolve the issue. Since you are already running a D16sv3 and you say that the workload is on a singular disk, then I assume the bottleneck is the disk. Limits for the DSv3 series are here.
If you are unsure, please let me know the disk type, and size and share the disk metrics. If necessary we can work with you directly to further investigate.
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