FinOps

with Azure
Bringing FinOps to life through
organizational and cultural alignment
FinOps with Azure 2

Contents

Introduction 2

Predictability versus flexibility - The variable cost model of the cloud 3

What is FinOps? 4

Chapter 1 Teams need to collaborate, and a centralized team drives FinOps 5

Chapter 2 Decisions are driven by the business value of cloud 8

Chapter 3 Everyone takes ownership of their cloud usage 11

Chapter 4 Reports should be accessible and timely 14

Chapter 5 Take advantage of the variable cost model of the cloud 17

Introduction
Moving to the cloud brings a new resource provisioning
and cost structure that invariably changes the way you
budget, allocate, and report IT costs. The variable cost model
of cloud can be challenging to manage, but can also provide
more granular control and visibility into your spend; letting
you take advantage of cloud to maximize its business value.

FinOps is an evolving cloud financial management discipline and

cultural practice that touches all facets of your business, from business
and product groups, engineering, finance, and all the way to the
executive suite.

In essence, FinOps involves everyone in the organization who manages

cloud services. It changes the way you align teams and allocate costs
among those teams, while driving visibility, best practices, accountability,
and insights about their cloud usage.

Core to FinOps is the cultural change that occurs when cross-functional

teams collaborate to drive business value from their cloud investments.

This e-book is designed to help organizations understand the cultural

and organizational alignment changes the FinOps Framework (a set
of best practices established by members of the FinOps Foundation)
to maximize cloud business value. We’ll guide you through the FinOps
Principles to highlight Microsoft solutions and resources that will support
your organization’s cloud financial journey.

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FinOps with Azure 3

Predictability versus
flexibility - the variable
cost model of the cloud
Cloud spending is highly flexible. You’re no longer It means Finance must find new ways to gain back
incurring large up-front capital expenditures the predictability it had with the fixed-cost model.
(CapEx) for purchasing and maintaining your own IT That’s where FinOps practices come into play. When
infrastructure. You’re not provisioning new servers six the organization is managing its costs at the team
or 12 months out in anticipation of capacity needs level, those teams need reporting mechanisms that
or provisioning them at a size predicted to meet include KPIs for their share of total costs, and also
your needs five years from now when they’re done KPIs for unit cost measures for key services, and
depreciating. Instead, spending on cloud services metrics that call attention to opportunities to
can be incremental, and can be exactly aligned to create value.
respond instantly to scale up or down depending
It starts with visibility. Cloud costs can be incurred
on your capacity needs at any given time.
by any engineer of the organization at any moment.
Shifting from centralized, all-up-front purchasing to To effectively manage this consumption-based
an incremental shared cost model drives everyone model, everyone in the organization, from
to take ownership of their cloud spending and developers to finance leaders, should understand
empowers them to optimize that spend. In many and embrace the processes and policies that go
cases, the new pay-as-you-go pricing model changes into making cloud usage decisions based on what
the spending approval process for organizations. And matters to the business. Such decisions usually
new business metrics emerge, changing the way you require trade-offs to get the right balance of
forecast cloud spend, all requiring a new way to track performance, availability, and cost. For the cloud
and report cloud usage. to become a driver of innovation and revenue,
those decisions cannot be made in silos.

Tradeoffs
Mastering the cloud is not just a technology, FinOps seeks to guide actions to maximize the value
business, or system problem. It is multi-faceted, of cloud spend, but decisions must be made on an
involving people, processes, and technology, and “Iron Triangle.”
ultimately affecting the culture of the organization
as a whole.
Cost Management

People Process Quality

Cloud
Success

FinOps

Cost Time
Technology (Speed)

Tradeoffs must be made by balancing the company’s

goals in every case in terms of speed (time to market),
quality (performance, reliability, availability) and cost.
The goal of FinOps is not always to do things the
cheapest, but to do things in the way that develops
the most value.

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FinOps with Azure 4

What is FinOps?
FinOps is an evolving cloud financial Teams need to collaborate​
Collaboration is the hallmark of FinOps. It’s about
management discipline and cultural cultural change and building a common focus on
practice that enables organizations to cost efficiency among the siloed teams that might
not typically work closely together. Teams must work
get maximum business value by helping together in near real-time as the cloud operates on
engineering, finance, IT, and business a per-resource/per-second basis. Collaboration is
the engine that drives continuous improvement
teams to collaborate to take advantage and fast decision-making.
of the variable cost model of the cloud.
Decisions are driven by the business
At its core, FinOps is a cultural practice. It’s the value of cloud​
way for teams to manage their cloud costs, where Unit economics and value-based metrics
demonstrate business impact better than aggregate
everyone takes ownership of their cloud usage
spend. Make conscious trade-off decisions between
supported by a central best-practices group. cost, quality, and speed. Think of cloud as a driver
of innovation, a driver of capability, and a way to
The FinOps Framework, a set of best practices, improve speed to market and customer satisfaction.​
standards, and guidance by the FinOps Foundation
and its open-source community, is based on the Everyone takes ownership of their
following six principles which act as the north star cloud usage​
objectives of the FinOps guidance. Accountability of usage and cost is pushed to
the edge. Individual feature and product teams
are empowered to manage their own usage
against their own budgets. FinOps decentralizes
the decision-making about resource usage and
optimization. Technical teams must consider cost
as a first-class requirement just as they would
uptime or performance.

FinOps reports should be accessible

and timely​
Process spending, forecast, and efficiency data
quickly and consistently, and provide visibility to
all levels of the organization. Create, monitor, and
improve real-time financial forecasting and planning.
Focus relentlessly on clean data to drive decisions.
Utilize internal team benchmarking as well as
industry peer-level benchmarking.  

A centralized team drives FinOps​

Centralized management and executive
sponsorship of FinOps practices are highly
recommended. Centralized automation
reduces duplicated efforts and makes it easier to
govern and control committed use discounts and
reserved instances with cloud providers. Engineers
and operations teams need to stay focused on
usage and not think about rate negotiations.   

Take advantage of the variable cost

model of the cloud​
The variable cost model of the cloud should
be viewed as an opportunity, not a risk. Just-in-time
prediction, planning, and purchasing of capacity is
preferred over static long-term procurement cycles.
Make continuous small adjustments in cloud usage
and optimization.   

Next, we’ll examine each of these principles, and the

capabilities, functional activities, and Microsoft Azure
solutions that can empower your organization to
maximize cloud business value.

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FinOps with Azure Teams need to collaborate, and a centralized team drives FinOps 5

Chapter 1

Teams need
to collaborate
A centralized team
drives FinOps
Microsoft solutions for these principles

Microsoft Cost Management

Azure Policy

Microsoft Power BI

Microsoft Teams

Azure Monitor Workbooks

Azure Advisor

Microsoft Azure learning paths

What these principles mean Why they matter

Collaboration and a centralized team enable an Collaboration improves the way teams work
organization to continuously improve its practice together and solve problems. This leads to more
to gain efficiency and boost innovation. efficient processes, increased success, and improved
communication. Without collaboration, decisions
A centralized FinOps team is the driver of FinOps.
are based on partial data. By eliminating silos,
FinOps requires cross-functional teams to work
collaboration drives faster adoption and innovation.
together toward a common goal. With FinOps,
cloud fiscal responsibility is shared between Success can only be achieved with inclusion,
engineering, finance, technology, and business communication, and accountability. When teams
teams. An organization cannot be successful without collaborate, there is complete visibility into what the
all teams involved. Teams must collaborate to find teams do, and everybody is on the same page with
the best balance between all objectives to support regard to cloud cost management. Collaboration
the single objective that matters: Business value. fosters better alignment and innovation and helps
Working together as a cross-functional team creates prioritize investments in tooling and practices that
accountability through the organization based drive cost accountability and efficiency. Effective
on shared experience, terminology, and goals. collaboration can lead to guardrails and policies
Centralized FinOps practitioners can promote this that are more effective because they include the
collaboration, while performing specific capabilities, perspectives of all the teams that operate within
such as managing rate and discount optimization them. Team collaboration facilitates visibility,
on behalf of the whole organization. accountability, and healthy business operations.
Each team brings a different perspective to solving
Ultimately, FinOps is about cultural change. It
complex problems. But working together allows them
means finding ways to ensure teams work together
to build a consistent way to talk about these complex
to continuously improve on agreed-upon metrics for
problems in ways that make them easier to address.
efficiency. And that makes education and enablement
a key factor for facilitating effective collaboration A centralized team removes negotiation discussions
to learn more about one another’s disciplines to from key teams so they can focus on value-added
accommodate the speed with which we work. efforts from a cost optimization perspective. It creates
Teams must help define governance and parameters clear segregation of roles and responsibilities and
for cloud usage that provide some control while also drives alignment among IT and business teams.
ensuring innovation and speed of delivery can flourish
alongside cost efficiency.

“Teams need to collaborate very

closely to find the best balance
between all objectives to support the
one single objective that really matters:
Business value.”
– Dirk Brinkman, Principal Cloud Solutions Architect, Microsoft

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FinOps with Azure Teams need to collaborate, and a centralized team drives FinOps 6

Key capabilities
Establish a FinOps culture – Creating a movement Manage commitment-based discounts –
to establish cultures of accountability so that your To maximize these discounts, teams need
organization understands that the practice of cloud to closely collaborate and align in terms
cost management is really about leveraging FinOps of forecasting and planning.
to accelerate the creation of business value.
FinOps education and enablement – Allows
Establish a FinOps decision and accountability all those participating in cloud adoption and
structure – Defining FinOps-related roles, FinOps practices to increase their understanding
responsibilities, and activities assigns accountability of cloud, FinOps, and the value it can bring to
and identifies cloud cost management gaps the organization.
between teams.

Key milestones for building a FinOps culture of collaboration

Crawl Walk Run

Engineers are still learning what FinOps is Engineers understand the importance of Engineers consider financial impact during
and their role within it. FinOps within the business. each lifecycle.

FinOps metrics are available to teams, but Teams monitor and optimize this metric. Engineers actively look for FinOps opportunities.
engineers don’t actively use the metrics. Engineers proactively confirm budget and
highlight changes that will impact costs.

Finance and engineers are only just starting Engineering and Finance are aware of each other FinOps team advocates with Engineering teams
to meet. and understand what motivators drive each other. for investment for solid financial endeavors.

FinOps Maturity Model by FinOps Foundation

Adopting these principles Azure Monitor Workbooks – Similar to

with Microsoft solutions Orphaned Resources Workbook and FinOps
Insights Workbook, Azure Monitor Workbooks
Microsoft supports these FinOps principles provide great insights on optimizing costs and
help with house-keeping of Azure resources
with the following solutions:
which can impact costs.

Microsoft Cost Management – Consider who

Microsoft Teams – Integrate the people,
from the business, engineering and finance
content, and tools your team needs to work
teams needs to be included in budget alerts
together effectively.
and what automation is appropriate. Support
data visibility to allow collaboration and a
centralized team. Azure Advisor – Analyzes your resource
configuration and usage telemetry and then
Azure Policy – Help enforce organizational recommends solutions that can help you
standards and to assess compliance at scale. Its improve the cost-effectiveness, performance,
compliance dashboard provides an aggregated reliability, and security of your Azure resources.
view to evaluate the overall state of the
environment, with the ability to drill down to Microsoft Azure learning paths – Learn new
the per-resource, per-policy granularity. It also skills to boost your productivity and enable
helps to bring resources to compliance through your organization to accomplish more with
bulk remediation for existing resources and Microsoft Certifications.
automatic remediation for new resources.

Microsoft Power BI – Create, share, and

consume business insights in the way that
serves you and your role most effectively.

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FinOps with Azure Teams need to collaborate, and a centralized team drives FinOps 7

Market research
What initiatives does your organization
use to establish a FinOps culture?
Expert Tips Respondents to the 2023 FinOps Foundation State of FinOps
survey indicated that providing transparency and reporting
around cloud costs are the most popular topics. However, 61.8%
of respondents indicate they are still in the Crawl maturity phase.
“Leverage the expertise of your FinOps team
to train people, to establish a FinOps culture,
to establish cloud cost-control guardrails and
cost-tagging standards, create budgets and
cost forecasts, develop tools and dashboards,
and optimize organizational costs.”
– Hamel Yigang, Principal Cloud Solutions Architect, Microsoft

“It starts with getting agreement from the

business, finance, and engineering leaders
that FinOps is important to your organization.
With the right executive level sponsorship,
you should be able to build out your FinOps
team from subject matter experts across your
organization. As you start to apply the FinOps Source: FinOps Foundation State of FinOps survey 2023

Lifecycle, make sure you’re reporting back your

progress to your executive including why it’s
beneficial to your organization.” Cultural strength grows with maturity
– Sonia Cuff, Cloud Advocate Team Lead, Microsoft
Newer FinOps members start out with little strength of culture.
Spread throughout are Crawlers and Walkers starting to build
“Define internal governance between IT, their FinOps cultural momentum.
Finance and Management to share KPIs
and define objectives and processes.”
– Cedric Dupui, Senior Cloud Solutions Architect, Microsoft

“Adopting these principles matter because

it eliminates silos within the organization
and brings executive, engineering, finance,
procurement, business and product teams
together to work with each other to address
cost management in the cloud and in Source: FinOps Foundation

other areas.”
State of FinOps survey 2022

– Madhav Lakshminarayanan, Senior Cloud Solutions

Architect, Microsoft

“Collaboration is a key to develop

accountability across a company.” FinOps Foundation guidance
– Mark Aggar, Principal TPM Manager, Microsoft
• Invest time and energy into fostering
collaboration required by the introduction
“Without collaboration decisions are based of FinOps.
on partial data. It’s like finance cutting costs
• Encourage creativity, curiosity and
without consulting with engineers first.“
collaboration among teams.
– Joseph Marino, Modern Service Management Solutions
Architect, Microsoft • Centralize control of rate negotiation,
reserved instance and savings plan
purchasing, and centralized policy and
“You need to have accountability at each level governance within the core FinOps team
of decision making, and it needs to come from to free up time for engineering teams to
the top. That should include accountability for focus on optimizing usage.
workloads that generate revenue as well as • Cloud use will be new to many resources
workloads that do not generate revenue but in the organization, not just finance or
are still critical for the business.” engineering. Expect mistakes to be made
and try to blamelessly examine why
– Nelson Pereira, Director, Cloud Solutions Architect, Microsoft
mistakes happen and how they can be
avoided or minimized in the future to
foster the innovation.

• Make a central team responsible for cloud

spend, give them support in rallying and
aligning the organization and make them
accountable for organizational-level, as
well as FinOps team results.

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FinOps with Azure Decisions are driven by the business value of cloud 8

Chapter 2

Decisions are driven

by the business value
of cloud
Microsoft solutions for this principle

Microsoft Cost Management

Microsoft Power BI

Well-Architected Review

Azure savings offers

Azure Advisor

Microsoft Azure learning paths

What this principle means Why it matters

Each operational team needs to access near-real-time Cloud financial decisions based on business value
data to influence their spend and help them make cannot be made in silos. They require and enforce
data-driven decisions that result in efficient cloud collaboration and turn discussions from money
costs balanced against the speed and performance spent to efficiency and value of that spend. Your
and quality and availability of services. return on investment for cloud usage is then based
on business metrics.
Using the concept of cloud unit economics to
measure cloud spend against business output, Internal team benchmarking drives best practices
organizations create and track business value and helps form strong repeatable patterns that bring
metrics so that reports show the impact of the most business value, while industry peer-level
their decisions. benchmarking helps determine how your company
is performing.
With access to new capabilities, the cloud
becomes a driver of innovation, which also factors Clear and consistent decision-making processes
into cloud value. Developing metrics that reveal increase confidence and agility while reducing time
the business value of your cloud spend allows you to outcome and value.
to attach growth in cloud spending to your overall
business growth.

With trending and variance analysis, you can

then make informed trade-off decisions among
cost, quality, and speed for your cloud workloads.
This data also informs an organization’s KPIs and “Cloud costs are like other
helps align forecasting models with desired technology costs, they’re only
business outcomes.
worthwhile if they’re providing
a business capability that is
more valuable than their cost.”
– Sonia Cuff, Cloud Advocate Team Lead, Microsoft

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FinOps with Azure Decisions are driven by the business value of cloud 9

Key capabilities
Resource utilization and efficiency – Observing a Forecasting – The practice of predicting
resource’s utilization over time to ensure sufficient future spending in cloud must be based on a
business value for the cloud costs associated with combination of historical spending and future
each class or type of resource being consumed. plans at a team level. Future cloud infrastructure
and application lifecycle changes may impact
Data analysis and showback – The ability to current budgets and influence budget planning
leverage data to create a near real-time reporting and future cloud investment decisions.
mechanism for cost allocation, optimization, and
value-based decision making. Budget management – Strategic decisions on
how to operate as a business and what to invest
Measuring unit costs – Developing metrics that in are made based on budgets. If actual expenses
reveal business value using cloud unit economics, do not match the budget, it can impact other
a system of profit maximization based on decisions that were made based on those budgets.
measurements of how well your organization
is performing against its FinOps goals and as a Establishing a FinOps decision and
business overall. accountability structure – Capturing an
organization’s roles, responsibilities, and activities
to bridge operational cloud cost management
gaps between teams and help cross-functional
teams work out processes and decision trees.

Key milestones for cloud business decision-making

Crawl Walk Run

Establish a simple hierarchy of decision- Decision and accountability structure and processes Standardized FinOps decision making processes
making authority and accountability. are well documented. are in place, utilizing agreed FinOps metrics.

Define efficiency metrics that support Mature product teams have implemented unit Unit costs for key services are developed and
business improvements. economics and can use them to tell effective cost tracked over time for efficiency.
management stories.

Users are tracking costs at the account level KPIs are developed to measure the cost effectiveness Business and product owners understand that their
but are not using unit economics to measure of desired business outcomes. design decisions drive cost.
their cost effectiveness.

FinOps metrics are available to teams but there Leadership makes decisions based on the cost impact Able to make proactive and predictive decisions
is no set ritual followed by engineers around and business value. based on business goals.
the metrics.

FinOps Maturity Model by FinOps Foundation

Adopting this principle with Microsoft solutions

Microsoft supports this value-based decision-making principle with the following solutions:   

Microsoft Cost Management – Azure savings offers – Find pricing

Monitor and track usage patterns to benefits and savings plans such as
continuously optimize costs and access Reserved Instances, Saving Plan for
rich operational and financial insights to Compute, and Azure Hybrid Benefit.
make informed decisions.
Azure Advisor – Get actionable
Microsoft Power BI – Get up-to-the- recommendations to help you optimize
minute analytics and create reports to your Azure resources for reliability,
share insights, foster collaboration and security, operational excellence,
help make data-driven decisions on performance, and cost.
cloud value.
Microsoft Azure learning paths – Learn
Well-Architected Review – Review an new skills to boost your productivity and
assessment tailored to your workload enable your organization to accomplish
type with recommendations for more with Microsoft Certifications.
optimization based on the five pillars
of the Well-Architected Framework.

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FinOps with Azure Decisions are driven by the business value of cloud 10

Research
Progress still needed for measuring
unit costs
The majority of respondents indicate low maturity in their
unit costs capability across key areas where unit costs can
be incorporated.

FinOps Foundation State of FinOps survey 2023

Expert Tips

“Start with the quantifiable. I wouldn’t say

we’re going to increase productivity by 20%.
That’s too fuzzy. But I could model out a 5%
increase to overall revenue.”
– Jeff Amels, Senior Cloud Solutions Architect, Microsoft

“Identify key roles and responsibilities. Form

a team of decision makers. Assign ownership
and hold everyone accountable for their role
in team collaboration.”
- Tanuja Shah, Senior Program Manager, Microsoft

FinOps Foundation guidance

• Use techniques such as trend analysis and variance analysis to understand variations in costs at a team and aggregate
level. Comparing teams with themselves in the past can create the best indicator of both problems and efficiencies.

• Define unit economics for your cloud spend at both a technical and business level and build a robust reporting
mechanism so that you can make good business decisions based on value.

• Benchmark against industry peers or organizations with similar usage patterns to see how you are performing and
understand the challenges and solutions from other industries.

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FinOps with Azure Everyone takes ownership of their cloud usage 11

Chapter 3

Everyone takes
ownership of their
cloud usage
Microsoft solutions for this principle:

Microsoft Cost Management

Azure Policy

Microsoft Power BI

Azure Advisor

Microsoft Azure learning paths

What this principle means within that scope. This shifts responsibility for cloud
costs to the lines of business and those costs become
With the multitude of cloud services offered, it’s part of the forecasting, planning, and operations for
hard to imagine an organization that doesn’t need those business units. That transparency also increases
to better segment and allocate costs to the users of awareness of IT’s contribution to the business and
those services (product and feature teams, lines of provides an immediate feedback loop.
business, etc.). When costs are not properly allocated,
no one has a complete picture of their true costs and Why it matters
cost overruns.
When teams are aware and responsible for their
cloud spend, they can measure that spend against the
With FinOps, accountability of usage and cost must
business value it delivers and then focus investments
be pushed to the edge where the developers and
in areas where cloud usage can improve the business.
engineers responsible for building cloud resources
Engineering teams know their environments best, and
understands their responsibility in driving cloud value.
using unit economic KPIs, can select and continually
Moving to the cloud requires fundamental changes to
shift their cost profile, architectures, service choice
both mindset and behavior around existing financial
and operating models to align with changing business
management practices to embrace the variable
needs.
cost model of the cloud.

Managers can implement team-level KPIs and track

Instead of looking at cloud usage as a fixed cost,
against targets, and finance teams will understand
technical teams learn to consider cost as a new
how to correctly allocate usage costs to the business
efficiency metric which is tracked from the beginning
units. FinOps teams can prepare reporting and data
of the software development lifecycle. This is not an
visualization to keep leadership informed of cloud
intuitive change for many developers. Developing in
business value.
the data center may not have exposed developers
to using cost as a first-class requirement in the
past. Building this awareness and appreciation for
engineering in a cost-effective way will take time. “Cloud fiscal responsibility
is shared between the cloud
Individual feature and product teams must be platform team and the
empowered to manage their own cloud spending
workload teams. A customer
against their budget and make value-based decisions
cannot be successful here
without both teams involved.”
– Rob Kuehfus, Principal Program Manager, Microsoft

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FinOps with Azure Everyone takes ownership of their cloud usage 12

Key capabilities
Resource utilization and efficiency – Ensuring there Data analysis and showback – Leveraging cloud
is sufficient business value for the costs associated usage data to create near real-time reporting
with each resource being consumed by observing which calls to attention the total costs for the
that utilization over time to understand if the business entity, opportunities for cost avoidance,
performance, availability, and other quality metrics and the organization’s KPIs for financial health.
in line with the expense incurred.
Managing shared cost – Without appropriately
Cost allocation (metadata and hierarchy) – splitting costs that are shared, engineers and
Establishing a consistent hierarchy of accounts with product managers lack a complete picture of
resource-level metadata to divide up consolidated how much their products are really costing.
cloud service provider invoices among various IT
groups who use cloud within the organization. Chargeback and finance integration –
Programmatically integrating the ability to
charge expenses to a specific business unit with
an organization’s internal financial management
and reporting tools.

Key milestones for decentralizing ownership of cloud usage

Crawl Walk Run

Cost allocation metadata has been established. Shared platform owners are able to produce Shared platform/service owners are able
showback costs generated by internal customers. to fully allocate and chargeback costs.

Product owners and engineers are still unaware Product owners and engineers are aware of Product owners and engineers include shared
of their portion of shared costs. their portion of shared platform/service costs. costs as part of their forecasting and planning.

Owners are not able to determine costs generated Shared costs are split using an appropriate Shared cost processes and workloads
by internal customers. distribution model(s). are automated.

FinOps Maturity Model by FinOps Foundation

Adopt this principle with Microsoft solutions

to help push accountability to the edge:

Microsoft Cost Management – Distributing Microsoft Power BI – Visualize and share your
responsibility for cloud costs is a complex cloud usage data with reports customized to your
and ever-shifting task. This service provides specific KPIs for data-driven decision making.
the reports to help you monitor and analyze
cloud spending, manage budgets, export data, Azure Advisor – Personalized recommendations
and act on recommendations to optimize to optimize resources, reduce costs and increase
costs. Implement governance policies for efficiency and performance of your cloud
effective enterprise cloud cost management, investments. You can use Azure Advisor to target
and increase accountability with budgets, cost recommendations to specific subscriptions and
allocation, and chargebacks. resource groups for more fine-grained visibility into
how the recommendations impact your cloud users.
Azure Policy – Set guardrails throughout your
resources to help control and optimize your Microsoft Azure learning paths – Learn new
cloud spend and practice consistent resource skills to boost your productivity and enable
governance to get more value from your your organization to accomplish more with
investment. Microsoft Certifications.

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FinOps with Azure Everyone takes ownership of their cloud usage 13

Research
FinOps priorities How chargeback is being implemented
Cost allocation remains a top priority while establishing a FinOps Respondents seem to continue to rely on manual methods to
culture and resource utilization and rightsizing increased in facilitate chargeback, followed by those who report not doing
importance for FinOps practitioners. this at all, indicating that practitioners still have a journey ahead
for automating these tasks.

Source: FinOps Foundation State of FinOps 2023 survey

More organizations are managing

shared costs
Source: FinOps Foundation State of FinOps 2023 survey
The survey shows that FinOps practitioners are building
a competency for allocating cloud costs using a weighted
cost sharing model.

2022 2023

Expert Tips

“Tagging, tagging, tagging. Without an

effective tagging strategy, there is no real
visibility into cloud spend.”
– Madhav Lakshminarayanan, Senior Cloud Solutions
Architect, Microsoft Source: FinOps Foundation State of FinOps 2023 survey

“We will analyze your performance and

your consumption for that workload, and
then we can say ‘look, you’re not using
all of the capacity that this SKU provides FinOps Foundation guidance
from a memory perspective or a compute
• Clearly communicate and train on the culture
perspective.’ So, we can probably downgrade of accountability with everyone who can impact
you and save on cost.” cloud spend. Engineers must feel ownership not
to cut costs, but to make good value decisions
– Nelson Pereira, Director, Cloud Solutions Architect, Microsoft within their scope of control.

• Make sure resources are properly tagged and

“The centralized FinOps teams requires well organized to ease accountability so that
everyone can take immediate actions against
leadership sponsorship to ensure that the their cloud usage.
policies, procedures and processes are
• Ownership of cost as one of the technical
followed by the organization.” requirements of software should be established
– Joseph Marino, Modern Service Management Solutions clearly by management collaboratively across
Architect, Microsoft disciplines, and at all levels of management.

• Define clear roles and responsibilities,

provide continuous learning, and use tools
to improve visibility.

• Communicate goals and objectives for

engineering teams using unit economics to
allow developers the ability to innovative within
their scope of control and help achieve the
overall value objectives.

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FinOps with Azure Reports should be accessible and timely 14

Chapter 4

Reports should be
accessible and timely
Microsoft solutions for this principle:

Microsoft Cost Management

Azure usage and charges

Microsoft Power BI

Microsoft Azure learning paths

What this principle means the visibility required to determine how your resources
are performing, while trending and variance analysis
Moving at cloud speed means today’s cost data help explain cost fluctuations.
can be very different than it was three days ago.
But adjustments can have an impact just as quickly. Reporting is also a powerful way to improve
Cloud use is advancing and changing so fast it transparency and showcase visibility from top to
doesn’t make sense to wait until the end of the bottom and vice versa. To optimize cloud usage,
month to report. Accessible and timely reports you need to understand what is consumed and
create fast feedback loops that result in more efficient who is consuming it. It’s also about taking ownership
behavior. In the context of FinOps, this work will and accountability. Every individual should be able
typically focus on cloud cost and usage data. to see their usage reports and understand their
financial impact.
This principle therefore relies heavily on adequate
data ingestion and data normalization capabilities. When you process cost data quickly and consistently,
FinOps encourages teams to process and share cost you can benefit from better cloud utilization. It allows
data as soon as it becomes available. This real-time you to take advantage of the variable cost model
visibility autonomously can drive better cloud and improve real-time financial forecasting. When
utilization, helps determine if resources are under-or visibility into cloud spend is provided to all levels of
over-provisioned, and provides consistent insights the organization, you achieve better FinOps team
into cloud spend to all levels of the organization. collaboration, enabling everyone to take ownership
of their cloud usage and enabling data-driven
An organization that can create, monitor, and improve decisions based on cloud business value.
real-time financial forecasting and planning can easily
see where and why costs increased. At the same time, Clear and timely reports allow organizations to
it enables internal team benchmarking, allowing the operate proactively because they support and inform
team to drive best practices and celebrate wins. On an real-time decision making as well as critical reporting
industry-level, this benchmarking allows you to assess mechanisms such as showback and chargeback.
your company’s performance in relation to peers.

Why it matters
There’s no control and optimization without
information and data. If you aren’t looking at your
cloud costs frequently, you are certainly wasting
“Create a reporting schedule
money by letting waste exist for longer than necessary. for each business area. Review
Enabling stakeholders to visualize data quickly, when the reports with a centralized
they need it, means they have the most accurate data team. Identify corrective
to review and act on. Adopting this principle provides actions where needed.”
- Tanuja Shah, Senior Program Manager, Microsoft

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FinOps with Azure Reports should be accessible and timely 15

Key capabilities
Data ingestion and normalization – Process and Budget management – To make decisions on
transform data sets to create a queryable common how to operate as a business, what to invest
repository for your cloud cost management needs. in and other strategic decisions made based
on budgets. If actual expenses do not match
Forecasting – Understand how future cloud the budget, it can impact operations and
infrastructure and application lifecycle changes other decisions that were made based on
may impact current budgets and influence budget those budgets.
planning and future cloud investment decisions.
Data analysis and showback – To create
Managing anomalies – Detect, identify, alert, a near “real time” reporting mechanism
and manage unexpected or un-forecasted cloud for stakeholders.
costs in a timely manner to minimize detrimental
business impact.

Key milestones for accurate and timely reporting

Crawl Walk Run

Match granularity of cost and usage data on Ingest data from multiple data sources, normalizing Consistent data lake of usage, cost, performance,
incoming source files, though reporting separately. cost metrics. utilization data; sharing with other disciplines
across the org.

Ensure metadata being applied to hierarchy and Ability to create consistent reports for different Ability to run a single report with multiple clouds.
resources is consistent across cloud providers and clouds, possibly using different reports.
data sources.

FinOps Maturity Model by FinOps Foundation

Adopt this principle with

Microsoft solutions
Microsoft supports this FinOps principle
with the following solutions:

Microsoft Cost Management – Monitor, allocate

and optimize the cost of Microsoft Cloud
workloads.

Microsoft Power BI – Analyze and manage

Azure costs in Power BI.

Azure usage and charges – Download a daily

breakdown of Azure usage and charges in the
Azure portal.

Microsoft Azure learning paths – Learn new

skills to boost your productivity and enable
your organization to accomplish more with
Microsoft Certifications.

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FinOps with Azure Reports should be accessible and timely 16

Market Research
Variance between budget and actual spend Forecasting is happening more frequently
2023 FinOps Foundation research found 48.5% of respondents Compared to 2022, frequency of forecasting has increased, with
at Crawl maturity reported their variance rates between a 52% decrease in respondents doing annual forecasting and the
budget and actual cloud spending. This means that among the biggest increase in those forecasting monthly. This indicates this
respondents, there’s room for growth in the maturity of the capability is maturing with over 50% showing they are at Walk
Budget Management and Forecasting capability. or Run levels.

Source: FinOps Foundation State of FinOps survey 2023 Source: FinOps Foundation State of FinOps survey 2023

Who can self-serve cloud costs reports?

A majority of respondents report that their FinOps Practitioners
are enabled to self-serve cloud cost reporting.

Expert Tips
% Respondents

“When the showback model evolves into

a chargeback type of reporting model,
the IT organization is almost shifting from
a cost center to an internal profit center
and is able to represent revenue streams
attached to the company, and it gets
pretty exciting for a CTO.”
– Jeff Amels, Senior Cloud Solutions Architect, Microsoft

Source: FinOps Foundation State of FinOps survey 2023

“Referring to Prius-Effect, share visual

reports and KPIs, we all have unconscious
bias to stay in the green zone.”
– Cedric Dupui, Senior Cloud Solutions Architect, Microsoft

FinOps Foundation guidance

• Many organizations already have excellent
reporting teams, tools, and processes in place.

• Leverage these groups and their experience

if possible and help them understand how to
use the large volumes of cloud data they may
not be familiar with managing.

• The more consistent your reporting is, less

changes will have to be communicated to
everyone using it.

• Existing reporting may provide key cost

allocation tags, summarization rules or
terminology for a FinOps team to use more
broadly.

• Ask each of your points of contact for the

most useful reports they leverage.

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FinOps with Azure Take advantage of the variable cost model of the cloud 17

Chapter 5

Take advantage of the

variable cost model of
the cloud
Microsoft solutions for this principle:

Microsoft Cost Management

Azure savings offers

Azure Advisor

Microsoft Azure learning paths

What this principle means But resources used in the cloud are loaded with all
the costs of operating the cloud data centers they
The shift from fixed to variable spending changes the run in, so being cost efficient means using resources
way you manage and report costs, but those changes only when they are needed.
should be embraced as an opportunity to deliver
Cloud allows the organization to quickly adapt its
more business value. The pay-as-you-go nature of
spend to support business-critical use cases, and scale
resource provisioning means budgets can be set and
that usage for particular workloads when needed.
shifted according to changing business priorities.

Applying resources as needed accelerates time-to-

A variable cost model provides the opportunity to
value and drives agile processes for planning by
lower operational costs by reducing wasted capacity
promoting iterative budget allocation and forecasting.
and the manpower needed to maintain system
infrastructure. Your cloud resources are individually
This resource usage agility enables you to prioritize
charged in micro amounts, providing level of usage
spending when time-to-delivery is important, and
granularity that enables showback and chargeback
re-allocate spending when usage is less urgent.
to specific business units and individuals. This further
enables business agility with just-in-time prediction,
planning, and purchasing of cloud capacity.

This translates into an agile, proactive system design

process with iterative planning and continuous
“While a variable spend model
optimization. With just-in-time purchasing, you don’t
might be attractive to the CTO,
need to provision six months, or 12 months out.
For your organization, it means that depreciation the CFO doesn’t like variable
and amortization are no longer tied to your capital budgetary allocation. They
expenditures, so your key performance indicators like consistent year-over-year
(KPIs) will shift to focus more on cash flow. This spending that’s easy to track
model also enables you to apply special offers
over time. To overcome that,
and rightsizing methodologies to further drive
and land it with both the CTO
usage savings.
and CFO, you have to do some
Why it matters projective modeling of your
Azure consumption rates during
The use of consumption-based services like public
cloud or SaaS offerings creates the potential for
different volumes and times of
organizations to achieve massive scalability, global year, and then look at the cost
availability, and meet other critical use cases they history of your on-premises
might not even be able to build in a data center. workloads.”
– Jeff Amels, Senior Cloud Solutions Architect, Microsoft

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FinOps with Azure Take advantage of the variable cost model of the cloud 18

Key capabilities

FinOps education and enablement – Providing Forecasting – Understanding how future

training, events, internal communications, cloud infrastructure and application lifecycle
and other learning experiences to accelerate changes may impact current budgets and
FinOps adoption. influence budget planning and future cloud
investment decisions.
Establishing a FinOps decision and accountability
structure – Capturing FinOps-related roles, Workload management and automation –
responsibilities, and activities to build Giving FinOps teams the ability to match
decision-making and accountability structures supply to demand most efficiently by creating
and bridge operational cloud management gaps. the mechanisms to automatically adjust what
resources are running at any given time.
Resource utilization and efficiency – Ensuring there
is sufficient business value for the cloud costs
associated with each class or type of resource being
consumed. Resource utilization, efficiency and cost
must be looked at together.

Key indicators of variable cost model management

Crawl Walk Run
Users are tracking costs at the account level. Tagging is fully defined and communicated Users are tracking costs by tags and tagging
to the user community. is governed and compliance is at high levels.

Cloud spend is allocated to teams based Strategy implemented on how to show and Chargeback and showback reporting is integrated
on estimated usage of resources. allocate shared costs and discounts. automatically into the companies IT finance tooling.

Cloud spend is allocated to teams based Ability to put a dollar value against costs that Uses cost and utilization data to drive
on estimated usage of resources. can be avoided by rightsizing underutilized or automated processes.
inefficient resources.

Has some visibility into resource utilization and Accounts, projects, or subscriptions are identified Multiple sources of data are being brought
efficiency such as billing data and tools from a by metadata or a naming standard as belonging together to effectively allocate shared costs.
cloud provider. to specific cost centers.

FinOps Maturity Model by FinOps Foundation

Adopt this principle

with Microsoft solutions
Consider the following Microsoft cost
management solutions to help your
organization take advantage of the
variable cost model:

Microsoft Cost Management – Monitor and

track usage patterns across multiple resources
to continuously optimize costs.

Azure savings offers – Find pricing benefits

and savings plans such as Reserved Instances,
Saving Plan for Compute, and Azure Hybrid
Benefit.

Azure Advisor – Get actionable

recommendations to help you optimize
your Azure resources for reliability, security,
operational excellence, performance, and cost.

Microsoft Azure learning paths – Learn new

skills to boost your productivity and enable
your organization to accomplish more with
Microsoft Certifications.

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FinOps with Azure Take advantage of the variable cost model of the cloud 19

Market Research
Workload management and automation
Respondents in 2022 reported an increase in automation the way in automation involving rightsizing, containerization,
compared to previous data. From all our respondents who and making the most of savings plans and discounted rates.
automate, budget overage notifications, reporting, and tagging
hygiene are the most common things to automate. Runners led

Notifications/alerts for Creating or adjusting

46% going over budget 21% budgets

Reports of cloud usage

45% information to teams 20% Instance rightsizing

Committed resource
40% Tagging hygiene 20% management

Applying data retention

23% and lifecycle policies 11% Container rightsizing

Resource utilization
22% management

Source: FinOps Foundation State of FinOps survey 2023

FinOps Review
Assessment FinOps Foundation guidance
• In addition to business level KPIs, establish
Take the next step: Assess your
application specific KPIs to measure the
organization and adopt best practices. efficiency of individual applications or services
to encourage teams to drive utilization of
Use FinOps guidance to assess your their resources up, and encourage them to
shut things off when not in use.
organization’s capability gaps.
Get recommendations for maximizing • Use automation and governance controls
to create defaults that turn off things that
cloud business value using FinOps are not required to run.
best practices.
• Establish reporting of utilization in
combination with observability teams to
map cost to utilization across meaningful
measures.

• Consider architectural models such as

containers and serverless to only use
resources when they are needed, and to
drive maximum efficiency in key services.

• Use and automate scaling to automatically

rightsize the resources available to an
application as it cycles through periods
of demand.

• Be sure when moving an application to cloud

that it can take advantage of the scaling cloud
offers or consider refactoring or rearchitecting
those that can’t.

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FinOps with Azure 20

The FinOps Foundation is a directed Project of the Linux Foundation dedicated to advancing people who practice the discipline of cloud
financial management by providing community, career advancement and best practices. The FinOps Foundation is a 10,000+ strong
global community, representing more than 3500 companies. It provides a variety of training and certification programs including the
FinOps Certified Practitioner designation. It counts dozens of major service and platform providers including Microsoft Azure as part
of its partner certification programs such as FinOps Certified Platform and FinOps Certified Service Provider programs.

(c)2023 Microsoft Corporation. All rights reserved.

Disclaimer

This document is provided “as-is.” Information and views expressed in Microsoft assumes no responsibility for any errors, omissions, or
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