Intelligent FinOps in Azure

Mechanics Team
8 min readApr 26, 2024

Leverage FinOps in Azure to optimize your cloud spend and drive accountability across your organization. With Microsoft Cost Management, gain complete visibility into your cloud costs, track spending by department or project, and forecast future expenses. Utilize management groups, subscriptions, and tags to organize costs and allocate resources efficiently, ensuring alignment with organizational priorities.

Make informed decisions with proactive cost reduction recommendations from Azure Advisor and architectural best practices like Azure Landing Zones. Operationalize FinOps practices with centralized management focus and continuous evaluation through the FinOps Review assessment. Azure expert, Matt McSpirit, shows how to improve your organization’s capability and operational agility with FinOps on Azure.

Manage cloud spend and drive accountability.

Establish control in the Cloud with FinOps on Azure. Get started.

Track spend by structure, region, or timeline.

Utilize subscriptions, tags, and management groups for granular cost control and role-based access. Check out FinOps on Azure.

Drive efficiency with FinOps.

Use Azure Advisor to optimize spend with recommendations tailored to usage. Implement architectural best practices with Azure Landing Zones for consistent cost management and policy differentiation. Take a look.

Watch our video here:

QUICK LINKS:

00:00 — Improve control on Azure through FinOps
01:01 — Gain visibility and accountability over Cloud spend
02:11 — Track and report spending
03:28- How to track costs
04:14 — Tagging resources
05:57 — Optimized efficiency
07:02 — Maintain FinOps practices
08:05 — Wrap up

Link References

How to implement FinOps on Azure at https://aka.ms/FinOps

Leverage Cloud Adoption Framework guidance at https://aka.ms/C-A-F-Tagging

Click-through demos at https://aka.ms/finops/guides

FinOps Review assessment at https://aka.ms/finops/review

Start using Microsoft Cost Management at https://aka.ms/CostManagement

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Video Transcript:

-Are you truly set up to run your organization in the cloud, and do you have the right controls in place to manage your spend and drive accountability?

-Well, the more you’re in control of the mechanics of operating in the cloud, the more you’ll be able to do in the cloud, especially when you consider the agility the cloud gives you, with on-demand resources, along with the latest silicon, managed services that remove complexity, and evolving AI capabilities all at your command. There’s in fact a whole industry movement and framework for establishing this control, called FinOps, established by the FinOps Foundation.

-Similar to how DevOps provides a continuous feedback process aided by technology to bridge the gap between developer and IT operations teams, FinOps helps you to bridge the gap across stakeholders, from financial, business, and technical teams to efficiently build organizational capabilities in the cloud. This includes achieving more predictable cloud spend with less wastage, commitment-based savings, and better ongoing collaboration on how the cloud can help improve operations for your organization, both now and in the future.

-So, where do you start? Well, job number one is to set the foundation for visibility and accountability over your cloud spend. Here, Microsoft Cost Management in the Azure portal as the core source of consumption data gives you complete visibility of accumulated costs across your entire account at a monthly run rate, or even across selected date ranges, without you having to do anything.

-Cost trends help with forecasting at an aggregate level, and you can drill down in granular detail so that you can start to see your typical run rates, for example, by resource type. Then with Microsoft Copilot for Azure built in, you can ask natural language questions to get the insights you need faster, for example, breaking down how costs compare over previous months to help find trends and anomalies.

-Additionally, if you don’t want to use the Azure Portal or if you’re a business user, you can consume this usage data in your environment of choice, such as powerful visualizations available with Power BI reports for your business analysts, or you can integrate the data within your internal apps and financial systems with available APIs for your business and financial teams to consume the data the way they want, which brings everyone together with a common understanding on cloud costs. That said, the crux of driving more accountability is to track and report spending in a way that makes sense to the stakeholders across your organization based on agreed priorities.

-For example, mapping costs against your organizational structure or regions to be able to potentially charge back costs or tracking against a specific timeline to help with budget management of projects, or where you have shared apps and workloads in use across your organization, you may need more specificity on the granularity of spend to understand how costs should be. The mechanics of achieving this timely and accessible visibility come down to a few things, the first of which is a subscription that you can use to delineate departments, apps, or cost centers in your organization.

-Underneath each subscription are your resources, which are organized in resource groups. Now, importantly, tags work to track specific consumption and can be assigned for your subscriptions, resource groups, and all the way down to specific resources, and if you’re an Enterprise Agreement customer, overseeing all of this are management groups, which can help you define a hierarchy over your subscriptions and resources.

-For example, using this construct, you can group sets of subscriptions and their resources for cost management by business unit, and you can configure role-based access to offer privileged views over cost analysis at the department or down to the individual user level. So, let me give you a snapshot of what you can achieve with an example of how this helps you track costs by different segments in your organization.

-So here, within your Azure tenant, you can use management groups aligned to your organizational hierarchy. You can nest multiple management groups under higher level management groups, and within each of them, you can define one or more subscriptions, and this hierarchy allows you to view costs at the subscription level. Now in Microsoft Cost Management, I’m in cost analysis, and this is my view of costs across the entire account. I can group costs, for example, by department name, resource group, subscription, and others.

-So, I’ll choose Resource Group in my case, which represents the costs for resources to run workloads, or projects in our case, and I can see the cost breakdown by service name, location, and enrollment account name. And in the group by dropdown, you might have noticed the tag option. This is where tagging resources comes in. These are important in order to associate cloud usage costs appropriately, which can be a department or a cost center. Now, you’ll want to spend some time establishing the right approach and naming your tags for consistency, leveraging our cloud adoption framework guidance at aka.ms/C-A-F-Tagging.

-In Azure policy, you can enforce tags on future or existing resources at scale using pre-configured policies that work at the subscription, and optionally the resource group level, such as adding a specified tag if its missing on a resource in the subscription, or ensuring that new resources created inherit a tag from the subscription.

-Then under Remediation, tags can be applied to existing resources as well as any new resources created on the subscription. Now, if I move back to Cost Management using the tags we’ve established, it’s now easy to filter costs by tags, which represent the individual resource usage. And if I group costs by tags, I can also track costs by category, for example, how different environments are used.

-From there, using budgets, you can also use the tags you’ve created and assigned for things like cost centers to set targeted budgets by month, quarter, or year, along with the budget amounts that you define, and based on alert conditions that you set within each budget, these can automatically alert the people accountable within your defined cost center. Everything I’ve shown you are foundational core competencies, which you can also learn more about with our click-through demos at aka.ms/FinOps/Guides, where each provides click-by-click guidance by FinOps capabilities.

-This one, for example, is guiding me through how to enforce tag inheritance on resources and establish policies to require that tags are added to any new resource. By now, you’ll have established a degree of collaboration across stakeholders as you determine priority workloads and stakeholder interest, so with your baselines established, how can you make sure you’re optimized for efficiency?

-Well, to help you look for areas for optimization, tools like Azure Advisor surface proactive recommendations for cost reduction by subscription, where, for example, you might be paying for idle compute resources or paying too much for virtual machines, and with Quick Fix items, you can rightsize directly for Azure Advisor to implement those recommendations. It also shows you recommendations for commitment-based discounts, with savings plans and reserved instances, which can be over one- to three-year terms.

-These recommendations are based on an analysis of cloud resource usage over an extended period of time, and there are also architectural considerations that can lead to more consistency in how costs are managed and distributed among your stakeholders. So here, you can use architectural best practices with Azure Landing Zones, which comprise a set of shared services and dedicated per-app subscriptions to more easily allocate costs and differentiate policies.

-Next, once you’ve done the work to identify and optimize your existing cloud footprint, how do you maintain your FinOps practices moving forward so that you can operationalize what you’ve already done as you modernize or roll out new workloads in the cloud?

-Well, ultimately, this speaks to making FinOps part of your organization’s DNA, with a centralized management focus that continually evaluates business objectives, tracked metrics, and their trends. Now to assist, the FinOps review assessment at aka.ms/FinOps/Review can help you initiate or strengthen the FinOps practice for your organization.

-Now, after starting the assessment, it will ask you to indicate what stage your organization is in today, then the FinOps domains that you’re interested in improving. Once you select those, it walks you through a series of questions tailored to each domain and underlying capabilities. When you’ve completed the survey, the assessment will output an overall score and point you to important resources as well as improvement recommendations based on your responses for each of the FinOps capabilities.

-You will use these as you continue your FinOps journey. Adopting FinOps can help your entire organization to make better decisions with the cloud to improve your organization’s capability and operational agility, whether that’s through adopting more cloud-native approaches or managed services, or building better experiences around your data with generative AI.

-To learn more about FinOps on Azure and how to implement it, go to aka.ms/FinOps, and to start using Microsoft Cost Management, go to aka.ms/CostManagement. Subscribe to Microsoft Mechanics for the latest tech updates, and thanks for watching.

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