Setting up Key Metrics for Azure Cost Management

Key Metrics for Azure Cost Management

Azure cloud portal makes it easy to deploy and manage thousands of resources, but without proper governance and oversight in place organizations will struggle to manage cost. A well-planned organizational structure for your Azure billing and resource hierarchies enables visibility and control over costs as you create your cloud infrastructure. Organizing your cloud-based resources is critical to securing, managing, and tracking the costs related to your workloads. 

Define a Management Group Hierarchy 

A well-planned organizational structure for your Azure billing and resource hierarchies helps to give you a good understanding and control over costs as you create your cloud infrastructure. 

Creating a subscription or resource group for each team is common practice. They can help you to differentiate costs and hold teams accountable. If you already have teams with multiple subscriptions, consider grouping the subscriptions into management groups to analyze the costs together. Management groups, subscriptions, and resource groups are all part of the Azure RBAC hierarchy.  

If your organization organizes spending by the cost center, you can surface this data by enforcing a resource tagging policy that requires a cost center be specified at time of provisioning. 

Metrics and KPI’s 

The following are examples of useful metrics that you should gather to help track your cloud costs: 

• Annual / Monthly spending: The total annual cost for services provided by a cloud provider. 
• Forecast versus actual ratio: The ratio comparing forecasted and actual spending (monthly or annual). 
• Pace of adoption (month-over-month) ratio: The percentage of the delta in cloud costs from month to month. 
• Accumulated cost: Total accrued daily spending, starting from the beginning of the month. 

Budget 

Once you have your organizational cost reporting structure setup in Azure you can view accumulated costs over time to estimate monthly, quarterly, or even yearly cost trends against a budget. After you've identified and analyzed your spending patterns, it's important to begin setting limits for your teams. Azure budgets give you the ability to set either a cost or usage-based budget. Azure budget will also send out alerts when thresholds are exceeded. 

For organizations interested in managing compliance with their governance strategy, InCycle can accelerate your efforts. How are you managing your resources in Azure?  Ask yourself some simple questions:   

• Do you know where your Azure resources are being created?   
• Are your resource provisioning standards consistent? 
• Are you able to audit and enforce consistent provisioning policies? 
• Can you decommission projects with confidence? 
• Can you recreate resources in Azure with confidence?  
  

If you don’t know the answers to these questions you may have cloud governance blind spots.   Download our Azure Governance Playbook today.