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Top 6 Azure FinOps Best Practices You Need to Know

Azure Cost Management

5 Mins Read

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When managing cloud workloads, FinOps best practices offer the best way of starting the process adoption. FinOps, short for Financial Operations, is a fusion of financial discipline and operational efficiency: as companies increasingly rely on public cloud services, adopting Azure FinOps becomes imperative for maintaining financial transparency and control and optimizing resource utilization while fostering cross-functional collaboration.

It is a roadmap that guides teams toward proactive cost management and clear accountability and control. The main requirement is a mindset where financial considerations are seamlessly intersected with operational and technical decisions and tradeoffs, ensuring a balance between financial responsibility and technological innovation.

Top 6 Azure FinOps best practices

FinOps best practices and guidelines constitute a robust framework for navigating the landscape of Azure cloud management, aligning financial oversight with operational and technical excellence.

1. Monitoring and analyzing Azure costs

The first and most important step is monitoring and analyzing Azure costs with Azure cost analysis tools such as Azure Cost Management and Billing. This ensures real-time (or up to 12-48 hours prior) visibility into spending patterns, identifying cost drivers, trends, and potential optimization opportunities.

One of the first questions I ask companies is, “How much do you spend in the cloud daily, and how is this cost distributed per cloud service and application?” The Answer to this question tells me if they are in control of their spending, and you’ll be surprised to see how many companies cannot answer this simple question.

2. Right-sizing virtual machines

The next step is optimizing the cloud resources for their usage: right-sizing virtual machines and PaaS services is a technical imperative involving an assessment of computing and memory requirements to avoid overprovisioning or underutilization.

Azure Advisor can help kickstart the process, but then all the decisions must involve the application owners and developers. We have been collectively fighting a culture of overallocation that came from buying CAPEX servers and hardware for on-premises data centers, which would have to last years and accommodate growth and changes.

3. Implementing auto-scaling

There are none of these risks in the cloud: you can size up and down and scale horizontally and vertically all resources and workloads according to the real need. In my experience, eliminating overallocation practices is the first low-hanging fruit of all saving initiatives.

Implementing auto-scaling mechanisms further enhances efficiency by dynamically adjusting resources in response to fluctuating workloads, promoting cost-effectiveness without compromising performance.

4. Utilizing Azure Reserved Instances

Utilizing Azure Reserved Instances or Savings Plan is the next logical step, to gain the maximum discount against commitment for your (now hopefully) optimized and laser-cut workloads. This practice requires understanding all the workload patterns and business projections for optimal (which to me can never be less than 99%) utilization.

These measures result in a finely tuned Azure environment, striking a balance between cost-effectiveness and performance. Now can also be a good time to establish a baseline to calculate your saving efforts. Everything new that is added subsequently will be treated as out of scope until the next measurement cycle.

Read more: Azure Savings Plan vs Reserved Instances

5. Implementing Azure policies, tagging, and naming conventions

When dealing with right-sizing and deletion of unused objects, the need for a specific set of internal policies may arise. This is the right moment to define and deploy company-wide policies, with the use of Azure Policies, Tagging, and the right naming conventions, to ensure that everything happening during the saving effort cycle is correctly mapped, tracked, and perceived by internal cloud users.

For example, suppose you decide that unattached disks have a snooze and delete policy. In that case, you must define how many days you will keep the disks before the snooze (sending out proper communication) and how many days before the final delete. This will ensure that your decisions don’t affect the business but still deploy the right culture of not wasting resources.

6. Establishing cross-functional communication between team

Encouraging communication between finance, HR, and IT departments is more than a cultural initiative; it involves defining collaboration practices and rules, using Azure FinOps tools like Azure Policy, and enabling policy-based management of resources.

For example, you might decide to use a “deny SKU” policy, so all the teams must be informed and know what happens when the wrong SKU is deployed. Establishing cross-functional teams integrates financial considerations into the software development lifecycle towards collective ownership of cost management. This approach ensures that cost implications are always factored into architectural decisions, code development, and operational processes.


Derived from the principles advocated by the FinOps Foundation, they are a comprehensive framework that instills a culture of collaboration, financial accountability, and operational resilience, ensuring that cloud resources are utilized best and contribute directly to the teams’ business objectives.

In essence, FinOps best practices help companies to develop a holistic approach where financial operations and technical expertise converge to optimize cloud spending. Adhering to these guidelines ensures financial accountability, operational resilience in the dynamic cloud ecosystem, and, ultimately, neat technical debt management.

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This article was published on Dec 22, 2023.

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