Azure Cost Visibility Framework for Clients

Having proper cost visibility is no longer optional when organizations are working in the cloud.

When things are migrated or built in the cloud, you quickly learn the importance of cost control, as suddenly you pay for what you use (PAYG). This means that:

If you provision more capacity or compute than you need (over-provisioning), you will overpay. It is a matter of time before your finance team comes knocking at your door.
If you provision less capacity or compute than you need (under-provisioning), your applications and workloads’ performance will suffer. This will hurt your reputation as an organization, both internally and externally.

Due to this, it is essential to choose the right services with the right SKU if we want our costs to be reasonable. This is what FinOps is about. To be able to do this, we need knowledgeable engineers capable of making these decisions, and we must provide them with dashboards or tools to oversee how effectively cloud resources are being used.

But there’s another side of this equation: even if we have these tools and the knowledge, we need full cost visibility. If we don’t have it, we won’t be able to prioritize where to focus our efforts first in our FinOps cost optimization initiatives (e.g., what is costing us the most?). This is also part of FinOps initiatives, as another face of the same coin.

As an MSP, we should help our clients attain this cost visibility and therefore give them cost control. Once cost visibility is achieved, what we call the ‘Prius effect’ will take place—there will be an increase in cost accountability and awareness instantly across the organization. Additionally, knowing how much we are spending in real time will allow organizations to ‘press the gas pedal’ when they need to or contain costs (‘step on the brakes’) when their management requires it, based solely on their current needs.

What Is a Cost Visibility Framework?

A Cost Visibility Framework is the foundation we should help our clients build to retain cost control in the cloud.

In our view, it should have some essential components:

Granular cost visibility across different tenants and clouds
A tagging strategy in place that can be used for Cost Allocation and Accountability
Proactive (not reactive) cost monitoring and alerting
Forecasting and cost estimation

Step 1: Standardize Cost Tagging Across Clients

Cost tagging is the foundation of any effective cost visibility framework. Without proper tagging, it’s impossible to allocate costs accurately or understand spending patterns at a granular level.

In my opinion, cost allocation is a fundamental process in any organization:

In larger organizations, it is definitely a requirement for two key processes: Chargeback and Showback. These processes are needed when cloud contracts, agreements, and licensing are centrally managed, which requires a financial process to charge (Chargeback) or report/show (Showback) business units or different departments their cloud spend.
In smaller organizations, it is also required—maybe not for Chargeback or Showback processes, but to be able to determine how much the cloud resources that are tied to an application or specific project are costing. Without this information, it is really difficult to assess value versus cost of our cloud workloads.

Apart from cost allocation, tags can also help with resource ownership. I often recommend Owner-type tags to understand who the Business Owner is for a specific resource, which fosters cost accountability as well.

Having all these standardized tags (even if slightly different) across clients also speeds up client transitions. When things are standardized and governed by proper tagging, understanding a really complex setup by a recently onboarded consultant becomes much simpler than before.

Essential Tags for Azure Resources:

Environment: pro/dev/pre/uat/tst
Department/Business Unit: Finance, Marketing, Engineering, Operations
Project/Application: Project name or application identifier using each organization’s naming convention
Owner: Technical owner or responsible team
Cost Center: For financial allocation and chargeback
Criticality: Critical, High, Medium, Low

Implementation Strategy:

Define a company-wide tagging policy that all teams must follow. Communication is key at this point. We will need to explain the benefits we will gain by using this tagging strategy so we can get platform teams’ buy-in.
Use Azure Policy to enforce mandatory tags and prevent resource creation without proper tagging
Implement tag inheritance so child resources automatically inherit parent resource tags
Regular tag auditing to ensure compliance and fix missing or incorrect tags
Automation tools to apply tags retroactively to existing resources via Infrastructure-as-Code,
scripting, or similar, depending on the organization

Best Practices:

Keep tag names consistent and use standardized values
Limit the number of required tags to avoid complexity. Simplicity and manageability are key in tagging
Document the tagging strategy and train teams on proper usage
Use Azure Resource Graph/Azure Log Analytics Workbooks to query and validate tag compliance
Use Azure Policy for automated tag inheritance and mandatory tag enforcement
Apply tags at scale using Infrastructure-as-Code (Terraform, Bicep, ARM, or similar)

Step 2: Centralize Multi-Tenant or Multi-Cloud Cost Data

Managing costs across multiple Azure tenants or cloud providers requires centralized visibility to avoid blind spots and enable comprehensive cost analysis. Multi-tenant environments present several challenges: fragmented cost data across different subscriptions and tenants, difficulty aggregating costs for organization-wide reporting, different billing cycles and currencies, and limited cross-tenant visibility for shared services.

To address these challenges, Azure provides several native solutions. Azure Cost Management APIs allow you to programmatically extract cost data from multiple tenants using REST APIs. Management Groups help organize subscriptions under a centralized governance structure. For MSPs managing multiple client tenants, Azure Lighthouse enables cross-tenant management capabilities. Additionally, Cost Management Cost Exports can be configured on each subscription to centralize all billing information in the same Azure Storage Account or Data Lake, enabling quick preparation of Power BI dashboards that can be reused across multiple clients.

For multi-cloud scenarios, organizations should use cloud-agnostic cost management tools that support Azure, AWS, and GCP. The FOCUS standard provides an excellent way to normalize cost data formats across different cloud providers and is supported by all major cloud platforms. Maintaining consistent tagging strategies across all cloud platforms is essential for unified cost management.

Step 3: Define Cost Allocation and Accountability Rules

Clear cost allocation rules ensure that costs are attributed to the right teams, projects, or business units, enabling accurate chargeback and showback reporting.

Cost Allocation Models:

Direct Allocation: Costs directly attributed to specific resources or projects
Proportional Allocation: Shared costs distributed based on usage percentages
Fixed Allocation: Shared infrastructure costs divided equally among users
Activity-Based Allocation: Costs allocated based on actual usage metrics

The easiest way to begin with cost allocation is to start with a good distribution of subscriptions and resource groups. If an organization is distributed across different business units, a good approach would be to use one subscription per business unit, and have one or multiple subscriptions for shared services.

With this approach, we can directly assign the cost attributed to a business unit as the combination of:

Their own subscriptions
The cost of shared subscriptions. It’s recommended to start with simpler allocation methods (proportional allocation based on approximate usage) and progress to more advanced models such as metric-based allocation (following the FinOps principle of crawl, walk, and run).

Accountability Framework:

Resource Owners: Technical teams responsible for optimizing their resources
Budget Owners: Business units accountable for staying within allocated budgets
FinOps Team: Central team responsible for cost governance and optimization
Executive Sponsors: Leadership providing strategic direction and budget approval

Implementation Steps:

Map all Azure resources to cost centers or business units
Define shared service allocation rules (networking, security, management)
Establish monthly/quarterly cost review processes
Create automated showback/chargeback reports for budget owners
Set up cost variance alerts when spending deviates from plans. You can leverage Azure Budgets and Azure Cost Management Anomaly Detection to this effect

Key Metrics to Track:

Cost per business unit/department
Cost per project or application
Cost per environment (prod vs. non-prod)
Shared services cost allocation
Cost variance against budgets

Step 4: Implement Proactive Reporting and Alerts

Reactive cost management leads to budget overruns and missed optimization opportunities. Proactive monitoring enables teams to take corrective action before costs spiral out of control.

Organizations should implement multiple types of alerts to ensure comprehensive coverage. Budget alerts notify teams when spending approaches or exceeds budget thresholds, typically at 50% (early warning), 75% (escalation to management), and 90% (critical alert requiring immediate action). Anomaly detection identifies unusual spending spikes or patterns, such as daily spending variance of 20%+ increase from average or weekly trends projecting 110%+ of monthly budget. Resource-specific alerts monitor high-cost resources for optimization opportunities, while trend alerts notify when spending patterns indicate future budget issues. Idle resource alerts help identify unused or underutilized resources.

Reporting should follow a structured cadence: daily reports for anomaly alerts and critical threshold breaches, weekly summaries for spending trends and analysis, monthly detailed cost allocation and optimization recommendations, and quarterly strategic reviews and budget planning sessions.

For automation, organizations can use Azure Cost Management + Billing alerts for basic threshold monitoring, implement custom Logic Apps or Azure Functions for complex alerting scenarios, create automated reports using Power BI or similar tools, and set up Slack/Teams notifications for immediate alert visibility.

Step 5: Forecast and Review Periodically

Regular forecasting and reviews ensure that cost management stays aligned with business objectives and identifies optimization opportunities proactively. Keep in mind that forecasting is almost impossible if we dismiss the cost of new projects or if we do not consider the projects that are going to be decommissioned in the near future.

For new projects, costs should always be estimated in advance and added to budgets. For old projects being shut down, it is recommended to notify cost controllers that the cost is going to decrease and estimate by how much. Both of these should be considered when doing forecasting exercises, as they won’t be complete without these internal insights.

Effective forecasting requires multiple components working together. Historical analysis uses past 3-6 months of data to identify trends, while growth projections factor in planned business growth and new projects. Seasonal adjustments account for business seasonality and cyclical patterns, and resource planning includes planned infrastructure changes and migrations. Additionally, market factors consider cloud provider pricing changes and new services that may impact costs.

Organizations should establish a structured review schedule:

monthly reviews for actual vs. forecast variance analysis and short-term adjustments
quarterly business reviews for strategic alignment and budget reforecasting
annual planning for long-term capacity planning and budget allocation
ad-hoc reviews triggered by significant business changes or cost anomalies

During these reviews, teams should analyze cost variances and identify root causes, review and update resource allocation strategies, identify optimization opportunities and prioritize implementation, assess the effectiveness of current cost controls, and plan for upcoming business initiatives and their cost impact.

For forecasting tools and methods, organizations can leverage Azure Cost Management’s native forecasting capabilities, implement machine learning models for predictive analytics, use spreadsheet-based models for simple scenarios, deploy third-party FinOps platforms with advanced forecasting features, and utilize the Azure Calculator to estimate new projects or release costs.

Success should be measured through forecast accuracy (within 5-10% of actual costs), cost optimization savings achieved, budget variance reduction over time, and time to identify and resolve cost issues.

How Turbo360 Enables End-to-End Cost Visibility

Turbo360 provides MSPs with a comprehensive platform to implement all aspects of a cost visibility framework for their Azure clients:

Unified Cost Dashboard:

Aggregate costs across multiple Azure tenants and subscriptions
Real-time cost monitoring with customizable views
Drill-down capabilities from organization level to individual resources

Advanced Tagging and Allocation:

Automated tag compliance monitoring and enforcement
Custom cost allocation rules based on business requirements
Support for complex multi-tenant cost allocation scenarios

Proactive Monitoring and Alerts:

AI-powered anomaly detection for unusual spending patterns
Customizable alert thresholds and notification channels
Automated cost optimization recommendations

Comprehensive Reporting:

Branded, client-specific cost reports for MSP customers
Automated monthly and quarterly cost review packages
Executive-level dashboards for strategic decision making

Forecasting and Planning:

Machine learning-based cost forecasting
Scenario planning for business growth and infrastructure changes
Integration with business planning and budgeting processes

Conclusion

Building a robust cost visibility framework is essential for MSPs to deliver value to their Azure clients. By implementing standardized tagging, centralizing cost data, defining clear allocation rules, enabling proactive monitoring, and establishing regular review processes, MSPs can help their clients achieve true cost control in the cloud. It is not an easy journey, but having ready-made tools and frameworks always speeds up this process, allowing for faster setup with new clients.

The key to success lies in treating cost visibility as an ongoing discipline rather than a one-time project. Organizations that invest in proper cost visibility frameworks will be better positioned to optimize their cloud spending, make informed business decisions, and maximize their return on cloud investments.

Remember that the “Prius effect” – where visibility naturally leads to more conscious behavior – is a powerful force. Once your clients can see their cloud costs clearly, they will naturally become more cost-conscious and make better decisions about resource usage and optimizat