Introduction

With major cloud providers experiencing a compound annual growth rate (CAGR) exceeding 15%, the adoption of public cloud continues at a remarkable pace.

While cost reduction remains an expected benefit during cloud adoption, the primary goal is to drive exceptional value and innovation.

According to McKinsey Digital, the value created through cloud could exceed $1 trillion by 2030. Yet, despite these projections, over 80% of CIOs admit they have not met their expected goals from cloud migration, and it's estimated that more than 30% of cloud spending is inefficient or wasted.

Securing that projected $1 trillion in value has proven to be a frustrating challenge for many organizations. One of the core reasons is that financial operating models remain trapped in outdated processes, mindsets, and tools.

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Redefining Cloud Metrics

For enterprises migrating to the cloud, it’s natural to apply traditional CapEx-driven approaches. However, many quickly realize that legacy IT financial controls are no longer operationally effective or accurate when managing the dynamic nature of cloud services.

The following table summarizes common challenges that arise in cloud financial governance when compared to traditional processes.

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All of these traditional processes have their own approach in the cloud, but the approach must be more agile, and a new model is needed accordingly. Fortunately, the FinOps Foundation has developed a set of processes and KPIs to help model a business's success. It provides a foundation for organizational management and optimization that can be deployed and operated to best support modern infrastructure.

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Decentralized Financial Accountability

FinOps is not just an operational framework—it represents a cultural shift that brings together technology, finance, and business to enable organizational transparency and shared responsibility for cloud cost management. It requires a mindset shift in which financial accountability is decentralized to the edge teams, making everyone responsible for ensuring cloud services are consumed in the most cost-effective way.

On average, traditional data center servers operate at less than 50% of their CPU and memory capacity, resulting in significant underutilized capital. When applying conventional provisioning methods to public cloud infrastructure, organizations often over-allocate resources, leading to massive waste—which can account for up to 30% of cloud overspending. Given the dynamic nature of cloud infrastructure, it is crucial to optimize resource usage and enable dynamic provisioning to support fluctuating workloads. This responsibility should lie with the teams that deeply understand the nuances of their projects and workload demands.

To address this challenge, enterprises are building cloud FinOps capabilities that not only establish strong cost visibility and control, but also accelerate knowledge sharing across teams. This empowers edge teams to optimize spending without compromising performance—while still aligning with broader guidelines set by central leadership.

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Start Your FinOps Journey by Deploying KPIs

There's no single set of metrics that fits all businesses perfectly. This is because each organization, environment, and team is at its own stage of maturity with unique requirements. However, modeling the top 10 or 20 KPIs listed in Finop's Foundation is a firm commitment to define expectations and get a firm initial understanding of costs.

Once you've measured monthly usage across all clouds, made sure all resources have been described (tag completeness), and set an initial budget, you'll begin to take advantage of drifting costs. While learning through new analytics and controls, the team naturally initiates requests and communicates when there are issues, which allows FinOps practitioners to refine and adjust models. You can go a step further and empower teams to work automatically by integrating into messaging systems like Slack, Gchat, or Teams.

Here are the top 10 FinOps KPIs recommended for starting a FinOps practice.

Cloud costs: The total cost of cloud services

• Explanation: This is the total amount spent on cloud services across all vendors. This is critical to understanding overall cloud spending and forms the basis for many other metrics.
• Commentary: Depending on data sync, reseller, or other complexity, this may be more difficult than expected.
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Cost per unit: Cost for business metrics

• Explanation: This metric helps link cloud spending to business outcomes. It helps you understand whether cloud costs scale efficiently as your business grows. Examples include LLM cost per query or cost per customer acquisition.
• Commentary : A deep understanding of transaction pipelines and integration with business systems is required.
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Cost allocation accuracy: The percentage of costs correctly allocated to the team/project

• Explanation: Measure how accurately cloud costs are attributed to a specific team, project, or department. A high ratio ensures accountability and helps teams make informed decisions about resource use. It works with “tag completeness”
• Commentary: The keyword here is a tag. No other tool or parameter can provide granular control and attributes for teams and workloads.
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Resource utilization: The percentage of provisioned resources actually used‍‍

• Explanation: It shows that the provisioned resources are being used efficiently. Low utilization may indicate excessive provisioning, while consistently high utilization suggests that additional or greater resources and/or platform optimization are needed.
• Commentary: This is a basic KPI. It works with Rightsizing and Idle resource reporting.
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Resource Reserved Instance Coverage: The percentage of compute time applied by the Reserved Instance

• Explanation: RIs can offer significant discounts on existing workloads. This KPI shows what percentage of computing time is processed by RI to help identify further savings opportunities.
• Commentary: Commitments are generally the first and easiest way to cut costs right away, but they often mask underlying optimization problems. This KPI checks whether you're taking advantage of these RI savings.
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Savings plan coverage: The percentage of computing expenditure applied by the savings plan

• Explanation: Similar to an RI guarantee, it measures how much computing costs are covered through a savings plan that provides a discount if you commit to use it for 1 to 3 years.
• Commentary: Similar to RI
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Cost difference: The difference between estimated cloud spend and actual cloud spend

• Explanation: Compare actual expenses to estimated expenses. Large or frequent differences may indicate unexpected spikes in usage or inefficiency, which should be investigated.
• Commentary: This KPI is a core part of financial due diligence—setting budgets and identifying cost trends is essential for proactive cloud cost management.
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Cost optimization ratio: The percentage of cost reduction recommendations implemented

• Explanation: This tracks how many cost-saving recommendations you've successfully implemented. It helps measure the effectiveness of FinOps practices.
• Commentary: An operational KPI that helps track ongoing optimization KPIs and team responsiveness.
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Tag compliance: Percentage of resources that are properly tagged for cost allocation

• Explanation: Tag integrity and tag hygiene are critical for accurate cost allocation and reporting. This KPI shows what percentage of resources are correctly tagged according to the organization's policies.
• Commentary: It is a basic KPI that is key to establishing resource tracking and cost attribution.
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Unit economics: cloud costs as a percentage of revenue or gross margin

• Explanation: This correlates cloud costs to revenue or gross margin. This helps ensure that cloud costs remain proportional as the business grows and does not erode profitability.
• Commentary: This is a high-level KPI useful for determining virtual “COGS.”

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The FinOps Journey Continues

As FinOps practices evolve, organizations adopt more advanced tools and KPIs—enabling them to integrate sophisticated technologies such as intelligent scaling, anomaly detection, and governance through well-established processes and communication channels. This approach empowers teams to manage and monitor cloud metrics in a decentralized yet coordinated way, aligning with the principles of modern FinOps.

Partner with OpsNow to accelerate your FinOps journey and take control of your cloud costs. We follow the proven principles of the FinOps Foundation, helping organizations raise FinOps awareness, standardize best practices, and implement measurable KPIs across teams.

Get started with OpsNow or schedule a live demo to see how we can help you unlock the full value of your cloud.