Help Your Team Get Familiar with Budgets, Spending, and Cost Tracking

Cost optimization happens at different levels of the organization. It is therefore important to understand how your workload fits into an overall vision and supports business objectives as well as FinOps practices. Having visibility into how resources are organized and how financial policies are applied helps you manage your workload consistently and effectively.

Example Scenario

Contoso organizes and hosts trade shows. To improve ticket sales, the company decides to develop a mobile application in-house. The following scenarios illustrate the journey from idea to launch, focusing on sound financial decisions. The web application is developed in .NET, hosted on Azure App Service, and uses Azure SQL Database for its database.

Develop a Cost Model

Before you can properly track expenses, you need to build a basic cost model.

A cost model provides a clearer view of potential expenses (infrastructure, support, configuration). It also helps identify cost drivers early on to estimate how usage changes might affect budget and revenue over time.

Contoso’s Challenge

Contoso wants to create a mobile app to manage ticket sales but does not know how much it will cost, especially during demand spikes.

They plan to start small and grow, but without a cost model, it is hard to secure funding or plan effectively.

Approach and Results

The team creates different cost scenarios based on required resources and possible traffic growth. They explore several configurations to estimate current and future Azure costs.

They combine rough estimates for infrastructure, team costs, and expected revenue to create a starting model.

This model allows them to forecast costs over time and adjust as decisions evolve.

Set a Realistic Budget

Ensure your budget covers all necessary elements: key features, support, training, and growth margin.

Once the budget is defined, you can set spending limits and receive alerts if a resource or the entire project exceeds them.

Contoso’s Challenge

The app is in the design phase, and Contoso has identified the basic resources needed.

They now need to determine the budget for this mobile workload.

Without a solid budget, they risk running out of funds, wasting money on non-essential items, delaying the project, or even jeopardizing the entire workload.

Approach and Results

By refining their cost model, the team establishes a reliable budget to share with stakeholders.

This budget gives the architect a clear financial target for designing the application. By anticipating necessary adjustments, the team includes a small safety margin.

The goal is to remain flexible while adhering to the budget as much as possible.

Encourage Upward Communication

Promote upward communication between architects and application managers.

When your organization adjusts the budget, production feedback is just as important as the numbers.

Contoso’s Challenge

Contoso’s mobile app is live and performing well.

After analyzing its usage, the team realizes it could be more cost-effective.

Since management seems satisfied, they hesitate to speak up.

Approach and Results

The team is encouraged to view the budget as their own and share ideas with product management to improve efficiency without compromising security, reliability, or performance.

They discuss the pros and cons of the proposed changes.

The changes are approved, and savings follow.