FinOps KPIs to Improve Cloud Cost Management

Setting FinOps KPIs is essential for aligning the entire organisation toward shared financial goals. However, a broad, company-wide goal is not enough. To achieve meaningful results, each team or individual responsible for a KPI should have realistic and achievable objectives tailored to their role.

Different teams have different priorities:

• Finance teams focus on budgets, spending thresholds, and cost forecasts.
• Engineering teams track idle instances, orphaned resources, and tagged infrastructure.
• Product teams measure unit costs and compare them with revenue.

KPIs should reflect these differences to ensure each team can contribute effectively. The next step is determining how to reach these goals. Sometimes revenue growth is the solution, but often cost optimisation can provide significant margin improvements.

The following six KPIs help teams focus on cost management while maintaining operational efficiency.

1. Maintain 80-90% Reservation Coverage with Savings Plans

Reservation plans, such as AWS Reserved Instances or Google Committed Usage, offer discounts when resources are pre-allocated. Businesses should aim to cover 80% of predictable cloud usage with reservations, reaching up to 90% when feasible.

Avoid reserving 100% of resources, as this can lead to wasted spending. Spot Instances can provide additional savings but come with risks, including sudden termination, making them suitable only for workloads that can tolerate interruptions.

2. Tag At Least 90% of Taggable Resources

Resource tagging is critical for understanding where money is spent. While some resources are untaggable, it is important to tag the items that can be tracked. Achieving 90% tagging coverage is a strong milestone, which can be gradually improved over time. Proper tagging allows teams to allocate costs accurately and monitor resource usage efficiently.

3. Reduce Orphaned Resources to 5% or Less

Orphaned resources are machines running without clear ownership or purpose, often generating unnecessary costs. Identifying and decommissioning these resources can significantly reduce waste. Even a few untracked machines can cost hundreds of dollars per month, so regular auditing is essential.

4. Minimise Idle Machines

Idle machines consume resources without performing valuable work. Some may be necessary for standby or load spikes, but most represent unnecessary costs. Monitoring idle instances, tracking how long they remain inactive, and deactivating unnecessary machines can deliver immediate savings. Cloud providers often provide idle resource alerts that can be used to measure and reduce these costs over time.

5. Optimise Costs Based on Usage Patterns

Cloud usage can vary between weekdays and weekends or peak and off-peak periods. Instead of applying a flat cost-cutting approach, analyse usage patterns to identify safe opportunities for savings. For instance, if 95% of the workload occurs during business hours, costs can be trimmed over weekends or low-demand periods without affecting performance.

6. Track Costs at a Unit Level

Understanding costs at a granular level allows teams to assess how much each product, feature, or customer segment costs to support. Comparing these costs with generated revenue helps identify profitable and underperforming areas.

Unit-level tracking enables informed decisions about scaling successful products, trimming underperforming features, or targeting specific customer segments. Detailed tracking often requires a cloud cost platform like Opslyft, which can break down costs for specific products, features, or customer groups.

Conclusion

Implementing these six FinOps KPIs allows organisations to gain deeper insight into cloud spending, improve cost efficiency, and support strategic decision-making. By maintaining reservation coverage, tagging resources, reducing orphaned and idle machines, optimising costs according to usage patterns, and tracking unit-level expenses, teams across finance, engineering, and product functions can work together toward shared financial goals.

Platforms like Opslyft make tracking, visibility, and cost allocation easier, providing the data needed to make informed, actionable decisions. When KPIs are aligned with team priorities, businesses can improve margins, reduce waste, and ensure cloud resources are used effectively to support growth and innovation.