Finops Metrics to Start¶

Estimated time to read: 9 minutes

While working with cloud providers, most provide detailed usage reports and automated cost-reduction suggestions. However, significant effort is often required to create custom dashboards and insights to truly understand your Total Cost of Ownership (TCO). Identifying where and how to optimise costs based on your value streams is complex. For example, terminating disaster recovery instances reduces immediate spend but sacrifices business continuity. Therefore, before starting any cost optimisation procedure, you must monitor and understand your underlying ecosystem. Below are the most common metrics used to achieve financial transparency.

FinOps Framework and FOCUS Specification¶

As of 2026, the generalised FinOps Framework has expanded to include Executive Strategy Alignment and specific domains for AI and Data centre cost integration.

Furthermore, the industry has standardised on FOCUS 1.3 (FinOps Open Cost and Usage Specification). FOCUS provides a normalised schema and format for multi-cloud billing. Ensure your metrics and internal cloud cost tooling align with the FOCUS specification to enable consistent reporting, taxonomy, and chargebacks across AWS, Azure, and GCP.

Note that some of these metrics (like CPA or ROI) aren't specific to cloud cost optimisation but are important financial metrics to understand when looking at the broader impact of cost optimisation efforts. Similarly, metrics like Load Time or MTTR aren't directly related to costs but can be improved by good cloud management and can indirectly impact costs.

Note that the exact method to calculate these metrics may vary based on your organisation's specific context and details. Some of these metrics may require significant analysis and tracking to calculate accurately.

In addition to the metrics listed above, organisations should also consider tracking the following metrics.

Below is deeper context on the Total Cost of Ownership (TCO), as it remains a critical metric for long-term cloud strategy and organisational alignment.

Total Cost of Ownership (TCO) is a financial estimate that helps consumers and enterprise managers determine direct and indirect costs of a product or system. It is a management accounting concept that can be used to assess the overall investment in a product or service over its lifespan.

In the context of cloud computing, TCO includes the cost of migration, implementation, operation, service fees, and the ongoing costs of managing and maintaining the system.

Here are the key components:

Direct Costs¶

Hardware: Includes the cost of physical servers, storage devices, and network equipment required for on-premise or co-located infrastructure.

Software: The costs associated with acquiring software licenses, performing mandatory upgrades, and ongoing maintenance.

IT Operations: Personnel costs associated with running the IT department, including salaries, training, and benefits for sysadmins and engineers.

Facilities: The physical cost of hosting servers, including electricity, cooling, rental, or depreciation of the data centre space. In a cloud context, this is largely abstracted into service fees.

Indirect Costs¶

Downtime: Includes both planned (maintenance, upgrades) and unplanned (system failures, network outages) downtime that results in lost productivity or revenue.

End-User Operations: The costs incurred due to time spent by non-IT staff troubleshooting or dealing with IT-related issues.

Scalability: The financial and resource costs of upgrading or scaling the system to accommodate organisational growth.

Security: The cost of ensuring data protection, including dedicated security software, hardware, and personnel time.

Compliance: Costs associated with meeting legal, regulatory, or industry-specific standards (e.g., GDPR, PCI-DSS).

Depreciation: The calculated reduction in the value of hardware and software assets over their operational lifecycle.

Opportunity Cost¶

These are costs associated with the next best alternative foregone. For example, if resources are spent on maintaining on-premise servers, they cannot be spent on a potentially more profitable activity like product development.

When calculating TCO for cloud services, typically compare it to the TCO of running the equivalent system on-premise or in a different cloud provider. The TCO of cloud services is generally more favourable because many of the direct and indirect costs are significantly lower, eliminated or included to direct costs, and you do not need to think about them. For example, hardware investment is typically unnecessary and less needed for IT operations, facilities, and associated costs or the operating system security is eliminated as offered without extra cost with the Image provided by the cloud providers to spin up your instances. However, each organisation will have a unique cost structure and should calculate its specific TCO even when migrating to the cloud or changing between cloud providers.