FinOps KPIs | Yarken Help

KPI: Percentage of Costs Associated with Unallocated Cloud Resources

Usage: This KPI is used to identify the unallocated cost associated with the cloud resources that are not assigned to specific projects, applications, teams, or workloads.

Explanation:

This KPI calculates the Percentage of Costs Associated with Unallocated Cloud Resources, which measures the portion of your total cloud costs that is linked to resources that are not tagged with specific identifiers like applications, teams, projects, or any other key tag. These untagged resources are often considered unallocated, as they are not directly assigned to a workload or project.

How it’s calculated:

The calculation for this KPI is based on the billed cost from your cloud consumption data.

To calculate the cost associated with unallocated cloud resources,

Resource ID must be available for the given cloud resource.
The resource must not be tagged in any of the tag columns, such as Application Tag, Product Tag, Service Tag, Team Tag, Department Tag, Cost Center Tag, Environment Tag, Customer Tag, Component Tag, and Tech Stack Tag.

If any resource matches these criteria, then the billed cost associated with the untagged resource is considered for calculating the total cloud cost associated with the unallocated resources.

Formula:

(Billed cost of unallocated cloud resources / Total billed cost of all cloud resources) × 100

Billed cost of unallocated cloud resources: The sum of the costs from resources that are untagged.
Total billed cost of all cloud resources: The sum of costs for all resources, including both tagged and untagged resources.

For a more detailed explanation, see the below example:

Example

Resource ID	Application Tag	Team Tag	Tech Stack Tag	Billed Cost
Resource 1	app1			$50
Resource 2				$50
null				$30

In this case:

Resource 1 is a tagged resource (tagged with app1) and it is allocated.
Resource 2 has no tags in the relevant columns (Application Tag, Team Tag, Tech Stack Tag), so it is considered an unallocated resource.
The resource with no Resource ID is not included in the cost associated with resource spend and the tag will not be considered.

From this table:

Billed cost of unallocated cloud resources = $50 (for Resource 2) + $0 (for the resource with no ID)
Total billed cost of all cloud resources = $50 (for Resource 1) + $50 (for Resource 2) = $100

Thus, using the formula:

Percentage of Costs Associated with Unallocated Cloud Resources = (50/100) × 100 = 50%

KPI: Percentage of Cloud Costs that are Tagging Policy Compliant

Usage: This KPI is used to identify the percentage of cloud costs associated with tagging policy compliant cloud resources.

Explanation:

This KPI measures the amount of compliance for cloud cost tagging, and requires an established organizational tagging policy.

The sophistication of determining what acceptable tag criteria are and the stringency of the KPI should evolve with the organization’s FinOps maturity.

How its calculated:

The calculation for this KPI is based on the billed cost associated with the cloud resources that are compliant to the tagging policy.

To calculate the costs that are tagging policy compliant,

The resource must be tagged in any of the tag columns, such as Application Tag, Product Tag, Service Tag, Team Tag, Department Tag, Cost Center Tag, Environment Tag, Customer Tag, Component Tag, and Tech Stack Tag.

Only resources that meet the above tagging requirements are counted as compliant. The cost associated with these compliant resources is then compared to the total billed cloud cost to determine the compliance percentage.

Formula:

(Billed cost of tagging compliant cloud resources / Total billed cost of all cloud resources) x 100

Billed cost of tagging compliant cloud resources: The sum of the costs for resources that meet the tagging policy requirements.

Total billed cost of all cloud resources: The total billed cost of all resources, whether tagging-compliant or not.

For a more detailed explanation, see the below example:

Example:

Resource ID	Application Tag	Product Tag	Team Tag	Tech Stack Tag	Billed Cost
Resource 1	app1				$80
Resource 2					$20

In this scenario,

Resource 1 is tagged with Application Tag (app1), so it is tagging compliant.
Resource 2 is missing the tags, so it is not tag compliant.

From this table:

Billed cost of tagging compliant cloud resources = $80 (only app1 meets the tagging policy).
Total billed cost of all cloud resources = $80 + $20 = $100

Thus, using the formula:

Percentage of Cloud Costs that are Tagging Policy Compliant = (80/100) × 100 = 80%

KPI: Percentage of Costs Associated with Untagged Cloud Resources

Usage: This KPI helps the organization to measure the percentage of cloud cost associated with the untagged cloud resources.

Explanation:

KPI measures the portion of your total cloud cost that linked to cloud resources that lacks the required tags as per your organizational tagging policy.

Note: Not all CSP Cloud Resources can be tagged.

How its calculated:

This KPI is based on the billed cost from your cloud consumption data. To calculate the cost associated with untagged cloud resources,

Resource ID must be available for the given cloud resource.
The resource must not be tagged in any of the provider specific tag columns or custom tags column such as Application Tag, Product Tag, Service Tag, Team Tag, Department Tag, Cost Center Tag, Enviornment Tag, Customer Tag, Component Tag, and Tech Stack Tag.

Any resource missing these required tags is treated as untagged. The costs associated with these untagged resources are then compared to the total cost of cloud resources to calculate the percentage of untagged costs.

Formula:

(Billed cost of untagged cloud resources / Total billed cost of all cloud resources) x 100

Billed cost of untagged cloud resources: The sum of costs from untagged cloud resources.
Total billed cost of all cloud resources: The sum of costs for all cloud resources, tagged and untagged.

For a more detailed explanation, see the below example:

Example:

Resource ID	Application Tag	Team Tag	tags	Tech Stack Tag	Billed Cost
Resource 1	app1	team1			$50
Resource 2			germany		$20
Resource 3					$30

In this example:

Resource 1 have two tags (app1 and team1), so it is tagged.
Resource 2 has only a germany tag, therefore it is tagged.
Resource 3 has no tags, so it is untagged.

From this table:

Billed cost of untagged cloud resources = $30 (for Resource 3).
Total billed cost of all cloud resources = $50 (for Resource 1) + $20 (for Resource 2) + $30 (for Resource 3) = $100

Thus, using the formula:

Percentage of Costs Associated with Untagged Cloud Resources = (30/100) × 100 = 30%

FinOps KPIs Reference:

https://www.finops.org/wg/finops-kpis/