By: Dylan Fandrich
As companies begin to lean further into the Cloud FinOps process, one critical question must be answered: What am I spending money on? While this may seem like a straightforward question, it can quickly turn into hundreds of hours of work without a proper system in place.
Tagging is the foundation of how teams stay accountable for cloud costs. In the world of FinOps, it’s the mechanism that ties cloud spending back to the teams and projects driving it.
How Tagging Drives Cloud Cost Accountability
When you tag your resources properly, you’re answering essential questions like:
- Who owns this service or resource?
- What is it supporting – an app, a product, or a feature?
- Is this dev, test, or production?
- Where is this cost coming from – what region, account, or provider?
Without consistent tagging, FinOps becomes a guessing game. Teams cannot tie costs back to real usage, which means valuable insights get lost. It’s impossible to start any optimization effort if you don’t first understand your costs.
Showback models are a great starting point for creating organization-wide visibility into spending. Using an owner or team tag allows engineers see what they are spending, even if they’re not being billed directly. Without this data, it is next to impossible for engineers to understand their impact on costs within the overall environment. The result? Engineers and product leads start to understand their impact on the costs within the overall environment.
The result? Engineers and product leads begin to understand their impact on the cloud bill, which is a huge win for building a cost-conscious culture.
Best Practices for Effective Tagging
It’s one thing to have a tagging policy—it’s another to actually enforce it. That’s why the FinOps Foundation encourages teams to track how much of their spend is properly tagged versus what’s falling through the cracks.
Good tagging hygiene comes down to a few best practices:
- Keep required tags minimal but essential: Focus on tags like owner, environment, and cost center.
- Use automation: Leverage Infrastructure as Code, policies, and CI/CD pipelines to enforce tagging.
- Set up systems (or teams) to auto-tag: Automate tagging for secondary resources that often get missed.
- Monitor and clean up: Use dashboards and workflows to catch and fix untagged items before they snowball.
It’s easy to go overboard with the number of tags when creating a strategy. Tracking compliance across 25 tags is nearly impossible, and the insights often have diminishing returns. Especially early in the FinOps journey, keeping it minimal to 3-5 essential tags ensures the reports generated are actionable, easy to monitor, and fosters a culture of tagging compliance.
Tagging for AI and ML Workloads
AI and ML workloads bring new complexity to cloud spending. Training large models, running pipelines, and spinning up GPU-heavy jobs all lead to unpredictable, bursty costs. That’s where tagging becomes unbelievably critical.
On platforms like AWS, many AI-related charges are written to Marketplace, bypassing native anomaly detection systems. Without proper tags, these charges can rack up unnoticed, and by the time they’re identified, it’s nearly impossible to narrow them down.
Key questions that should be answered by an AI tagging strategy include:
- Is this for a customer-facing product or internal R&D?
- Which team’s budget should it hit?
- Was this training, testing, or production inference?
Proper tagging allows budget alerts to pick up what anomaly detection cannot. For example, if an organization’s total cloud bill is $500k in a month, a $5k/day increase might not trigger a budget alert quickly. However, by tagging resources to specific dev teams of projects, alerts can be set up at a granular level. This ensures increases are noticed within hours, not days or weeks, and can be tied back to their source with minimal effort.
Building a Cost-Conscious Culture with Tagging
Tagging is more than just a technical practice—it’s a cultural shift. By making tagging a priority, organizations empower teams to take ownership of their cloud costs. This accountability drives better decision-making and fosters a culture of financial responsibility.
Conclusion and Next Steps
Tagging is the foundation of FinOps success. It enables cost accountability, drives optimization efforts, and builds a cost-conscious culture. Without it, cloud cost management becomes a guessing game.
Ready to take control of your cloud costs? Contact Pellera’s Cloud FinOps Advisor team for a free consultation to see how tagging and the wider idea of FinOps can benefit your organization.
