Resource tagging is the best option for a client’s finance department to identify the cost of cloud use in a public cloud environment shared by different projects and departments. Resource tagging is a feature that allows users to assign metadata to their cloud resources. These tags, which consist of a key and a value, make it easier to manage, search for, and filter resources1. Resource tagging can help to manage costs effectively, especially in large-scale cloud environments, by enabling the following capabilities2:
Cost allocation: Resource tagging can help to allocate costs to different projects, departments, or business units based on the tags that are associated with each resource. For example, a tag can indicate the owner, purpose, or environment of a resource, such as ProjectA, Marketing, or Dev. By using these tags, the finance department can generate reports that show the breakdown of cloud spending by different categories and attributes.
Cost optimization: Resource tagging can help to optimize costs by identifying unused, underutilized, or overprovisioned resources based on the tags that are associated with each resource. For example, a tag can indicate the status, expiration date, or performance of a resource, such as Active, 2023-12-31, or High. By using these tags, the finance department can monitor and analyze the usage and efficiency of cloud resources and make recommendations for cost savings or improvements.
Cost governance: Resource tagging can help to enforce cost governance policies and best practices by applying tags that are consistent, standardized, and mandatory across all cloud resources. For example, a tag can indicate the compliance, security, or quality of a resource, such as PCI-DSS, Confidential, or Approved. By using these tags, the finance department can audit and verify that the cloud resources are following the rules and regulations that are set by the organization or external authorities.
The other options are not as suitable as resource tagging for the client’s finance department to identify the cost of cloud use because:
Reserved instances: Reserved instances are a pricing model that allows users to reserve cloud resources for a fixed period of time and pay a lower rate than on-demand resources. Reserved instances can help to reduce costs by offering discounts for predictable and steady usage patterns, but they do not provide a way to track and allocate costs across different projects and departments3.
Service level agreement: A service level agreement (SLA) is a contract that defines the level of service and performance that a cloud service provider (CSP) guarantees to its customers. An SLA can help to ensure the reliability, availability, and quality of cloud services, but it does not provide a way to measure and report costs for different projects and departments.
RFI from the CSP: An RFI (request for information) is a document that solicits information from a CSP about its products, services, and capabilities. An RFI can help to evaluate and compare different CSPs based on various criteria, such as features, benefits, and pricing, but it does not provide a way to monitor and manage costs for existing cloud resources that are used by different projects and departments.
[References:, 2: Define your tagging strategy - Cloud Adoption Framework, 3: What are Reserved Instances? - Amazon Web Services, 1: What is Tagging in cloud computing?, : What is a service-level agreement (SLA)? - IBM Cloud, : What is an RFI? - TechTarget, , , , , ]