Why Tagging is the Secret to FinOps Success

Digital Team
Jun 26
4 min read

How tagging makes FinOps possible

Tagging cloud resources might sound simple, but it plays a major role in controlling costs, improving visibility, and building a strong FinOps culture. Whether you’re a government agency, a non-profit, or a large enterprise, tagging is essential to understanding who’s using what—and why.

In this article, we explain why tagging and labelling are critical in FinOps, how they help teams across finance and IT work together, and what best practices you should follow. We’ll also look at how different cloud platforms—AWS, Google Cloud and Azure—manage tagging.

1. Why tagging matters for cloud cost management

When budgets are tight, leadership needs quick answers. Without good tagging, it’s nearly impossible to know where cloud costs are coming from. Tagging links cloud usage to specific projects, teams, or purposes. That means:

You can identify unused services or “orphan” resources that are still costing money.
Teams become accountable for their usage.
Finance can compare cost to performance and adjust budgets as needed.
Everyone gets more transparency on what’s being spent and why.

Tagging also turns traditional cost control into something smarter—where savings don’t come at the expense of quality or service.

2. Tagging helps spot waste and improve efficiency

FinOps brings clarity to the cloud. But without tagging, even the best FinOps process can’t deliver. Tagging helps organisations:

Track all resources across multiple clouds
Label inactive services that should be shut down
Allocate costs by department, contract or project
Provide real-time usage dashboards to leadership

When tagging is consistent and well-planned, it becomes much easier to automate tasks, reduce waste, and boost the value of every cloud dollar spent.

3. How tagging works in different cloud platforms

Each cloud provider has its own way of tagging. Here's how the main ones do it:

Amazon Web Services (AWS). AWS uses a tag key and tag value structure. Tags can be added through the EC2 console, and permissions can be restricted to specific users. Steps include selecting a region, choosing the resource type (e.g. EC2 instance), and applying key-value tags that help classify and filter resources.

Google Cloud Platform (GCP). In GCP, labels are used to group resources with a similar purpose—like development, testing or production. Each resource can have up to 64 labels. Labels are case-sensitive and must follow a regex naming rule. GCP also supports cloud tags as an additional way to manage resource classification.

Microsoft Azure. Azure tags are used to categorise resources by department, environment or cost centre. Tags are managed through Azure Cost Management and PowerShell commands. There are limits—tag names can’t exceed 512 characters and values can’t exceed 256. If someone lacks permission, a “Tag Contributor” role can be assigned.

4. Best practices for tagging and labelling

Good tagging is more than just putting a name on a resource. Here are some smart ways to make it work:

Avoid using sensitive or personal information in tags
Stick to a clear and consistent format
Keep tag names and values short and readable
Avoid special characters in Azure tags (like %, &, /, etc.)
Group tags into categories: business, technical, automation, security
Use automation to apply tags during resource creation
Audit tags regularly to clean up outdated or unused ones
Make sure tags reflect your funding sources and reporting needs

5. Tagging builds accountability and transparency

When done right, tagging connects cloud usage to teams, functions and costs. This creates:

Accountability: Everyone sees who used what and why.
Efficiency: Finance teams can quickly review services and recommend changes.
Transparency: Business leaders can make data-driven decisions without surprises.
Readiness: When budget cuts or emergencies hit, you already know where to reduce spending.

6. Automating your tagging process

Manual tagging isn’t scalable. Most organisations need automation to manage tagging across hundreds or thousands of cloud resources. FinOps teams can:

Use tagging plugins for AWS
Schedule scripts in Azure
Apply labels automatically in GCP

Automation reduces errors and saves time. It also ensures that tagging happens the moment a resource is created—rather than waiting for someone to remember.

7. Linking tags to budgets and reporting

One of the main benefits of tagging is that it makes showback and chargeback possible:

Showback: Lets departments see what they’ve spent without being billed.
Chargeback: Allocates actual costs to specific teams or projects.

With a solid tagging strategy, organisations can forecast budgets, identify overuse, and make cost-saving changes without guesswork.

Tagging is the heart of FinOps

Tagging isn’t just a technical detail—it’s the foundation of a working FinOps culture. Without good tagging, you can’t track usage, control spending, or build trust between teams.

Cloud platforms like AWS, Azure and GCP offer powerful tagging features. But it’s up to your team to use them wisely. Set clear rules, automate wherever possible, and treat tagging as a key part of your financial strategy.

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