Updated 26 October 2026 · Published by Zoorik
Cloud cost governance is the set of rules that keeps your cloud spend inside agreed limits. It covers budgets, tag rules, approvals and limits on what teams can deploy. You define the rules, apply them, then monitor whether teams follow them.
What is FinOps governance?
In the FinOps Framework, FinOps governance is called policy and governance. Microsoft’s starter rules for a FinOps governance model include:
- Enforce your tagging strategy for cost allocation and chargeback.
- Alert on budgets and on unusual spend (anomalies).
- Block or audit new resources in more expensive sizes, such as E-series virtual machines (VMs).
An example: limit VM sizes
Azure Policy has a built-in deny rule named Allowed virtual machine size SKUs. It blocks creating or resizing a VM to a size that isn’t on your list.
To test it, assign it with enforcement off (DoNotEnforce). It then reports which VMs break the rule but blocks nothing.
On AWS, AWS Budgets alerts you when spend goes outside your policy. A budget action can also apply an access policy or stop chosen Amazon EC2 or Amazon RDS instances. It runs on its own or after your approval.
Why it matters for your cloud cost
- A deny rule blocks a resource before it exists, so it never adds to your cloud cost.
- A forecast alert warns where spend is heading, not only what you’ve spent.
- Rules and alerts set limits. To reduce the cloud cost you pay now, you change what runs.
- The free assessment works out what your clusters and disks could save.
Read next: How to reduce cloud costs
Sources: Microsoft Learn, “Policy and governance” (opens in a new tab); Microsoft Learn, “Built-in policy definitions for Azure Virtual Machines” (opens in a new tab); Microsoft Learn, “Details of the policy assignment structure” (opens in a new tab); AWS, “COST02-BP05 Implement cost controls” (opens in a new tab) (Cost Optimization Pillar).