Basic Federated design for Azure

• EA: Ideal for large orgs. One contract with Microsoft, all billing centralized.
   
• MCA with Azure Plan: Also supports cost centralization but more flexible for decentralized orgs.
   
• Tip: Even under an EA or MCA, you can allocate costs to business units via subscriptions and management groups.   

• One subscription per department/team/project, mapped to a cost center.
   
• Each unit operates within its subscription(s), but billing flows to the central account.
   
• We use Azure Management Groups to group subscriptions logically.  

• Use Cost Analysis, Budgets, Exports, and REST APIs to pull usage and cost data per unit.
   
• Setup scheduled exports to Azure Storage, Power BI or 3rd party tools for reporting.  

• Central team pays Microsoft, then charges back to each business unit based on their usage.  If appropriate, start the Showback as early as possible to prepare the departments for the costs.
   
• Use tags, resource groups, or subscription-based grouping to track usage.
   

• First create an agreed upon tagging taxonomy to standardize the syntax.

• Require cost center, department, environment tags for all resources.
• 
  
• Start by reporting on deviations to tagging policy and then once you have gained confidence from the Federated units then you can go to enforcement.
   
• Use Azure Policy to enforce and remediate missing tags.
   
• Example tags: CostCenter, Project, Environment, BusinessUnit.
   

• Federation units manage their own resources.
   
• Central FinOps team has read access to all billing data and policies.
   
• Use Azure Lighthouse to delegate access without breaking autonomy.  

• Central team purchases Reserved Instances (RI) or Savings Plans.
   
• Share across subscriptions to maximize commitment coverage.
   
• Use "scope = shared" to benefit all federated teams.     

• Central team can create budgets per subscription/resource group/tag.
   
• Notify each federation unit as they approach thresholds as early as possible so they can take corrective action. 3rd party tools are very good at enabling these projections.  

Tools like Apptio Cloudability, CloudHealth, or Flexera can help automate cost allocation, tagging compliance, and chargebacks in complex federated setups.  

• Create a FinOps governance board across units.  
• Implement cost anomaly detection alerts.  
• Encourage usage of Bicep/Terraform templates with pre-tagging.  
• Have a central Azure Landing Zone blueprint that enforces standards.