diff --git a/.github/workflows/ansible-deploy.yml b/.github/workflows/ansible-deploy.yml
deleted file mode 100644
index 6951f935f1..0000000000
--- a/.github/workflows/ansible-deploy.yml
+++ /dev/null
@@ -1,69 +0,0 @@
-name: Ansible Deployment
-
-on:
-  push:
-    paths:
-      - 'ansible/**'           # Ansible code
-      - '!ansible/docs/**'     # Exclude docs
-      - '!ansible/README.md'
-      - '.github/workflows/ansible-deploy.yml'  # Workflow changes
-  pull_request:
-    paths:
-      - 'ansible/**'           # Ansible code
-      - '!ansible/docs/**'     # Exclude docs
-      - '!ansible/README.md'
-      - '.github/workflows/ansible-deploy.yml'  # Workflow changes
-
-jobs:
-  lint:
-    name: Ansible Lint
-    runs-on: ubuntu-latest
-    steps:
-      - name: Checkout code
-        uses: actions/checkout@v4
-
-      - name: Set up Python
-        uses: actions/setup-python@v5
-        with:
-          python-version: '3.14'
-
-      - name: Install dependencies
-        run: |
-          pip install ansible ansible-lint
-
-      - name: Run ansible-lint
-        run: |
-          cd ansible
-          ansible-lint playbooks/*.yml
-
-  deploy:
-    name: Deploy Application
-    needs: lint
-    runs-on: self-hosted
-    steps:
-      - name: Checkout code
-        uses: actions/checkout@v4
-
-      - name: Set up Python
-        uses: actions/setup-python@v5
-        with:
-          python-version: '3.14'
-
-      - name: Install dependencies
-        run: |
-          pip install ansible
-
-      - name: Run playbook
-        run: |
-          cd ansible
-          touch /tmp/vaultpass.txt
-          chmod 600 /tmp/vaultpass.txt
-          echo "${{ secrets.ANSIBLE_VAULT_PASSWORD }}" > /tmp/vaultpass.txt
-          ansible-playbook playbooks/deploy.yml -i inventory/hosts-runner.ini --vault-password-file /tmp/vaultpass.txt
-          rm /tmp/vaultpass.txt
-
-      - name: Verify deployment
-        run: |
-          sleep 10  # Wait for app to start
-          curl -f http://${{ secrets.VM_HOST }}:5000 || exit 1
-          curl -f http://${{ secrets.VM_HOST }}:5000/health || exit 1
diff --git a/app_python/app.py b/app_python/app.py
index 06194342e7..77e4af2f8a 100644
--- a/app_python/app.py
+++ b/app_python/app.py
@@ -2,21 +2,38 @@
 DevOps Info Service
 Main application module
 """
+import json
 from flask import Flask, jsonify, request
 from datetime import datetime, timezone
 import logging
 import os
 import platform
 import socket
+
 HOST = os.getenv('HOST', '0.0.0.0')
 PORT = int(os.getenv('PORT', 5000))
 DEBUG = os.getenv('DEBUG', 'False').lower() == 'true'
 
-logging.basicConfig(
-    level=logging.INFO if not DEBUG else logging.DEBUG,
-    format='%(asctime)s - %(name)s - %(levelname)s - %(message)s'
-)
-logger = logging.getLogger(__name__)
+
+class JSONFormatter(logging.Formatter):
+    def __init__(self):
+        super().__init__()
+
+    def format(self, record: logging.LogRecord) -> str:
+        rec = {
+            "timestamp": datetime.now().isoformat(),
+            "level": record.levelname,
+            "message": record.getMessage(),
+        }
+        if "http" in record.__dict__:
+            rec["http"] = record.http
+        return json.dumps(rec)
+
+
+logger = logging.Logger(__name__, logging.INFO if not DEBUG else logging.DEBUG)
+stderrhandler = logging.StreamHandler()
+logger.addHandler(stderrhandler)
+stderrhandler.setFormatter(JSONFormatter())
 app: Flask = Flask(__name__)
 
 
@@ -64,10 +81,20 @@ def get_request_info() -> dict[str, str | None]:
     }
 
 
+def get_http_extra_info():
+    return {
+        "http": {
+            "location": request.path,
+            "method": request.method,
+            "ip": request.remote_addr,
+        }
+    }
+
+
 @app.route('/')
 def index():
-    logger.debug(f'Request: {request.method} {request.path}')
     """Main endpoint - service and system information."""
+    logger.debug(f'Request: {request.method} {request.path}', extra=get_http_extra_info())
     return jsonify({
         'service': {
             'name':        'devops-info-service',
@@ -87,7 +114,7 @@ def index():
 
 @app.route('/health')
 def health():
-    logger.debug(f'Request: {request.method} {request.path}')
+    logger.debug(f'Request: {request.method} {request.path}', extra=get_http_extra_info())
     return jsonify({
         'status':         'healthy',
         'timestamp':      datetime.now(timezone.utc).isoformat(),
@@ -96,7 +123,8 @@ def health():
 
 
 @app.errorhandler(404)
-def not_found(error):
+def notfound_handler(e):
+    logger.info('A 404 Not Found error occured', extra=get_http_extra_info())
     return jsonify({
         'error':   'Not Found',
         'message': 'Endpoint does not exist'
@@ -104,7 +132,8 @@ def not_found(error):
 
 
 @app.errorhandler(500)
-def internal_error(error):
+def internal_error(e):
+    logger.error('Internal Server Error 500', extra=get_http_extra_info())
     return jsonify({
         'error':   'Internal Server Error',
         'message': 'An unexpected error occurred'
@@ -112,6 +141,6 @@ def internal_error(error):
 
 
 START_TIME = datetime.now(timezone.utc)
-logger.info('Application starting...')
+logger.info('Application starting... Configured with log level=%s', 'DEBUG' if DEBUG else 'INFO')
 if __name__ == '__main__':
     app.run(host=HOST, port=PORT, debug=DEBUG)
diff --git a/monitoring/.gitignore b/monitoring/.gitignore
new file mode 100644
index 0000000000..4c49bd78f1
--- /dev/null
+++ b/monitoring/.gitignore
@@ -0,0 +1 @@
+.env
diff --git a/monitoring/docker-compose.yml b/monitoring/docker-compose.yml
new file mode 100644
index 0000000000..df98f69d30
--- /dev/null
+++ b/monitoring/docker-compose.yml
@@ -0,0 +1,87 @@
+services:
+  loki:
+    image: grafana/loki:3.0.0
+    ports:
+      - 3100:3100
+    volumes:
+      - ${PWD}/loki/config.yml:/etc/loki/config.yml:ro
+      - loki-data:/loki
+    command: -config.file=/etc/loki/config.yml
+    healthcheck:
+      test: ["CMD-SHELL", "wget --no-verbose --tries=1 --spider http://localhost:3100/ready || exit 1"]
+      interval: 10s
+      timeout: 5s
+      retries: 5
+      start_period: 10s  # Grace period for startup
+    deploy:
+      resources:
+        limits:
+          cpus: '1.0'
+          memory: 3G
+        reservations:
+          cpus: '1'
+          memory: 1G
+
+  promtail:
+    image: grafana/promtail:3.0.0
+    volumes:
+      - ${PWD}/promtail/config.yml:/etc/promtail/config.yml:ro
+      - /var/lib/docker/containers:/var/lib/docker/containers:ro
+      - /var/run/docker.sock:/var/run/docker.sock:ro
+    command: -config.file=/etc/promtail/config.yml
+    deploy:
+      resources:
+        limits:
+          cpus: '1.0'
+          memory: 1G
+        reservations:
+          cpus: '1'
+          memory: 500M
+
+  grafana:
+    image: grafana/grafana:12.3.1
+    ports:
+      - 3000:3000
+    environment:
+      - GF_AUTH_ANONYMOUS_ENABLED=false
+      - GF_SECURITY_ALLOW_EMBEDDING=false
+      - GF_SECURITY_ADMIN_PASSWORD=${ADMIN_PASS}
+      - GF_SECURITY_ADMIN_EMAIL=${ADMIN_LOGIN}
+    volumes:
+      - grafana-data:/var/lib/grafana
+    deploy:
+      resources:
+        limits:
+          cpus: '1.0'
+          memory: 1G
+        reservations:
+          cpus: '1'
+          memory: 500M
+    healthcheck:
+      test: ["CMD-SHELL", "wget --no-verbose --tries=1 --spider http://localhost:3000/api/health || exit 1"]
+      interval: 10s
+      timeout: 5s
+      retries: 5
+      start_period: 10s  # Grace period for startup
+
+  devops-infoservice:
+    build: ${PWD}/../app_python
+    ports:
+      - 5000:5000
+    environment:
+      - DEBUG=true
+    labels:
+      logging: "promtail"
+      app: "devops-infoservice"
+    deploy:
+      resources:
+        limits:
+          cpus: '3.0'
+          memory: 4G
+        reservations:
+          cpus: '3'
+          memory: 1G
+
+volumes:
+  loki-data:
+  grafana-data:
diff --git a/monitoring/docs/L7t1_grafana.png b/monitoring/docs/L7t1_grafana.png
new file mode 100644
index 0000000000..4532864adf
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diff --git a/monitoring/docs/L7t1_infoservice.png b/monitoring/docs/L7t1_infoservice.png
new file mode 100644
index 0000000000..c1d1bcb839
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diff --git a/monitoring/docs/L7t1_loki.png b/monitoring/docs/L7t1_loki.png
new file mode 100644
index 0000000000..409f6e7d16
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diff --git a/monitoring/docs/L7t1_promtail.png b/monitoring/docs/L7t1_promtail.png
new file mode 100644
index 0000000000..e2402e4b20
Binary files /dev/null and b/monitoring/docs/L7t1_promtail.png differ
diff --git a/monitoring/docs/L7t2_grafana.png b/monitoring/docs/L7t2_grafana.png
new file mode 100644
index 0000000000..fa66aad643
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diff --git a/monitoring/docs/L7t2_terminalout.png b/monitoring/docs/L7t2_terminalout.png
new file mode 100644
index 0000000000..ea8013ee2a
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diff --git a/monitoring/docs/L7t3_panels.png b/monitoring/docs/L7t3_panels.png
new file mode 100644
index 0000000000..e293b44ee2
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diff --git a/monitoring/docs/L7t4_compose.png b/monitoring/docs/L7t4_compose.png
new file mode 100644
index 0000000000..b322296f47
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diff --git a/monitoring/docs/L7t4_login.png b/monitoring/docs/L7t4_login.png
new file mode 100644
index 0000000000..b2daf9e676
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diff --git a/monitoring/docs/LAB07.md b/monitoring/docs/LAB07.md
new file mode 100644
index 0000000000..9dfdb62041
--- /dev/null
+++ b/monitoring/docs/LAB07.md
@@ -0,0 +1,101 @@
+# Task 1
+
+## Evidence
+
+#### infoservice
+![infoservice](/monitoring/docs/L7t1_infoservice.png)
+
+#### grafana
+![grafana](/monitoring/docs/L7t1_grafana.png)
+
+#### loki
+![loki](/monitoring/docs/L7t1_loki.png)
+
+#### promtail
+![promtail](/monitoring/docs/L7t1_promtail.png)
+
+# Task 2
+
+#### terminal output
+
+![terminalout](/monitoring/docs/L7t2_terminalout.png)
+
+#### grafana
+
+![grafana](/monitoring/docs/L7t2_grafana.png)
+
+# Task 3
+
+#### panels
+
+![panels](/monitoring/docs/L7t3_panels.png)
+
+# Task 4
+
+#### login page
+
+![login page](/monitoring/docs/L7t4_login.png)
+
+#### docker compose output
+
+![docker compose output](/monitoring/docs/L7t4_compose.png)
+
+# Task 5
+
+
+## Architecture
+
+```text
+devops-infoservice
+  ^
+  |
+  v
+promtail -> loki <-> grafana
+```
+
+## Setup Guide
+
+1. Run `docker compose up -d`.
+2. Follow the detailed instructions on how to set up panels in the grafana webUI.
+
+## Configuration
+
+The configuration files are self-explanatory:
+- promtail discovers docker containers, filters only the one that is the infoservice, labels the logs.
+- loki stores the logs efficiently and indexes them once a day, vacuums once a week.
+
+## Application Logging
+
+I derived JSONFormatter class and used it.
+
+## Dashboard
+
+1. **Logs Table** (Logs visualization)
+   - Shows recent logs from all apps
+   - Query: `{app=~"devops-.*"}`
+
+2. **Request Rate** (Time series graph)
+   - Shows logs per second by app
+   - Query: `sum by (app) (rate({app=~"devops-.*"} [1m]))`
+
+3. **Error Logs** (Logs visualization)
+   - Shows only ERROR level logs
+   - Query: `{app=~"devops-.*"} | json | level="ERROR"`
+
+4. **Log Level Distribution** (Stat or Pie chart)
+   - Count logs by level (INFO, ERROR, etc.)
+   - Query: `sum by (level) (count_over_time({app=~"devops-.*"} | json [5m]))`
+
+## Production Config
+
+The most important configuration is setting the security environment variables. Also, I allocated several GiB of memory
+and several cores of CPU to the services in total.
+
+## Testing
+
+Run `docker compose ps` or check grafana.
+
+## Challenges
+
+Very difficult to configure. Luckily, the lecture provided a basic example.
+
diff --git a/monitoring/loki/config.yml b/monitoring/loki/config.yml
new file mode 100644
index 0000000000..24eaed5982
--- /dev/null
+++ b/monitoring/loki/config.yml
@@ -0,0 +1,29 @@
+auth_enabled: false
+
+server:
+  http_listen_port: 3100
+
+schema_config:
+  configs:
+    - from: 2024-01-01
+      store: tsdb
+      object_store: filesystem
+      schema: v13
+      index:
+        prefix: index_
+        period: 24h
+
+common:
+  path_prefix: /loki
+  storage:
+    filesystem:
+      chunks_directory: /loki/chunks
+      rules_directory: /loki/rules
+  replication_factor: 1
+  ring:
+    instance_addr: 127.0.0.1
+    kvstore:
+      store: inmemory
+
+limits_config:
+  retention_period: 168h
diff --git a/monitoring/promtail/config.yml b/monitoring/promtail/config.yml
new file mode 100644
index 0000000000..7520b10e31
--- /dev/null
+++ b/monitoring/promtail/config.yml
@@ -0,0 +1,21 @@
+server:
+  http_listen_port: 9080
+
+positions:
+  filename: /tmp/positions.yaml
+
+clients:
+  - url: http://loki:3100/loki/api/v1/push
+
+scrape_configs:
+  - job_name: docker
+    docker_sd_configs:
+      - host: unix:///var/run/docker.sock
+        refresh_interval: 5s
+        filters:
+          - name: label
+            values: ["logging=promtail"]
+    relabel_configs:
+      - source_labels: ['__meta_docker_container_name']
+        regex: '/(.*)'
+        target_label: 'container'