Unit cost visibility versus ownership, risk and obligation
The FinOps Foundation recently published a practical article on modelling data centre costs using the FOCUS standard. It’s a pragmatic approach to identifying data centre costs, building unit costs, then a rate card.
See: FinOps for Data Center: Practical Cost Modeling & FOCUS Alignment
The core problem it is trying to solve is straightforward. If you want to decide where workloads should run, you need to compare public cloud and data centre services on the same basis. Not budgets. Not invoices. Comparable unit costs. Apples for Apples.
To explain that, the article uses a hotel analogy.
You have to build the hotel first. Fit out all the rooms. Pay for the building, the staff, the utilities, the maintenance. Whether the guests arrive or not, the cost is there. Public cloud looks different because you only book rooms when you need them.
FinOps’ role in this model is to work out what a room actually costs. A room might be a vCPU hour or a gigabyte of storage. Once you know the full cost of running the hotel, you can calculate a rate card and see how utilisation affects unit prices. Low occupancy pushes unit costs up. High occupancy brings them down.
That is useful. It gives the business a way to compare options and have sensible conversations about where workloads belong. As the article suggests, the business can also adjust prices to drive behaviour.
It also raises a question I have been asked a few times already, “If FinOps is now modelling data centre costs, how does that sit with ITAM?”
The answer is not that ITAM needs to compete with FinOps. It is that they are doing different jobs, even when they are looking at the same building.
What FinOps is actually doing
FinOps is focused on unit economics and decision support.
In hotel terms, it is doing the revenue management job:
- It works out the cost per room night.
- It tracks occupancy.
- It shows how fixed costs behave when utilisation changes.
- It helps answer questions like “should this guest stay here or somewhere else”.
In data centre terms, this means translating large pools of spend into understandable internal services. It means producing a rate card. It means feeding data into a common format so on-prem and cloud can be compared.
This is not governance.
- It is not compliance.
- It is not asset lifecycle management.
- It is about making costs visible in a way that supports decisions.
That is exactly where FinOps should be operating.
Where ITAM fits in
ITAM is not trying to optimise the price of rooms. ITAM is responsible for owning and operating the hotel properly.
The easiest way to see the difference is to look at the types of questions ITAM asks.
Contracts and commercial reality
FinOps can tell you the cost per occupied room.
ITAM asks whether the hotel is on the right contracts in the first place.
- Are you on the right electricity and cooling agreements for your usage profile?
- Are you paying for premium support on infrastructure that does not need it?
- Are you licensing software per server when a site or enterprise agreement would be cheaper, or contractually required?
These decisions affect the baseline cost of the hotel. They do not show up as utilisation. They show up in contracts and commitments.
Entitlement versus usage
FinOps is interested in what is consumed. ITAM is interested in what you are entitled to consume.
In hotel terms, you might be paying for facilities as part of a bundle that you rarely use. You might have committed to minimum room nights under a corporate deal and not be hitting them. You might be paying for staff systems and accounts that are no longer active.
In ITAM terms, this is shelfware, over-licensing, and wasted entitlement. It is cost that never becomes a workload and never appears as capacity utilisation, but still matters financially.
Compliance and audit risk
A hotel can be full and profitable and still be non-compliant.
Fire safety certificates. Food hygiene standards. Insurance conditions. Franchise rules.
None of these improve occupancy. All of them matter.
The same applies in IT. Licence compliance, audit defence, contractual restrictions, data residency rules. These are not optimised by a rate card. They are managed through governance and evidence.
FinOps does not need to own that risk. ITAM does.
Lifecycle and estate hygiene
FinOps generally assumes the rooms exist. ITAM manages whether they should.
Rooms may be out of service. Hardware may be approaching end of support. Maintenance contracts may be renewing quietly in the background. Assets may be fully depreciated but still critical.
These lifecycle realities affect cost, risk, and future planning. They are not always visible in a unit cost model, but they shape the long-term health of the estate.
Waste that utilisation will not show
A good rate card will surface under-utilisation. If half the hotel is empty, the cost per occupied room goes up. That is healthy pressure.
But some waste does not look like low occupancy.
Rooms reserved “just in case” that are never used. Services that nobody owns anymore but are still running. Duplicate suppliers and platforms that grew organically and were never rationalised.
This is portfolio waste, not capacity waste. It sits squarely in ITAM territory.
Same building, different responsibilities
FinOps and ITAM are working on the same hotel, but from different control panels.
FinOps focuses on the price and utilisation of rooms so the business can make informed choices.
ITAM focuses on the obligations, entitlements, lifecycle, and risks that come with owning the building.
The FinOps Foundation’s work on data centre cost modelling is a smart and necessary step. It improves transparency and decision-making. It does not replace ITAM. If anything, it increases the need for clear asset, contract, and licence governance behind the numbers.
What we can learn from FinOps
Presenting cost options as easy to understand unit costs and rate cards works well with the business. They translate the complexity of the datacentre into something concrete.
ITAM can learn from this. We are good at finding risk, waste, and inefficiency. We are less good at expressing those findings in a form the business can use to make decisions.
In hotel terms, FinOps works out the room rate and shows what happens when the hotel is half empty. ITAM is the function that lowers the fixed cost of running the hotel and reduces the chance of expensive incidents. If you remove unused licences, renegotiate a support agreement, retire kit properly, or avoid an audit hit, that is not an internal control win. It is a lower cost base, a lower risk position, and often a better rate card.
When you express ITAM work as “this reduces the unit cost” and “this avoids a probable cost event”, the conversation changes. It becomes decision support. FinOps prices the rooms. ITAM makes sure the hotel is worth owning.
