The Foschini Group is a prominent retail organisation with more than 20 different brands. They required a comprehensive cost transparency solution to allocate costs accurately across these brands and improve their Return on Capital Employed (ROCE).
The Challenge
TFG lacked a cost transparency solution and chargeback model for their various brands. They required both the right solution and the relevant expertise to introduce an effective cost transparency discipline into the enterprise.
For a cost transparency solution to be implemented, TFG first required a complete product and service catalogue. The MagicOrange team were able to assist the client to build this from scratch.
Furthermore, there was no existing model for the allocation of costs based on operational drivers. This meant that every product and service required a driver to be sourced and incorporated into the MagicOrange model. In addition to the development of these drivers, education on how defendable and fair these drivers were, was also required as part of the implementation. Finally, the many disparate and distributed source data sets needed to be drawn together and this required the engagement of over 30 cost centre managers in the project.
Ultimately, the key demand from TFG was for a secure, robust, and repeatable cost allocation solution and framework, one that provided a complete audit trail of changes and a Business Intelligence front end that was capable of assisting in self-service for IT, logistics, property and brand stakeholders.
The Solution: MagicOrange Platform
The MagicOrange platform was implemented to address TFG’s challenges. The first phase focused on the IT & Logistics stack, delivering significant improvements within eight weeks.
Product and Service Catalogue: MagicOrange created a new product and service catalogue for TFG.
Operational Drivers: New drivers were identified and mapped to support cost allocations.
Business Intelligence (BI) Analytics: A set of powerful BI analytics was delivered to IT, logistics, finance, and business stakeholders.
Implementation Process
The implementation of MagicOrange was rapid and efficient:
Rapid Execution: The first phase, focusing on the IT & Logistics stack, was completed in just eight weeks.
Comprehensive Roadmap: A three-year roadmap was developed to ensure long-term success.
Benefits of MagicOrange
Rapid execution:
The new system was developed and implemented in a mere eight weeks.
Total Cost of Ownership (TCO) insights
Availability of fully loaded and accurate TCO for products and services across the organisation. This comprehensive understanding of costs supports budgeting, forecasting, and investment evaluations.
Data insights
Precise TCO of IT, logistics, and property services items established. Individual brands received pro-forma allocation of specific costs for the first time.
Calculating Return on investment at brand level
Accurate determination of profitability after shared service cost allocations enables precise calculation of return on capital at a brand level, providing CIOs and CFOs with improved financial visibility and insights.
Self-service analytics
MagicOrange’s powerful Analytics (BI), embedded Microsoft Power BI, enabled self-service access for stakeholders to answer questions.
Strategic decision-making
The implementation of scenario modelling empowers CIOs and CFOs to assess multiple scenarios, including different budgets, actuals, and forecast data. This aids in strategic decision-making and supports effective resource allocation.
Improved financial governance
TFG’s new MagicOrange cost transparency solution ensures reciprocal charging is properly modelled and catered for, promoting fairness and transparency among different business units. This supports robust financial governance practices and compliance.
Cost optimisation and informed management decisions
The client now has the ability to price both logistics and transport costs accurately which can be used to optimise costs and change the ordering process from suppliers.
Expertise and collaboration
MagicOrange provided advisory capabilities and expertise to support the customer’s transition into new territory.
Training for proficiency
MagicOrange followed up the implementation with a period of education and evangelizing, to ensure success. The company also introduced the technology business management (TBM) framework into the engagement, which made it much easier for the client to sell its allocation model to the 20+ brands that were required to utilise it.
