Due to the nature of our customers, and the requirements for confidentiality, we do not name our customers. However, should you wish to speak to our existing customer about the Magic Orange Solution, please contact us to request that we facilitate such communication
Creating clear visibility into share services costs
In the current economy, it is more critical than ever for enterprises to understand whether they are achieving an acceptable return on their investments. In order to reduce operating costs there is, and this means they need to create transparency around the cost, quality and value of shared services. In particular, there is a noticeable shift in the IT space where there is a growing focus on improved management of the consumption of IT services. Therefore, if IT is to be able to defend the costs of its services and be better positioned to make effective value-based decisions, cost transparency has never been more critical.
This was certainly the case for a particular asset manager with significant assets under management and both retail and institutional clients across Africa. This organisation realised that it had no transparency across its IT stack, nor any effective total cost of ownership (TCO) model. Lack of transparency meant there was no IT charge-back to the business and the company was instead managing its IT cost base using a traditional financial cost centre, along with account reporting and management techniques.
Thus, it sought more transparency within its IT cost base, due to the need to understand which business units, hardware, software and people were driving the organisation’s IT costs. It was also considered important to understand what cost optimisation opportunities were available within the IT value chain.
Realising that the enterprise did not necessarily have the right data, nor the bandwidth for their team to be capable of producing the levels of transparency that was being sought, the asset manager turned to Magic Orange for assistance.
Magic Orange undertook a very successful proof-of-concept (PoC) focusing on a small portion of the asset manager’s IT cost base, which demonstrated exactly how effective its cost transparency solution was. The success of this PoC led directly to a complete Magic Orange implementation that ultimately ended up covering more than 90% of the organisation’s IT cost base.
The successful implementation – which was undertaken in just two months – can be attributed to the active application of Magic Orange’s Technology Business Management (TBM) framework. By applying TBM, the implementation team was able to gather and load sufficient data to model the vast majority of the company’s IT cost base, leading to the customer happily moving onto a monthly licence fee model.
Furthermore, Magic Orange was able to deliver an accurate and fully loaded TCO, thereby enabling a fair and defendable charge-back to the business. Moreover, the use of the TBM framework went beyond this, affording the customer the opportunity to glean additional unexpected insights into the organisation’s IT spend.
The client found the transparency concerning the TCO of its enterprise resource planning (ERP) stack particularly insightful. The success of the implementation is also highlighted by the fact that soon after, the customer engaged Magic Orange to expand the scope of the implementation scope beyond just the IT stack, in order to model its remaining shared services stacks as well.
Two critical factors ensured the success of the project. The first was the willing cooperation of the customer from the outset, with the client getting engaged and actively using the solution from the earliest possible time. This included having the project sponsor utilise the embedded Power BI metrics as soon as they could, and having the project manager load and configure the data sets from the outset.
This hands-on customer engagement made sure data issues were identified and dealt with early and that the right cost drivers were obtained.
The second key factor in the success of this project was the application of the Technology Business Management framework (“TBM”) to the implementation, something that allowed the customer to slice and dice the data into cost pools, IT towers and applications or services. The use of TBM enabled the customer to complete the annual zero-based IT budget more rapidly and accurately, while at the same time enabling cost allocation and optimisation issues to be easily identified.