Expert Opinion

Measuring The Unmeasurable

In any large organisational cost base, there will inevitably be expenses that occur with no clear accountability or detailed understanding. This is particularly true of the shared services environment, where there are usually multiple input costs for a given service. Understanding these costs and how they impact one another is vital if the organisation wishes to cut costs or optimise services. This is why the role of cost transparency is becoming increasingly critical to large businesses. MagicOrange enhances cost transparency and with that transparency, fosters accountability.
By: Blake Davidson
Published on July 8, 2024
Read time: 3 mins
Article

The Importance of Cost Transparency

Understanding how shared services costs apply

Shared services refer to the consolidation of business operations used by multiple parts of the same organisation into a dedicated center. This approach unifies various back-office operations, enhancing efficiency and eliminating redundancy. However, shared services can create complexities in cost management, making it essential to understand and account for these expenses accurately.

Role of cost transparency

Cost transparency helps in identifying and managing costs effectively. By providing a clear view of expenses, businesses can optimise services and reduce wastage. It allows organisations to understand the total cost of ownership of their digital services, enabling informed decision-making that supports strategic business objectives.

Importance of financial accounting in IT

During his time at Morgan Stanley and Barclays, Davidson learned the importance of financial accounting in managing IT spend. His exposure to various departments and functions within shared services and infrastructure gave him a solid understanding of the complexities involved in cost transparency. This experience has been invaluable in his role at MagicOrange, where he helps clients understand and manage their IT costs.

Bridging the Gap Between IT and Business

Creating a link between IT and the business line

One of the key challenges in large organisations is aligning IT and business goals. Technically focused IT personnel may not always understand the commercial aspects of the enterprise, while business leaders may struggle to grasp the technical complexities of IT. Bridging this gap is crucial for effective cost management and value delivery.

Changing the perception of IT around the organisation

Cost transparency can transform the perception of IT from a cost center to a value center. By providing detailed insights into the costs and value delivered by IT services, businesses can see IT as a partner that supports their strategic goals. This improved alignment enhances the ability of IT to meet business needs and drive overall success.


Expert Insights from Blake Davidson
Blake Davidson, Chief of Staff at MagicOrange, has extensive experience working for several global enterprises in the financial services sector. A Chartered Accountant, he studied at the University of KwaZulu-Natal and completed his articles with one of South Africa’s big four accounting firms. After gaining valuable experience in Edinburgh and London, Davidson returned to South Africa, bringing his mature skill set to MagicOrange

Implementing Cost Transparency with MagicOrange

As Head of Delivery at MagicOrange, Davidson is responsible for implementing cost transparency solutions at clients. His team provides advice on best practices and assists with the non-technical changes required for success, such as changing corporate mindsets, shifting behaviors, and redefining roles and responsibilities.

One of the standout features of MagicOrange is its ability to demonstrate significant value within a short period. Unlike traditional cost transparency solutions that take months or years to show results, MagicOrange helps clients articulate value within weeks. This rapid demonstration of value is a game-changer for businesses looking to optimise their IT costs quickly.

The Ongoing Journey of Cost Transparency

Cost transparency is an ongoing journey that requires continuous improvement and value delivery. MagicOrange enables clients to delve deeper into their cost structures, uncovering hidden costs and opportunities for optimisation. This ongoing process ensures that businesses can continuously improve their cost management strategies and drive greater efficiencies. MagicOrange’s commitment to continuous improvement fosters long-term relationships with clients. By providing ongoing support and value through constant enhancements and cost-cutting measures, MagicOrange helps businesses achieve sustained success in their cost transparency initiatives.

Cost transparency is essential for optimising services and reducing costs in large organisations. MagicOrange, with its comprehensive cost transparency solutions, helps businesses achieve this by providing detailed insights into their expenses. Blake Davidson’s expertise and the innovative capabilities of MagicOrange make it possible to measure the unmeasurable, transforming IT from a cost center to a value center.

Want To Learn More?  Let’s Start A Conversation.

SCHEDULE A DEMO CONTACT SALES