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The future of cost transparency

By Wayne Shearer, MagicOrange, Managing Director APAC

Johannesburg, 03 Mar 2022
Read time 4min 10sec

True cost transparency:

IT cost transparency is currently more integral to business performance than it has ever been before. We are witnessing a new era of digital transformation with businesses expanding digital offerings to meet customer demands for online interaction, the inclusion of cloud strategies and the increasing trend of remote teams across the globe, to name a few. As industries evolve towards digital service-based economies, it is becoming more and more important for organisations to understand the total cost of ownership of these new digital services. If you take the cost of delivering an insurance claim, there is an IT ecosystem supporting this delivery service, such as support people, IT engineers and server costs. Often these costs are “hidden” and not included in the total cost of delivering the service. Only when a true total cost is known, can informed decisions be made that support the strategic direction of the business.

The misconception of the IT black box:

If you have worked in IT cost management for long enough, you would have heard the phrases, “it is too expensive and takes too long to deliver”; “we are over budget and I now have to carry the additional IT ‘business as usual’ costs”; and "where is the return?” These comments often lead to the ultimate comment of “IT is a black box”. I feel that this is not a fair reflection on the work that IT finance departments do when supporting both the IT division and the business. What is needed are solutions to support IT financial management.

The ability to have true cost transparency is a relatively new capability that IT divisions are striving to achieve. As enterprise resource planning (ERP) was a new discipline in the 1980s that gained traction over time and is now a core capability within IT divisions, so too is the evolution of “IT total cost of ownership” and the solutions within the market such as MagicOrange. As the awareness of the benefits that businesses are achieving through IT financial management increases, the discipline and concept of total cost of ownership will become a fundamental requirement in supporting the strategic objectives of the business.

CIOs and CFOs can now use a common language to understand the various costs of their business:

As we breakdown the concept of the IT black box through transparency of the actual cost and the associated drivers of these costs, we need to be able to translate IT spend from technology concepts into cost measures that are relevant to the business. This will ultimately ensure that IT and the business speak the same language.

This is where IT financial management solutions such as MagicOrange have a significant role to play. Through proven cost modelling and cost taxonomies, IT financial management enables the CIO and executive managers within the IT division to understand what drives their costs, and articulates this in a manner relevant to the CFO and business, therefore assigning the black box of IT to history.

How to achieve the holy grail of true IT financial management:

The need for an IT cost transparency solution will continue to grow in the coming years as varying workplace solutions develop and more businesses move to digital platforms to support customer service delivery.

MagicOrange is positioned to be a business productivity tool for both IT and the business. We leverage Microsoft technologies and tools, making it simple and easy to adopt. Our tool is not a proprietary solution like many competitive solutions. All functionalities and modules within the MagicOrange Prism are included for a single price point, with the added benefit that MagicOrange is cloud native and hosted on Microsoft Azure, offering the same security that governments and FTSE/Fortune 100 companies rely on. We are recognised by Gartner as an established offering in their Market Guide to ITFM solutions.

What our clients say about us:

“I went into a meeting with the business COO and he started questioning his IT charges. I brought up MagicOrange and had instant creditability – all the detail at my fingertips.” – Client in the insurance industry

“Phenomenal work! You have taken the insights to a level unseen in this business. I can see it changing perceptions and discussions around IT with the business. A game-changer.” – Client in the insurance industry

“The MagicOrange team were able to complete analysis and scenarios that we previously did not have access to.” – Client in the banking industry

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