Measuring the unmeasurable
The role of cost transparency is becoming increasingly critical to large businesses, says Blake Davidson, Head of Delivery at Magic Orange.
In any large organisational cost base, there will inevitably be expenses that occur with no clear accountability or detailed understanding thereof. 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 upon 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.
Blake Davidson, Head of Delivery at Magic Orange, knows just how important it is to understand these costs in great detail, thanks to his experience working for several global enterprises in the financial services sector.
A Chartered Accountant, he studied at the University of KwaZulu-Natal, before undertaking his articles with one of the country's big four accounting firms. He then spent six months in Edinburgh completing his articles, before moving to London, where he spent nine years.
"In that time, I learned just how vital the financial accounting side of the business was, and also just how much this interested me. I spent quite a bit of time at Morgan Stanley, looking after IT spend, which is where I discovered how important cost transparency is and just how complex the IT within a large enterprise is in this respect," he says.
He then moved to Barclays in the UK, looking after corporate real estate: in effect, reporting on the buildings Barclays owned and rented, which gave him exposure to further elements of the shared services environment. He suggests that having initially been involved with technology and IT; finance; legal and compliance; and human resources at Morgan Stanley, his work with Barclays gave him a solid understanding of many of the different departments and functions across Shared Services and Infrastructure.
"Upon moving back to South Africa, I joined Magic Orange, where the mature skills set I had picked up in London were of great value. It was, in fact, fantastic to be able to put these skills into practice at a leading-edge organisation in the cost transparency arena. Upon returning, I certainly expected to have to move into a more generic financial manager role, but at Magic Orange, I am actually able to help to increase South Africa's maturity in this market space.
"Quite often within IT, there are technically focused people for whom commercial sense of the enterprise is not the key area of focus, while the opposite is true of those running the business side.
"This creates two different camps which struggle to understand one another. Thus, for me, it is critical to create a link between what business needs and what IT provides, thereby changing the conversation they have.
"This change could be as simple as shifting the focus from IT 'delivering an application to the business', to something more akin to IT being able to state that it 'delivers this much value to the business via a particular application'," adds Davidson.
What this shift in tone accomplishes, he continues, is to enable the business to view IT more as a partner and a value centre, rather than simply as a cost centre. This, in turn, improves the alignment between the two and IT is better positioned to support the business. In this way it is able to deliver what is required to help the business meet its goals more quickly.
"As Head of Delivery, my team is responsible for implementing our solutions at clients. This is usually the start of a continuous journey, as they mature the concept of cost transparency within their organisation. Our team provides advice on how best to accomplish this and also assists the client with the non-technical changes that are required for success. This includes changing the corporate mindset, shifting behaviour and redefining roles and responsibilities."
He explains that his job is basically to implement the solution at clients and be able to demonstrate significant value to them, from what is a very complex issue, within just a few weeks.
"Most forms of cost transparency take months or even years to demonstrate meaningful returns, so to be able to help the client to articulate value within such a short space of time, he adds, is a real game-changer for them.
"It is quite something to see how people's faces change when they realise that something that they thought was basically unmeasurable can not only be measured, but that the results can also be used to derive substantial value in a very short space of time."
"Then comes the realisation that this is an ongoing journey, where they will be looking to improve continuously. This is the beauty of our cost transparency solution: it enables such granular levels of understanding that the client can continuously delve deeper, in order to find additional hidden costs that can be managed or improved.
"And from our side, this means an ongoing relationship with the customer, continuously delivering more value through constant improvements and cost-cutting measures enabled by this progressive application called Magic Orange. For me, this is what makes this job so exciting and rewarding," concludes Davidson.