There has never been an easy way to understand the true cost of running shared services. If someone asked you right now, would you know how all of your shared resources are being consumed? Would you say that your budget split is even close to being accurate?
“Today, one of the most challenging parts of functionally mastering and executing a costing methodology is the allocation of shared services costs across the organisation.” Thomson Reuters, The Secrets of Costing Shared Services
For most companies, understanding the true cost and profitability of different products and services is not easy. Cost allocation can be a highly complex and time-consuming process, especially when it comes to accurately allocating the cost of shared services such as IT, procurement, HR, payroll, marketing, finance, and accounting. Very few enterprises have transparency on these kinds of shared costs. And because of this, they lack complete, accurate knowledge of their company’s cost drivers.
The importance of cost transparency
When you don’t have a clear picture of your business costs, you’ll have a hard time understanding your true profit margins. You won’t be able to accurately measure financial efficiency, nor defend the costs of shared services. More importantly, you’ll have a hard time making informed decisions about your business.
You need to change the questions you ask. It shouldn’t be ‘why is IT so expensive?’ or ‘is our shared services spend in line with our budget?’. The question you need to ask is ‘what can we do to better understand our costs and what is actually driving them?’
Enter Magic Orange
The problem with most cost transparency initiatives is that they are extremely complicated and time-consuming to implement. They seldom have a repeatable and accurate total cost ownership (TCO) of products and services. Most initiatives rely on complex spreadsheets just to calculate a TCO. Magic Orange makes profitability and cost transparency simple and means you can spend less time on data sourcing and spreadsheet wizardry, and more time on analysis.
So, what is Magic Orange?
Magic Orange is a successful, disruptive software platform created to enable shared services managers to run their shared service department like a business. It is a ready-to-deploy solution that empowers you to take control of costs and unlock optimisation opportunities. At a more macro level, it provides deeper insight into company spending.
By using the patent-pending Magic Orange pricing engine, you can calculate an accurate price and TCO for your product and service portfolio. This knowledge will then help you to make decisions that can drive down your costs, improve efficiencies within shared service departments and ultimately increase profitability. Best of all, with its fast and easy deployment process, you will see a quick return on investment.
How does Magic Orange work?
Magic Orange intelligently processes financial and asset data to reveal insight into the cost, value and utilisation of shared services, and their true relationships to business services and products. This allows shared service executives, finance, and business units to make informed data-driven decisions enabling cost optimisation, efficient planning and smarter business aligned investments.
Data Integration: Magic Orange integrates data from different data sets and then creates a repeatable, robust and accurate TCO solution. This allows you to understand each constituent element of the TCO and its contribution to cost so that you can identify the impacts of specific changes in these costs. By using Magic Orange, you avoid being overwhelmed by data. Instead, you end up information and insight that can be leveraged for your company’s benefit.
Clear pricing: Pricing shared products and services accurately can be a difficult and onerous task. Magic Orange’s advanced algorithm takes care of complex calculations and delivers an accurate, granular view of the internal pricing of shared services. It is designed to calculate large volumes of detailed allocations in minutes and removes the individual complexities of costing between finance, shared services, and business. You can transform an admin nightmare into a profitable, time-saving business asset.
Future focus: Magic Orange’s Dashboards and Analysis toolset allows business users to benchmark their current cost environment against budgets, forecasts, historical data and any number of what-if scenarios. This means users can make meaningful decisions concerning tactical and strategic initiatives. The data solution is also scalable to ensure that companies of any size are able to use Magic Orange.
Contact us to discover how Magic Orange can improve cost allocation and ultimately the bottom line for your business
Analytics8 is technology agnostic advisor and implementation partner, not a software reseller. We pride ourselves on being able to provide businesses with genuine, unbiased advice based on our deep experience in data warehousing, business intelligence and advanced analytics. We are passionate about transforming data into usable information and actionable insight and have the skills and experience to deliver projects irrespective of an organisation’s current technology mix.