Customer Success

How The Foschini Group gained holistic cost optimisation with MagicOrange

When it comes to determining the Total Cost of Ownership (TCO) of delivered products and services, it is vital for organisations to be able to place a single value on the complete lifecycle of a capital purchase. This value includes every phase of ownership, from acquisition through operation, and includes the softer costs of change management that follows the initial acquisition, such as documentation and training.

In the retail space, it is therefore important to have a robust and repeatable system that enables the business to calculate the TCO of its IT, logistics and property costs. The Foschini Group (TFG) needed a robust granular model to charge back these costs to more than 20 different brands. The requirement for doing so was new, and existing systems did not provide this capability.

In addition, the client also required a more accurate return on capital employed (ROCE) per brand, such as determining Earnings Before Interest and Taxes (EBIT) after allocations divided by capital, rather than simply EBIT divided by capital. The retailer turned to MagicOrange to assist with both an implementation and consulting services.

The Challenge

TFG had no cost transparency solution and no chargeback model for  their various brands. They required both the right solution and the relevant expertise to introduce an effective cost transparency discipline into the enterprise.

For a cost transparency solution to be implemented, TFG first required a complete product and service catalogue. The MagicOrange team were able to assist the client to build this from scratch.

Furthermore, there was no existing model for the allocation of costs based on operational drivers. This meant that every product and service required a driver to be sourced and incorporated into the MagicOrange model. In addition to the development of these drivers, education on how defendable and fair these drivers were, was also required as part of the implementation. Finally, the many disparate and distributed source data sets needed to be drawn together and this required the engagement of over 30 cost centre managers in the project.

Ultimately, the key demand from TFG was for a secure, robust, and repeatable cost allocation solution and framework, one that provided a complete audit trail of changes and a BI front end that was capable of assisting in self-service for IT, logistics, property and brand stakeholders.


The answer to these challenges was the implementation of the MagicOrange Prism platform. The first phase focused on the customer’s IT & Logistics stack – an individual stack that nonetheless had a substantial budget. This phase was delivered in a mere eight weeks, despite being driven from a zero base.

As part of the project, MagicOrange created an entirely new product and service catalogue for the customer, as well as a new end-to-end service value chain. New drivers were also identified and mapped and, finally, a set of powerful BI analytics was delivered to all IT, logistics, finance and business stakeholders across the enterprise.


  • Rapid execution: The new system was developed and implemented in a mere eight
  • Total Cost of Ownership (TCO) insights: Availability of fully loaded and accurate TCO for products and services across the organisation. This comprehensive understanding of costs supports budgeting, forecasting, and investment evaluations.
  • Data insights: Precise TCO of IT, logistics, and property services items established. Individual brands received pro-forma allocation of specific costs for the first time.
  • Calculating ROCE at brand level: Accurate determination of EBIT after shared service cost allocations enables precise calculation of ROCE at a brand level, providing CIOs and CFOs with improved financial visibility and insights.
  • Self-service analytics: MagicOrange’s powerful Analytics (BI), embedded Microsoft Power BI, enabled self-service access for stakeholders to answer questions.
  • Strategic decision-making: The implementation of scenario modelling empowers CIOs and CFOs to assess multiple scenarios, including different budgets, actuals, and forecast data. This aids in strategic decision-making and supports effective resource allocation.
  • Improved financial governance: TFG’s new MagicOrange cost transparency solution ensures reciprocal charging is properly modelled and catered for, promoting fairness and transparency among different business units. This supports robust financial governance practices and compliance.
  • Cost optimisation and informed management decisions: The client now has the ability to price both logistics and transport costs accurately which can be used to optimise costs and change the ordering process from suppliers.
  • Expertise and collaboration: MagicOrange provided advisory capabilities and expertise to support the customer's transition into new territory.
  • Training for proficiency: MagicOrange followed up the implementation with a period of education and evangelizing, to ensure success. The company also introduced the technology business management (TBM) framework into the engagement, which made it much easier for the client to sell its allocation model to the 20+ brands that were required to utilise it.