Transforming a large bank’s cost management practice with robust and repeatable ITFM transparency

MagicOrange Prism replaced the spreadsheet environment and repaired obvious errors in the models, breaking down the bank’s overall IT budget which amounted to billions of dollars.

Challenge

One of the leading financial institutions in EMEA faced a complex problem - its IT cost allocation model relied on spreadsheets that were not fit for purpose in an enterprise institution.

The day-to-day problems of using Excel

• As the client’s spreadsheets grew larger and more complex, they produced different results for the same queries, leading to mistrust in output.
• Reciprocal charging, such as IT charging finance and vice versa, caused circular reference formulas within the spreadsheet, corrupting the file and leading to more mistakes.
• Excel posed risks to governance & security and did not provide an audit trail, making it challenging for the bank to ensure accuracy.
• Any changes made to financial information in the spreadsheet affected the accuracy of the cost allocation models, making it challenging to create budgets accurately.
• Using actual data from the previous month to create new cost allocation models took too much time, forcing the client to rely on estimates and assumptions.

The long-term impact of using Excel

Excel did not allow the client to test various scenarios, such as the various effects of moving to the cloud or implementing virtualisation. This made it nearly impossible to find a new solution based on facts that could lead to improvements for the business.

Having previously used an ITFM tool which failed to deliver clear and understandable cost transparency, the client was initially hesitant to commit to another tool. They needed a scalable, reliable, and flexible ITFM tool they could trust. MagicOrange were happy to provide such a tool having successfully implemented ITFM in the banking sector previously, with over 20 years of experience in this domain.

Solution  

MagicOrange implemented a cost transparency system that demonstrated how the bank's IT budget was allocated across various categories of spending.

• The new Prism system was deployed in two weeks, and the bank gained a detailed breakdown of their overall IT budget which amounted to billions of dollars.
• MagicOrange replicated and replaced the complex spreadsheet environment, consolidating it into one simple interface.
• Prism identified and repaired obvious errors in the client’s Excel-based allocation models.
• Ensuring powerful BI analytics were delivered to the organisation's IT, Finance, and Business stakeholders.
• Prism’s proven success in the banking sector was a key reason for being selected.

Benefits

• Faster time to model costs: Using MagicOrange, budgets and changes to budgets take minutes to calculate, while the impacts of changes to the model are also easy to trace, understand, and report on.
• Increased accuracy: Actuals are also loaded into the model for the first time, enabling the system to incorporate real financial data from the bank's operations into its calculations and reflect the bank's actual spend and revenue, rather than budgeted or projected figures. Better yet, actuals are loaded and ready by the 5^th day of the month.
• Data-backed decision making: By loading actuals into the model, the bank can get a more accurate picture of its financial performance and make better-informed decisions based on that data.
• Self-service capabilities: Customer stakeholders can answer their questions on a self-service basis, using MagicOrange’s powerful BI analytics, Microsoft Power BI.
• Reciprocal charging is modelled effectively: An accurate Total Cost of Ownership (TCO) of products and services is available to all divisions of the business.
• Simplified scenario modelling: Multiple scenarios can be tested to assist in both strategic and tactical decisions.

We’re pleased to say that the client was extremely satisfied with the implementation and attributed the new system’s success to three key factors:

1. the aggressive deployment timeline undertaken by MagicOrange
2. the exemplary product
3. the collaboration and cooperation of the bank’s key stakeholders.