Providing global scale cost transparency for leading IT and business solution provider

With over 200 legal entities in more than 55 countries spread across each continent, the company is a leading IT infrastructure and services company. Their size and complexity created difficulties tracking, managing, and charging costs. The primary reason for choosing MagicOrange Prism was to simplify the cost-charging process after successfully implementing IT Financial Management (ITFM) in telecoms previously.

The Challenge

The IT and business solution provider had varied groups, all with multiple global divisions that receive or provide services to each other. These cover everything from IT support, IT equipment, Cloud services, marketing, human resources, and facilities. With so many different services and over 310,000 employees in various countries and regions, charges were managed by numerous Excel spreadsheets, several individual owners, and in a multitude of currencies.

This resulted in inconsistencies and ambiguous charges. To further add to the complexity, no one person could trace charges from start to finish, or identify the originating cost they were being charged for.

Each central function would manage its charge-out methods using non-consumptive data, such as revenue or headcount. These charges would mostly be a below-the-line charge to various business recipients and create inaccuracies. The client required a solution to help their CFOs reduce the effort needed to manage charges, simplify their processes, and gain complete visibility into their figures.

The Solution

MagicOrange Prism was selected as the platform of choice to provide covered allocations of all central function’s charges to the consuming entities across all groups and divisions. In addition, Prism enabled the allocation of central and local insurance charges per country and legal entity responsible for the insurance charges.

MagicOrange supported the client with the review of allocation models from various service units by showing the cost flow from the entity incurring the cost, the on-charge to the service unit, and the recovery of costs from the end-consuming business unit.

Using MagicOrange, our client had a combined view of all costs across the globe in one currency. Moreover, it allowed users to see which entity is providing the cost, routing the cost, and consuming the cost. For the first time, CFOs were able to see the total cost they are managing - a game changer for the company.

Now any user can log in from anywhere in the world and see changes from any of the previous models. MagicOrange also assisted with the complex costing of transfer pricing and managing tax rules throughout the model, as well as providing ‘What-If’ scenario views showcasing various charge-outs.

Benefits

• Enhanced cost clarity: Thanks to MagicOrange, each business owner can easily manage their costs with one-click and say goodbye to the endless chain of unreliable and tedious Excel spreadsheets.
• Cost driver insights: The client now has valuable insights into the drivers of costs across divisions, empowering CFOs, and CIOs to make smarter business decisions based on consumptive data.
• Drive accountability and cost optimisation: MagicOrange has equipped the organisation with the information necessary for business units to effectively manage costs based on drivers within their control, fostering accountability and cost optimisation.
• Easy and intuitive user experience: By transitioning to MagicOrange, the client now has end-to-end transparency and visibility across all consuming business units, facilitating effortless changes to charge-out models.
• Comprehensive cost analysis: MagicOrange lets users to drill down and filter for any specific cost in their cost model, allowing CFOs and CIOs to examine specific costs and their relationships across different areas of the business.
• Efficient central charge management: With MagicOrange Prism, CFOs and CIOs can identify which projects, storage, and compute is allocated to which source account and cost centre in the General Ledger, increasing operational efficiencies and optimising resource allocation.
• Establishing a consistent charge-out approach: This Fortune Global 500 client did not have a consistent charge-out approach for central costs, and no single source of truth for how they should allocate and identify costs. Now they do. Following the successful implementation of MagicOrange Prism in telecoms, the client is able to charge out costs in a unified, rational and understandable manner to subsidiaries all over the world.
• Rapid time to value: What’s more, the client realised the benefits of cloud-native IT Financial Management within one month of implementation.

To start your IT Financial Management journey today, get in touch with our expert team.