Expert's opinion

Delivering true value through IT financial transparency

Written by Stephen Coull, Sales Director at Keyrus

The shift of focus from traditional products to value-added services by many companies represents new challenges.

One of the challenges is increasing difficulty to accurately understand their costs and the drivers of these costs. In a services focused world, establishing the actual costs of services remains the key focus; greater levels of granularity are often needed to establish these and to deliver true cost transparency.

This is especially true in a shared services environment where a range of administrative and support services, such as IT, HR and financial services, are provided to the entire organisation.

In today’s interconnected and highly complex business environment, it is more important than ever for both the business units that deliver, and those that receive these services to fully understand the costs as well as the drivers associated with them.

This can be achieved through cost transparency, an approach designed to provide business, finance, and shared service owners with detailed, meaningful insights into their respective areas. By gaining a clear understanding of the costs and volumes of their shared services product and service portfolios, enterprises can make fact-based strategic decisions regarding shared service investments.

Driving profitability and unlocking value through cost transparency

Business leaders need to understand their profitability and costs. Once they do, it enables them to utilise assets efficiently and show accurate profit margins. It provides actionable insights that will drive business transformation and future growth.

Cost transparency is designed to enable businesses to understand and attribute costs more accurately. It also enables those people responsible for specific areas of the business to understand which costs they are able to control, as well as which levers they can pull to effect changes in these.

This is because it creates both visibility and understanding regarding the costs and volumes of their entire IT product and service portfolio. This enables the organisation to make informed and fact-based strategic and tactical decisions regarding its IT investments.

According to Gartner, effective IT cost transparency is built on a foundation of six framework pillars, each of which plays a key role in creating the kind of transparency regarding costs that makes them significantly easier to understand and, therefore control.

These six pillars outlined by Gartner, when implemented properly, will enable CIOs to run IT as a business and provide the financial transparency needed to optimise cost and value.

To truly understand cost transparency and the enormous value it offers to an organisation, it is worth taking a deeper dive into what makes up each of these six pillars, and how they are individually and collectively able to deliver value to the enterprise.

By taking a closer look at each of these, we can determine how IT can best deliver value to the enterprise.

IT Budgeting

It is important to understand that budgets are a management tool used to allocate resources to achieve the enterprise’s objectives. As companies transform into digital businesses, there is a need to select, implement and manage IT more effectively. To achieve this, a multi-view approach to the IT budget is necessary.

In other words, managing costs in technology stacks requires both a technical view, which offers the ability to analyse and benchmark internal technology spend, as well as the calculation of the chargeback cost of IT business services.

At the same time, the business view needs costs organised in a way that clearly displays the cost of IT services in business terms. This enables business executives to easily link IT expenses with business needs.

Multiple budget views enable the holistic management of IT spend, allowing IT to take on a role as a business partner that can help the company in achieving its strategic goals, rather than being seen purely as a cost to the business. Moreover, it enables the IT budget to evolve from a cost tracker to a strategic tool, providing better alignment with the company’s goals.

Investment Planning — Effective Project Financial Management

Effective Project Financial Management is a process that brings together planning, budgeting, accounting, financial reporting, internal control, auditing, procurement, disbursement, and the physical performance of the project. The overall aim is to be able to manage project resources properly and achieve the project’s objectives.

The best way to do this is to begin running IT as a business, by undertaking an investment-planning process that focuses on the entire life cycle of an IT investment, allowing costs to be effectively managed and value to be maximised.

At its core, effective Financial Management is an ongoing process that features a cycle of good management habits, including planning, organising, directing, and controlling the financial activities – such as procurement – in a consistent, responsible manner. It also means applying general management principles to the financial resources of a project.

A crucial part of any project's financial management is post project evaluation. There needs to be proper workshops and documentation on the outcomes of planned objectives. Once these are evaluated, the business will be in a much better position to learn from its mistakes and plan more effectively for future projects.

Chargeback, Allocation and Showback

Chargeback occurs when the requesting department receives an internal bill or ‘cross-charge’ – for the costs that are directly associated with the various services that they consume.

IT Showback consists of providing IT management, departments, and corporate management with an analysis of the IT costs due to each department, without actually cross-charging those costs. Both rely on an effective resource allocation methodology and tools to accurately assign costs to users of IT services.

When considering this pillar, it is crucial that the enterprise clarifies its charter and mandate, aligns its objectives with its business goals, and then selects the right approach for the business. In turn, the IT organisation must understand all the chargeback options that might apply and help the business units to understand these options.

Benchmarking IT Costs

Benchmarking should be built into a chargeback or showback cost model in order to continually, and passively, evaluate key metrics and their trends over time, in order to generate critical insights. Benchmarking thus plays a key role in ensuring IT is spending the correct amount in the right areas.

Benchmarking is not about setting goals and trying to achieve them, but rather serves as an indication of what questions to ask and what insights one should understand about one’s own environment. When done correctly, benchmarking serves as a powerful tool to drive continuous improvement within the business.

IT Cost Optimisation

This is something that CIOs have often tried to achieve, though they have seldom been able to articulate how effectively they have done this, nor how effective they have been in helping to optimise business costs.

Ingraining cost optimisation within the IT organisation’s DNA requires leadership and planning by CIOs. IT cost optimisation needs to be constantly practiced, and CIOs should formulate a programme for cost optimisation by establishing a baseline of IT spending, identifying opportunities relative to peer-group benchmarks, developing a strategy to optimise and execute that strategy, before finally tracking the benefits realised.

Demonstrating the Business Value of IT

CIO’s must find a means of effectively communicating the understanding of the make-up of their IT costs and drivers, which has been learned through cost transparency. It is imperative that CIOs establish a common forum where Finance, IT and Business can come together to discuss IT spend, how it adds value to the business and how it aids in attaining the company’s objectives and strategies.

This can only be achieved if all stakeholders are speaking the same language. Armed with a cost transparency model and a common language, IT, Business and Finance find that they are more easily able to have productive, meaningful discussions.

Delivering cost transparency in a large retail environment

It is important in the retail space to have a robust and repeatable platform that enables the business to calculate the TCO of its IT, Logistics, and Property costs. Keyrus, the leading technology consultancy in South Africa,  worked with The Foschini Group - a large retailer operating across 26 countries that needed a robust granular model to chargeback costs to more than 20 different brands.

To address TFG’s multiple challenges, Keyrus deployed a solution designed in the MagicOrange Platform – a Gartner recognised IT Financial Management solution. Powered by MagicOrange and enabled by the expertise of Keyrus practitioners, TFG now benefits from full cost transparency including an understanding of their total cost of ownership (TCO) and accurate return on capital employed (ROCE).


It should ultimately be clear from the above that when leveraging the Six Pillars of IT Financial Transparency properly, CIOs are able to extend their reach far beyond the traditional focus of IT budgeting.

Solutions like MagicOrange have been designed to enable senior IT management to run IT as a business by providing the financial transparency needed to truly optimise cost and increase the value of the entire enterprise.

Increased demand for IT projects and services, coupled with the challenges that arise as organisations move to digital business models, have heightened the need for CIOs to do more than simply manage their IT budgets.

CIOs serious about making long-term changes to the financial side of their IT organisations need a framework to plan for these changes.  IT Financial Management framework can be used as an agent of cultural change for both IT staff and business stakeholders.

Benchmarking should be used when making any major changes to the enterprise, while effective measurement can be used to sustain these changes.

Cost transparency is a vital cog to ensure that CIOs achieve their plans while providing clear and obvious value to the business, by aligning with its strategies and goals.

By properly leveraging Gartner’s Six Pillars of IT Financial Transparency and a purpose-built ITFM tool, CIOs are able to extend their reach far beyond the traditional focus of IT budgeting. This should enable them to run IT as a business by providing the financial transparency needed to truly optimise cost and value.

Keyrus boasts numerous successes and has been involved in designing and implementing MagicOrange cost transparency solutions at several global financial institutions and across other industries like financial services, mining, telco, and industrials. Keyrus is a tool agnostic consultancy with certified experts and expertise in implementation of all major players of the Gartner’s Analytics & BI Magic Quadrant as well as the MagicOrange cost transparency solution.

This thought leadership article was published by ITWeb and CIO Magazine


Never miss an insight

Stay updated on the latest articles, events, and more

Your email address is only used to send you the Keyrus newsletter and for commercial prospecting purposes. You can use the link in our emails to opt-out at any time. Learn more about the management of your data and your rights.

Continue reading

Success story

Vector Logistics embraces cloud-powered modern analytic solutions

April 20, 2022

A leading national supply chain specialist now benefits from vastly improved visibility and immediate access to information via self-service following a sophisticated cloud-powered analytics solution delivered by Keyrus.

Success story

Robust cost transparency model for The Foschini Group

April 6, 2022

Following this implementation, TFG is benefitting from insights into the costs of delivering IT and services to the group, as well as the ability to accurately assign costs to users of IT services. For the first time, IT is able to properly explain these chargebacks with accurate, detailed reports.

Success story

Company-wide BI enablement and self-service at a large retailer

March 31, 2022

The leadership of Mr. Price Group, JSE listed retail company and one of the largest retailers in South Africa, had the foresight to invest in the new generation of BI solution and to empower wide business communities to utilise the tool. Keyrus has developed a unique methodology to train business users to extract relevant information for fast, competent decision-making through a self-service.

Press release

Keyrus wins a prestigious Tableau partner award

March 14, 2022

Keyrus, a leading business intelligence and analytics consultancy in South Africa announced that it has been recognised as a 2021 Tableau Partner Award winner for the following category: EMEA Rising Star. This award is a testament to Keyrus’s achievements as a long-term Tableau Partner and dedication to their customer success.

Expert's opinion

How to maximise your BI investment through business-wide enablement

March 3, 2022

Modern business intelligence (BI) technologies have propelled a surge in demand for a company-wide BI enablement as, for the first time, entire business communities are able to obtain answers from company data via self-service. That empowers them to have meaningful conversations about data, leading to more data-driven business culture. Once people throughout the business have visibility into, and take ownership of, the data, the organisation benefits from speed to insight as well as the ability to make rapid, informed decisions.


A proud Industry Insight Sponsor of ITWeb BI & Analytics Summit 2022

February 22, 2022

Enabling a data-driven business in a post-pandemic world is a topic that we at Keyrus feel very strongly about. Our experts will be taking the stage to contribute to this years' BI & Analytics Summit thought leadership and discussion on the most effective ways of driving business-wide enablement and maximizing the value of your data.

Press release

Namibia Breweries appoints Keyrus to implement their Big Data strategy

January 27, 2022

A leading southern African beverage manufacturer has selected Keyrus, a leader in the Data & Digital consultancy space, to partner on a journey of platform and application modernisation.

Expert's opinion

The future of business intelligence: 6 key trends

November 18, 2021

Business Intelligence (BI) - has undergone significant transformation in recent years and certainly is not being superseded by artificial intelligence. In fact, it has become more efficient and user friendly since moving to the cloud, utilising AI and machine learning, and its embedded implementation. Today's business leaders know that data is a valuable asset that needs to be used effectively to ensure efficient company processes. They require powerful data analysis tools to help them in the decision-making process. Businesses are embracing sophisticated analytics and data science to gain insights and make more informed decisions, the result; turning your BI department into a profit centre.


Live Webinar - Get to Know Tableau with Keyrus

November 10, 2021

Keyrus, in partnership with Tableau, have assisted organisations to transform how they use data to solve complex business problems, and become more data driven organisations, enabling more informed decision making—do you want to do the same? Register for this live webinar to discover the secrets of a self-service approach to visual analytics.

Press release

Keyrus’s mission is to 'make data matter'

October 15, 2021

An international player in consulting and technology as well as a Data and Digital specialist, Keyrus has announced new goals for the market via a renewed and inspiring vision. A vision underpinned by its 25 years of global and 10 years of South African expertise in the data and digital sector.