Driving transparency and empowering strategic business partnerships

As a global specialist in a wide range of sectors, Macquarie Group is continuously seeking to realise opportunity for the benefit of clients, shareholders and their people. Through an entrepreneurial spirit and encouragement of innovation, their goal is to provide the business groups the resources they need to invest in the technologies that will deliver real business benefit and opportunity to maintain Macquarie’s reputation as a market leader.

The benefits of transparency

The formation of Macquarie’s Technology Business Management Office (TBMO) and the implementation of Technology Business Management (TBM) drove a new approach for managing financial data, chargebacks for IT and other services. The old system of using multiple spreadsheets gave way to a unified, consistent and transparent set of internal costing and budgeting mechanisms. Issues related to delays in providing cost projections, fluctuations in pricing, and fixed versus variable cost issues quickly gave way to what Richard Waters, Head of Services Management and Macquarie’s TBM executive sponsor, called “a robust technology forecast that leaders could commit to”.

Detailed technology costing information allows Macquarie to understand and explain how much is spent on underlying infrastructure, cybersecurity, workplace and central management functions.

That same detailed costing information can be tracked back easily to Macquarie’s businesses, which allows the TBMO to provide a service-oriented consumption model that is transparent to all stakeholders. Business owners, application owners and other internal consumers have more visibility to better understand the allocation and breakdown of technology costs and can choose to optimise services based on customer needs and market conditions.

The overall result has been a resounding success: Macquarie has reduced costs at the same time as fostering new services and products.

“TBM has transformed the nature of our relationship with the businesses we support,” said Waters. “It has changed the conversation from one of intense cost and allocation negotiation, to a business partnership where we are working collaboratively to effectively support the business’ strategic goals and keep costs down.”

Transforming the Technology Finance function

Just over 18 months ago, the Technology Finance team relied on manually intensive methods that many IT departments still use today: spreadsheets.

“The spreadsheet system worked but as a reporting tool it was not as effective as it should be” said Maria Bywater, TBMO Finance Lead. “Being able to see the cost drivers of your IT projects was very difficult. Since the implementation of TBM, tracking technology costs is so much simpler. You can see straightaway what units you’re using, how much it costs and why you are being charged.”

Nowhere have the benefits of TBM been more apparent than helping Macquarie with its technology forecasting and management of chargebacks. Since adopting TBM, Macquarie’s TBMO has re-imagined the Technology Finance function. Instead of the Technology Finance function being simply an accounting service and cost centre, it now operates as a strategic business partner, offering ways for business relationship owners and technology service owners to maximise efficiencies.

“One of our underlying principles around chargeback is stability of prices. Before we started using TBM, every month we would have to regularly review and adjust the price, whether it would be for a service or for an individual person’s labour rate” said James Priestley, Head of Technology Finance. “Now we only review our prices every quarter with a view that we will only make required pricing changes on the half year or the full year.”

Forecast pricing for technology now remains stable and changes only when underlying costs demand it. With TBM, the businesses now understand the drivers of the changes. In addition, stable and predictable costs mean the Technology Finance team is no longer required to go back to the business and recover costs to make up for incomplete forecasting.

Delivering value back to the business

TBM at Macquarie boosts the level of accountability for business owners. It helps them manage demand and to make better business decisions by providing data the entire organisation needs to continuously manage costs. By ensuring costs are transparent, Macquarie’s technology division found itself able to free up funds for proactive, forward-looking technology investments and innovation.
“That dynamic has enabled the businesses to maintain their level of investment in technology and transfer it from running the business to changing the business,” said Priestley. “What we have seen is that as we do save costs, the preference for the businesses is to reinvest those funds in change, innovation, or in other revenue generating programs and TBM has provided that flexibility. So, while the macro budget number has stabilised, the underlying use of funds has changed significantly.”

Advantages for technology service owners

Macquarie’s technology service owners – those stakeholders responsible for the provision of technology services and cost recoveries – not only see a complete and transparent cost representation of their services, they can also see where cost leakage occurs.

According to Ashley Cox, Macquarie’s TBM Transparency Program Director, “This changes how technology service owners look at their service profit and loss for the month. In addition to providing a high-quality service reporting framework, we report the amount of cost leakage, where we cannot recover the costs that we’re incurring to the businesses because we have incomplete data. We’ve seen technology service owners focus on those numbers to refine their data, so they are more accurately recovering the cost of providing their services. The result of improved data quality is a more efficient and equitable service price for all technology consumers.”

In short, TBM provides insight to support strategic decision making, such as the shift to cloud. Further, TBM helps the business units improve their own cost reporting and the quality of the data it provides. Given the more complete and accurate cost picture, business owners also want to find and realise simple savings (for example, the elimination of duplicate or unnecessary costs) and work with IT to bring down costs overall.

Better yet, because TBM enables self-service, technology service owners can analyse the system independently to run their services more efficiently and this information is transparent to the businesses.

Reflecting on the launch and adoption of TBM

Launching the three core components of TBM in quick succession over a 12-month period, with a ‘Go Live’ coinciding with a new financial year, required significant commitment and effort across the technology, finance and business relationship management functions. “Before we launched the TBM platform, we identified the big issues and worked closely with our stakeholders to solve those – gaining transparency over the data helped to focus attention and drive change.

When we look back now, we have a fair amount of pride and belief that what we implemented was ground-breaking and foundational,” said Cox. “In the months following transition, we have focused on delivering continuous improvements, driving adoption and streamlining reporting to further embed the core TBM practices to enhance the user experience.” The TBMO successfully ran a full financial year cycle, delivered 80+ enhancements, trained 350 users across the business and is now focused on further evolution.

Macquarie’s businesses have embraced the concept of TBM because having transparent and reliable data enables them to understand cost drivers and manage demand in partnership with Technology. “The next steps are to evolve the transparency of technology services and present costs in a language that align to the products each business provides in the markets,” said Waters. “Achieving this will unlock additional value and optimisation opportunities to support continued innovation and growth for the businesses.”