With three decades of experience at the intersection of finance and technology, Ronald Laxton knows the challenges CFOs face, and how to solve these.
By: Rodney Weidemann
In the current economic climate, the compliance requirements that the chief financial officer (CFO) is expected to meet are becoming increasingly onerous. In addition, the modern CFO is expected to focus on a wider range of corporate issues than ever before, while having less and less time in which to do so. For this reason, the CFO’s need for real time access to vital business information has never been greater.
The challenge, says Ronald Laxton, General Manager at Keyrus (an international technology consultancy that implements Magic Orange) is that, when it comes to making crucial cost management decisions, too many organizations still remain dependent only on what amounts to little more than sketchy data combined with gut feel.
“The typical organisational approach to cost management tends to adopt a one-dimensional view of such expenditures, ignoring the contextual information related to these costs. Failing to understand the entire ecosystem surrounding these costs properly makes it much more difficult to identify where interventions can be made, in order to reduce or improve the effectiveness of such expenses,” Ronald says.
“What is needed to change this is an approach and the supporting systems that make this information available when it is required, accurately, and perhaps most vitally, presented in a manner that makes it easy to digest.”
He explains that prior to his corporate career, he worked as a minister at the Methodist Church for nine years, having studied Theology at Rhodes University. He then moved into the business world. Since he had always had an interest in the intersection of technology and finance he launched his own company that provided opportunity to be involved in various ERP projects in South Africa, Africa, Germany, the UK and the USA It is through this experience that he understands the importance of the CFO having the necessary information available at the right time, in order to make critical business decisions.
“I sold the company during 2014, and took some time off. It was during this period that I got to know the management team at Keyrus and – with my passion for finance – immediately understood the value of the Magic Orange solution they had developed. In addition, I felt a tremendous affinity with their approach to business and it was an easy decision to come on board when they offered me a position,” he continues.
He explains that his main focus with Magic Orange is on changing the key conversations between the different executives in an enterprise. “For example, when one looks at a corporate environment, there is usually a shared service division that provides specific services to the company’s different business units. These services are generally costed and charged to each business unit, but the basis for such charges is often the source of confusion and disagreement. The implementation of a proper cost transparency framework can enable the organization to understand the true cost of delivering such shared services, and empower individual business units to understand EXACTLY how much they consume and the cost of such consumption. Once they understand the consumption metrics that drive these costs, they are able to manage them – and thus their profitability – more effectively. Cost transparency frameworks that we employ include Technology Business Management (“TBM”), and the application of these principles to other areas of shared services or business operations.”
“While it can obviously be quite difficult to achieve this level of cost transparency, where shared services are able to cost the different products and services they provide in an accurate manner, there are tools that enable such complex cost analysis to take place. What we are talking about here is a level of granular analysis that is simply not possible using only a general ledger and standard financial reporting tools.”
Laxton points out that he understands why many enterprises may not realize such tools exist. Disciplines such as cost transparency and Technology Business Management are relatively new, and the software solutions that support them are not as familiar as are the names of other kinds of business applications. And there is no doubt, he adds, that cost transparency remains one of the biggest challenges executives face today.
“This is not to say it can’t be done – my goal is to ensure that CFOs do have a clear understanding of how disciplines such as Technology Business Management and cost transparency can enable them to understand and manage complex value chains with the required level of granularity and accuracy.”
“We are living in a tough economy, and the demand continues to be one of ‘do more with less’. CFOs need a tool that can deliver a high level of transparency, maintain a high level of business operations and drive significant cost savings. Magic Orange has that tool,” he concludes.