PhosAgro has successfully migrated to a centralized budgeting and costing system. The new IBM Cognos TM1 system helped to unify and intensify planning and budgeting processes at all enterprises of the group. Moreover, the company solved the problems of calculating the prime cost of production for all products and semi-finished products. The system, developed by Odyssey Consulting Group consultants, replaced the functionally outdated solution based on Oracle Financial Analyzer. In addition to a number of functional limitations, the reason for changing the old system was the fact that it was no longer supported by the vendor.
Mikhail Kuraev, head of the department of planning for purchasing and management of inventory at CJSC "PhosAgro AG" explains that due to the launch of IBM Cognos TM1 at PhosAgro Group, the time and effort to prepare, coordinate and control annual and operating budgets was reduced, the cost of production was calculated, reliable information on the key aspects of corporate planning was received more quickly, the quality of interaction and the level of financial responsibility were increased.
The IBM Cognos TM1 software platform fully meets PhosAgro Group requirements. The system is notable for its broad functionality, flexibility of adjustment, easy assimilation and convenience of work for ordinary users, simplicity of scaling and integration with other accounting systems, reasonable cost of ownership. "At the stage of system choice we stated the opinion of the key company managers. We also interviewed representatives of some large industrial enterprises who use IBM Cognos TM1 for budgeting purposes", - says Mikhail Kuraev. "The Odyssey Consulting Group team in its turn has recommended itself in the market as one of the best partners in creating and developing budgeting systems based on IBM Cognos products".
These are the reasons that led PhosAgro to choose these systems and the partner. We are working with a team of professionals who are not only perfectly knowledgeable in technical issues of system implementation but also ask the right questions on the specifics of the business and are always ready to prompt the appropriate solutions and suggest any changes. Odyssey Consulting Group specialists do not approach the project formally, but are really concerned about the success of our company. "This pleasantly surprised us," - says Sergey Markish, head of methodology at PhosAgro AG.
A single budgeting model was implemented for four manufacturing enterprises and about forty affiliated sales and service organizations on the basis of IBM Cognos TM1 platform. The main budget forms were unified, the process of budget reconciliation became centralized and fully transparent. The PhosAgro Group employees work in a unified interface according to unified principles. The Odyssey Consulting Group solution covers budgets for sales, production, procurement of raw materials and energy, cost budgets, preparation of the consolidated cost budget, income and expenditure budget. In total it took about 8 months to implement the project. From the start of the project to the beginning of data entry and annual budgeting less than 3 months passed - a record time for such volume and specificity of the project tasks. The project team worked under tight deadlines. The 2015 budget was fully formed in IBM Cognos TM1, it was prepared within 2 months in parallel with the testing of the new system.
"We achieved what we wanted thanks to the professionalism and coordinated interaction of Odyssey Consulting Group consultants, our specialists and managers". - Mikhail Kuraev confirms.
PhosAgro works with a large number of nomenclature items, demand for products and with it the market prices are constantly changing. Thanks to IBM Cognos TM1, the company can create and adjust budgets for different market development scenarios and changes in business environment with less work. For example, income and expenses budget can be recalculated taking into account change of prices for raw materials, overhead and sales volumes. The budget for the next month is ready by the 20th day of the current month, at the same time IBM Cognos TM1 tracks adherence to annual limits and reserves available to each financial responsibility center.
The access rights of each specialist to the budgets are clearly defined. For example, in the consolidated estimate of income and expenses ordinary employees can see only information about income and expenses within their CFA, the full information is available only to the management. The system does not allow you to go beyond the possible expenditures of the budget without the approval of senior management. The system shows who of the specialists creates and who approves a concrete budget within the limits of a separate enterprise and subdivision. IBM Cognos TM1 shows which budgets are ready and which are not, whether the budget is approved or denied by the responsible manager.
Moreover, users can make comments to the current plans. Before the launch of the system, employees had to spend a lot of time tracking the status of readiness and approval of the budget. A single centralized budget management system allowed the company to provide a high level of transparency of financial and economic activities. One of the project peculiarities is a complex calculation of the planned cost for cross-sectional production. Dozens of semi-finished products are involved in the production of final products. Thanks to the new system, PhosAgro increased the speed and reduced the labour intensity of calculating planned production costs.
Before the start of the project, the company additionally used ERP system tools and the old budgeting system for this purpose. Now the calculations of planned production cost are fully performed in the IBM Cognos TM1 system.
"Previously, the process of calculating production costs could take several weeks. It was quite a complicated procedure: we had to change production tasks, recipes, involve a lot of specialists. Now that everything is implemented in a single system, we do the main calculations within one day by one economist", - Mikhail Kuraev explains.
In IBM Cognos TM1 the company calculates budgets 2-3 times faster on average than in the previous system.
"Before the project, recalculation of budgets at PhosAgro was an extremely labor and resource-intensive procedure. We had to wait for employees to download data from other accounting systems, make the necessary changes, and create a new plan. As a result, recalculation of individual budgets could take 1-2 working days. Now the entire budget preparation is done in IBM Cognos TM1, the data is updated in real time and is always up to date. We can use and calculate different budget scenarios. " - Sergey Markish speaks about how time to solve major corporate planning processes has decreased dozens of times.
Recalculation of major budgets, depending on the amount of data, takes from a few minutes to a couple of hours. Based on the data of sales and purchases a transport company more accurately plans the needs for rolling stock, taking into account the turnover of goods in different directions and the type of rolling stock. The system helps calculate rates for freight, including all associated costs, and generate reports on revenues and costs for transportation.
The system's tools allow company employees to instantly go to the desired budget from a consolidated estimate of income and expenses, for example, to examine the budget of a particular division in detail and determine what the income or expenses in the final forms are made up of, to study the dynamics of budget changes. In this way, PhosAgro spends less time on budget analysis and decision-making.
"We have received a convenient and easy-to-use budgeting system. A huge plus is the reference book in Russian, which allows you to quickly understand the logic of the solution, not only for administrators but also for ordinary users. Of course, we still need some time to assimilate the new budgeting system, in particular, advanced training of key users of IBM Cognos TM1 functionality and specifics of the implemented project", - Sergey Markish emphasizes.
A competence center in the company, which in future will independently maintain the solution and train new users, was established during the project implementation. At present Odyssey Consulting Group and PhosAgro continue to cooperate within the framework of the budgeting system development project.
