Russia's largest phosphate fertilizer producer has implemented an international standard budgeting model and financial modeling system. The tools were implemented on the IBM Planning Analytics platform (formerly IBM Cognos TM1), with Odyssey as the implementation partner.
The prerequisites for the project launch were the growth of PhosAgro's business structure. PhosAgro was actively developing its own trading network and had to integrate new business units into the unified planning structure with the opening of overseas trading offices. Thus, the company's rapid development has led to an expansion of the planning perimeter. In addition, it became necessary to be guided by international financial reporting standards in the formation of planned financial results. However, the current model of budgeting did not support this possibility. Another important incentive was the company's transition to a new level of development: it was necessary to include the strategic planning outline in a single hierarchy of automated planning processes. In this case, there was a need to build long-term forecasts: the formation of production, commercial and financial (P&L, cash flow, balance sheet) plans with a horizon of more than 20 years. Such a system would allow the company to remain flexible and scalable, reacting in time to changes in market conditions.
The company was tasked with modernizing its current budgeting and strategic planning processes, which would correspond to the new status of the company and help make the right managerial decisions. The system was to enable the following objectives:
Forming the consolidated plan in the IFRS format;
Including the model of strategic planning in the automated planning outline;
Obtaining tools for flexible adjustment of versions and investment projects to adapt the strategic plan.
In the process of forming the methodological basis at the start of the project, it was important to obtain external expertise. PhosAgro's representatives decided to go beyond a single experience and organized a large-scale competition, turning to representatives of the Big Four audit companies, among others. We were confident that Odyssey had sufficient expertise to fully implement the methodological tasks and tried to demonstrate this to the customer. For this purpose, a team with in-depth expertise in production planning of complex chemical production, logistics, sales and finance was formed. After a thorough analysis of the bids, the Odyssey team was selected as both a planning methodology development team and a partner in its automation.
Our company presented a competitive solution based on many years of practical implementation experience and deep understanding of the industry and company business processes. Comparable in methodological competence with the solutions of colleagues from BIG FOUR, the proposal of our experts was tested in practice and had an expert basis for successful automation.
During the project analysis we decided to choose Planning Analytics (formerly IBM Cognos TM1) for a number of reasons: it was one of the best and reliable solutions in its class, and the company's employees already had expertise in working with IBM products. The solution supported all the necessary processes and was easy to use for the company's employees. IBM Planning Analytics allows you to easily implement the following features:
A single interface for data entry into the system by grassroots budget users;
Consolidate data received from various departments;
Quickly performing complex calculations;
Separate access to data based on security policies in the company;
Recalculating financial indicators based on RAS and IFRS;
Coordinating the budget at the group, individual companies and CFO level.
PhosAgro already had previous experience of cooperation with Odyssey: the transition to a centralized system of budgeting and production cost calculation was successfully implemented. A long-standing partnership helped to create a sustainable foundation for the implementation of the approved project goals: the company was able to automate not just budgeting processes, but also various levels of planning on a single platform.
Challenge accepted. How to change the project model and implement it remotely
The project consisted of two major phases, the execution phases of which partially overlapped in time:
Development and approval of the planning methodology,
Implementation of budgeting and strategic planning models.
At the initial stage, it was necessary to fundamentally change the planning methodology and to revise the current concept of the budget model, based on which the implementation was to take place. Thanks to the flexible approach of the team to solving the issue and high involvement of the client to the process we managed not only to successfully agree on a new version of the multi-level planning system but also to build a trusting communication with the customer. This approach made it possible to move confidently through the project in the subsequent phases, which fell within the period of quarantine restrictions and were complicated by external factors.
Thanks to the active interaction between Odyssey experts and PhosAgro employees throughout the entire quarantine period, it was possible to complete all work on time. The implementation of IBM Planning Analytics has achieved impressive results:
Formation of the annual budget and strategic plan has been automated;
Flexible configuration of versions and analysis of investment projects in any combinations has been implemented;
Possibility of analysis under different scenarios of changes in external indicators has been implemented;
Balancing the sales plan by priority areas has been performed;
The IFRS-based planning project was successfully implemented by the beginning of the budget cycle, which has not disrupted the current business processes of the company. The successful implementation of the project was achieved largely thanks to the customer`s efforts. PhosAgro's team was committed to the result from the outset and took an active part in every stage of the implementation. It's a pleasure to work with such a motivated team and with our joint efforts we were able to achieve all the project goals on time.
PhosAgro is a rapidly developing company, and digital transformation is not just a requirement of our time, but also one of the main conditions for strengthening our leadership and further development of our advantages. The digitalisation of our key production and business processes is reflected in our 2025 strategy, and is being implemented across all processes and divisions: raw material extraction and processing, fertilizer production, sales, logistics, integrated planning. A few years ago we started implementing integrated reporting across the entire PhosAgro Group. The result is that today the company has made great strides in the development of production and technology, and in expanding our product range and sales market. Over the past five years we have increased our production of mineral fertilizers by more than 1.5 times, to 10 million tonnes, and become Russia's leader in terms of labour productivity dynamics. In short, PhosAgro has achieved a leading position in investment, technology, and production. And we have seen firsthand that the digital world offers limitless opportunities to develop leadership and efficiency. I am confident that our success in this field will help us stay one step ahead of our competitors.
PhosAgro is a vertically integrated Russian company with one of the world's leading outputs of phosphate-based mineral fertilizers and high-grade apatite concentrate containing P₂O₅ 39% or more. PhosAgro's fertilizers are highly effective, ensure the environmental friendliness of our agricultural products and do not contaminate soil with heavy metals. PhosAgro is the largest phosphate-based fertilizer producer in Europe (by total DAP/MAP/NPK/NPS capacity), the largest producer of high-grade phosphate rock worldwide with a P₂O₅ content of 39% and one of the leading MAP/DAP producers in the world, one of the leading European and the only Russian producer of MCP, as well as the only Russian producer of nepheline concentrate. Its main products, including raw phosphates - over 50 grades of fertilizers, feed phosphates, ammonia and sodium tripolyphosphate - are used by consumers in 102 countries on all inhabited continents. The Company's priority markets, in addition to Russia and the CIS, are Latin America, Europe and Asia. The company's shares are traded on the Moscow Exchange, while its Global Depositary Receipts (GDRs) are traded on the London Stock Exchange (ticker: PHOR). Since June 1, 2016, the Company's GDRs have been included in the MSCI Russia and MSCI Emerging Markets indices.
