Columbus started a budgeting system in PhosAgro

June 03, 2015. The Russian vertically integrated company "PhosAgro" announced transition to a centralized system of budgeting and cost accounting. A system is implemented on the IBM Cognos TM1 platform, the consulting company Columbus acted as the partner in implementation.

Using the IBM Cognos TM1 system at all enterprises of the PhosAgro Group planning processes and budgetings are unified and intensified. Besides, the company solved problems of calculation of production cost value of all products and semi-finished products. The system developed by consultants of Columbus replaced functionally outdated solution on the basis of Oracle Financial Analyzer.

The software platform of IBM Cognos TM1 completely meets the requirements of the PhosAgro Group. A system differs in broad functionality, flexibility of setup, ease of mastering and convenience of work to ordinary users, simplicity of scaling and integration with other accounting systems, acceptable cost of ownership.

During the project based on the IBM Cognos TM1 platform the uniform budgeting model for four manufacturing enterprises and about forty child sales and servicing organizations is implemented. The main budget forms are unified, process of approval of budgets is centralized and became completely transparent. The staff of PhosAgro Group works in the single interface by the uniform principles. The solution Columbus covers sales budgets, productions, purchases of raw materials and energy resources, cost budgets, preparation of a consolidated budget of costs, the income and expenditure budget.

In total project implementation took about 8 months. At the same time from start of the project prior to data entry and collecting of the annual budget there passed less than 3 months – record term for such volume and specifics of project tasks. "The project team worked in the conditions of tough terms. The budget of 2015 is completely created in IBM Cognos TM1, he was trained within 2 months in parallel with testing of a new system, - Mikhail Kurayev confirms. – We achieved the desirable thanks to professionalism and harmonious interaction of consultants of Columbus, our specialists and heads".

The PhosAgro company works with a large number of nomenclature positions, the product demand, and with it and market prices constantly change. Thanks to IBM Cognos TM1 the company can create and adjust with smaller labor costs budgets taking into account different scenarios of market development and changes of conditions of activity. For example, the income and expenditure budget can be counted taking into account changes of purchase prices of raw materials, overheads, sales volumes. The budget for the next month is ready to the 20th of current month, in parallel in IBM Cognos TM1 observance of the annual limits and reserves available to each center of the financial responsibility is monitored.

Access rights of each specialist to budgets are accurately defined. For example, in the summary profit and loss budget non-management employees see only data on income and expenses in the CFD, the complete information is available only to the management. A system does not allow to go beyond possible budget expenses without approval of the higher management.

In a system it is visible which of specialists creates and who approves the specific budget within the separate enterprise and division. IBM Cognos TM1 prompts what budgets are ready and what else are not present, the specific budget is adopted or rejected by the responsible head. Besides, users can enter comments on current plans. Before start of a system employees had to spend a lot of time for tracking of the statuses of readiness and approvals of the budget. The uniform centralized control system of budget process allowed the company to provide the high level of transparency of financial and economic activity. One of features of the project – difficult planned cost calculation for poperedelny production. Tens of semi-finished products are used for release of end products. Thanks to a new system in PhosAgro speed increased and the labor input of planned product cost calculation decreased. Prior to the beginning of the project the company in addition used instruments of Enterprise resource planning and an old budgeting system for these purposes. Now calculations of planned production cost are completely conducted in the IBM Cognos TM1 system.

In IBM Cognos TM1 the company calculates budgets on average 2-3 times quicker, than in the previous system. To the project recalculation of budgets in PhosAgro was extremely labor-consuming and resource-intensive procedure. It was necessary to wait until employees load data from other accounting systems, will make necessary changes and will create the new plan. As a result recalculation of separate budgets could occupy 1-2 working days. Now preparation of budgets is entirely conducted in IBM Cognos TM1, data are updated in real time and are always relevant. "We can use and calculate different scenarios of budgets. Runtime of basic processes of corporate planning was reduced in tens of times, recalculation of the main budgets depending on data volume takes several minutes till a couple of hours", - Sergey Markish tells.

With the advent of the IBM Cognos TM1 system the procedure of calculation and approval of transportation costs changed. On the basis of these sales and purchases the transport company plans the needs for the rolling stock taking into account turnover of loads on the different directions, like the rolling stock more precisely. A system helps to calculate rates of freight tariffs, including all accompanying expenses and to create income and expenditure statements on transportation.

Tools of a system allow the staff of the company to pass instantly to the necessary budget from the summary profit and loss budget, for example, in details to consider the budget of specific division and to define what there are income or expenses in final forms of, to study dynamics of changes of budgets. Thus, PhosAgro spends less time for the budget analysis and decision making.

During the project in the company the competence center which will independently support further the solution and to train new users is created. Now Columbus and PhosAgro continue cooperation within the project for development of a budgeting system.

Thanks to start of IBM Cognos TM1 in the PhosAgro Group terms and labor input of preparation, approval and control annual are reduced and operational budgets, calculation of production cost value, obtaining reliable information on key aspects of corporate planning is accelerated, the quality of interaction and level of the financial responsibility of employees is increased, representatives of the company integrator reported TAdviser.

"In addition to a number of functional restrictions with the reason of change of a former system there was the fact that she ceased to be supported by vendor. In addition process of collecting and consolidation of budget data on all enterprises was quite labor-consuming", - Mikhail Kurayev, the head of department of purchase planning and inventory management of PhosAgro AG Ltd explains.

"At a stage of the choice of a system we took vote among key managers of the company, also polled representatives of several large industrial enterprises which use IBM Cognos TM1 for budgeting tasks", - Mikhail Kurayev tells. The Columbus command, in turn, proved in the market as one of the best partners in creation and development of product-based budgeting systems of a line of IBM Cognos. These reasons also caused the choice of PhosAgro for benefit of specified a system and the partner.

"We work with a team of professionals who not only perfectly understand technical issues of system implementation, but also ask the correct questions about specifics of business, are always ready to prompt suitable candidate solutions of tasks, to offer these or those changes. Specialists of Columbus do not approach project implementation formally, and really take care of success of our company. It pleasantly surprised us", - Sergey Markish, the chief of group of methodology of PhosAgro AG Ltd notes.

"At a stage of the choice of a system we took vote among key managers of the company, also polled representatives of several large industrial enterprises which use IBM Cognos TM1 for budgeting tasks", - Mikhail Kurayev tells. The Columbus command, in turn, proved in the market as one of the best partners in creation and development of product-based budgeting systems of a line of IBM Cognos. These reasons also caused the choice of PhosAgro for benefit of specified a system and the partner.

"We work with a team of professionals who not only perfectly understand technical issues of system implementation, but also ask the correct questions about specifics of business, are always ready to prompt suitable candidate solutions of tasks, to offer these or those changes. Specialists of Columbus do not approach project implementation formally, and really take care of success of our company. It pleasantly surprised us", - Sergey Markish, the chief of group of methodology of PhosAgro AG Ltd notes.

"Earlier settlement process of cost of production could drag on for several weeks. It was quite difficult procedure: it was required to change works orders, compoundings, to involve a great number of specialists. Now, when all is implemented in a single system, we make the main calculations within one day by forces of one economist", - Mikhail Kurayev explains.

"We received a convenient and simple budgeting system in use. Huge plus are the reference book in Russian which allows to understand quickly logic of work of the solution to not only administrators, but also ordinary users. Of course, we still will need some time for mastering of a new budgeting system, in particular, profound key user training of functionality of IBM Cognos TM1 and specifics of the implemented project", - Sergey Markish emphasizes.