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PROPOSED

COST CENTER
SOLUTION

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Old Cost Center Set Up

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Old cost center coding structure
Tasnee HQ acts as the focal point of all Shared cost accumulation.
Hence Shared Cost Centers created under each company code serve the
following purpose
1. Accumulate Costs for Shared Services
2. Charge in the Costs of Shared Services to HQ
3. Receive Charge out from HQ

Cost center convention that is/has been followed is 10 digit Numbering system
Digit Digit Digit Digit Digit Digit Digit Digit Digit Digit
1 2 3 4 5 6 7 8 9 10
Shared Dedicate Function Serial Landscape Company Code
vs Core d vs F for Tasnee or
SSC or Shared D Finance Cristal T
C or S H for HR or C

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Old cost center coding structure
In the Cristal Landscape, existing CC were recycled to capture costs incurred by
Cristal for SS & CF. However, due to tax reasons there was no charge in to
Tasnee.

CCs in Cristal also followed org structure of 2015, but for some at L2 level and
for some at L3 level.

Furthermore, in both landscapes, CCs were either Shared or Dedicated.

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Existing Constraints

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Recent Development
In recent months from discussions with Finance BPs and Function Heads few things
emerged.

Function Reporting at L2 or L3 level not sufficient


Need L4 level reporting at least

Single definition of Dedicated to SBU not sufficient


Need Dedication defined to Entity, BU & SBU level also.

CC position of many people across functions in both Tasnee & Cristal Landscape
incorrect.

To meet these requirements new CCs would have to be created.

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NEW COST CENTER SETUP

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HQ as a Focal Point How it will work
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New SSC Allocate
[ HQ ] Pool SS Cluster cost in
and Cross-charge their
costs various costs to
costs
Corporate centers in segments as per SBUs & LEs
to SSC cost
Layer [1] Core Replica organization
centers NIC Legal
Cost Centers based on an a 1:1 structure
Entity
mapping
Corporate
Core/
3 3
Support Remaining Charged
functions Some part
back through
retained in HQ
allocation cycle

2
[HQ] 4

SBU/BU:
3
SBU SBU/BU:
Layer [2] To be allocated based on basis
To be allocated based on basis provided by SBUs/BUs
Dedicated provided by SBUs
/BU/Entity Entity:
as a Directly resend to the relevant
SBU/BU entity.

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Entity
Dedicated
[Dedicated]
SBU 1 SPC SPEC SAAC SPOCO
Dedicated 5
SBU/BU/ FAHSS
NIC Rowad HQ
Legal BU Dedicated \ TUV
Entity
1 Rassas Battariat Etc
Shared Cost

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New cost center set up- Basic Design
New cost center strategy will follow the following structure, having four groups
of cost center at broader level (where needed);
1. Dedicated to entity
2. Dedicated to BU
3. Dedicated to SBU
4. Fully shared cost

Minimum cost centers will be extended to legal entities on the basis of need. HQ will
have the full set of cost center where cost will be collected for all the four levels
mentioned above from all entities (Cristal, Tasnee and Non SAP companies).

Cost center groups will be created (for reporting purpose) with range functionality so that
it can be picked up within the range.

FBP Functions are responsible for the governance of cost centers and to approve any
modification in the cost center.

The model has been developed to accommodate all Tasnee new structure layer over
and above the legal entities where we kept the legal entities structure as is to avoid
disturbing any existing manufacturing or costing dependencies.

Internal allocation will harmonize the budget versus actuals.

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New Coding convention
Cost center convention should be following 10 digit Numbering system.

L4
3820021013
L3 Digit 10
Finance shared service
3
L2 Digit 7-8 GL Cost center
1
SBU Digit 5-6
10
Comp. Digit 4 SBU
2 D/S+Fn
S/D Digit 2-3 General KSA (GL)
Accounting
Digit 1 20
Finance-
Shared
3 Finance Services Digit 1 Code Digit 6 Code
Company Level of dedication CEO's Assistant 1
code - Finance 2
Shared 1
BU RGP
Dedicated- Entity Dedicated 2 Strategy & Growth 3
BU Dedicated 3 Support Functions 4
SBU Dedicated 4 T&I 5
Some basics: Final receiving cost center 9 Downstream SBU 6
If there is no further sub levels the next digit Petchem. SBU 7
Digit 2-3 Code
is represented by Zero as in case of CEO Titanium SBU 8
cost center above. Company codes
AMIC 9
All secretarial level staff to be included in Various companies
Final receiving cost center 0
one level above. e.g 8200, 1000, 1001 etc
Abbreviations: Digit 6-10 Code
SBU : Strategic Business Unit Levels 2,3,4
L2 : Level 2
Depends upon the org chart
L3 : Level 3
L4 : Level 4
Comp. : Company codes
S/D : Shared/Dedicated/Corp./Entity

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Coding convention (continued) Further Details

Digit 6 Digit 7-8 Digit 6 Digit 7-8


SBU L2 Code SBU L2 Code
Finance Finance Shared Services 10 Titanium SBU BU TiO2 10
Finance Finance BP - Functions 11 Titanium SBU BU Metals TiO2 12
Finance Accounting Policies & Legal Reporting 12 Titanium SBU Manufacturing TiO2 13
Finance Management Information 13 Titanium SBU Supply chain TiO2 14
Finance Risk & Insurance 14 Titanium SBU SBU Transformation TiO2 15
Finance Tax / Zakat Planning 15 Petchem. SBU BU Plolymer TPC 10
Finance Treasury 16 Petchem. SBU BU Chemicals TPC 11
Finance Finance BP - SBU Downstream 17 Petchem. SBU Manufacturing TPC 12
Finance Finance BP - SBU Petrochemicals 18 Petchem. SBU Supply chain TPC 13
Finance Finance BP - SBU Titanium 19 Petchem. SBU SBU Transformation TPC 14
Strategy & Growth Business Development 10 AMIC AMIC 10
Strategy & Growth Merger & Acquisition 11 AMIC AMIC 11
Strategy & Growth Strategy 12 AMIC AMIC 12
Strategy & Growth Transformation 13 AMIC AMIC 13
Support Functions Corporate Communications 10 AMIC AMIC 14
Support Functions General Services 11 Final receiving CC Final CC-CEO's Assistant 10
Support Functions Health / Safety & Environment 12 Final receiving CC Final CC-Corporate Communications 11
Support Functions Human Resources 13 Final receiving CC Final CC-Finance 12
Support Functions Information Technology 14 Final receiving CC Final CC-General Services 13
Support Functions Internal Audit 15 Final CC-Health / Safety &
Support Functions Legal 16 Final receiving CC Environment 14
Support Functions Procurement 17 Final receiving CC Final CC-Human Resources 15
T&I Streamlining & Transformation 10 Final receiving CC Final CC-Information Technology 16
T&I T&I Corporate Technology 11 Final receiving CC Final CC-Internal Audit 17
T&I T&I SBU Petrochemicals 12 Final receiving CC Final CC-Legal 18
T&I T&I SBU Titanium 13 Final receiving CC Final CC-Management cost 19
Downstream SBU BU Plastic Products 10 Final receiving CC Final CC-Procurement 20
Downstream SBU BU Batteries and Lead products 11 Final receiving CC Final CC-Strategy and Growth 21
Downstream SBU BU Technical Services 12 Final receiving CC Final CC-T&I 22
Downstream SBU Maadanuyah 13
Downstream SBU SBU Transformation DS 14

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Coding convention (continued) Further Details (L3)
Digit 9 Digit 9
Finance L3 Sr No Finance Cont.. L3 Sr No
Accounting Policies & Legal Accounting Policies Finance BP - HR / Legal / Corporate Comm. / HSE 1
Reporting 1 Functions
APAC Mining 2 Internal Audit / S&G / General Services 2
Investor Relations 3 IT / Finance 3
Legal Report Consolidation 4 T&I / Procurement 4
Legal Reporting International 5 Finance BP - SBU Batteries BP 1
Legal Reporting KSA 6 Downstream
Finance Shared Services General Accounting 1 Plastics BP 2
Order to Cash 2 Technical Services BP 3
Procure to Pay 3 Finance BP - SBU Chemicals BP 1
Treasury Accounting 4 Petrochemicals
Management Information Annual Strategic Budgeting & Forecasting 1 Manufacturing BP 2
Consolidation and Management Reporting 2 Polymers BP 3
Supply Chain BP 4
Risk & Insurance Insurance 1 Finance BP - SBU Manufacturing BP 1
Risk 2 Titanium
Tax / Zakat Planning Americas & Tax Reporting 1 Metals BP 2
Europe / APAC & Transfer Pricing 2 Supply Chain BP 3
KSA & MENA 3 TiO2 BP 4
Treasury Capital Structure & Policy 1
Cash Management 2
Debt Management 3

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Coding convention (continued) Support functions (L3)
Digit 9 Digit 9
Support functions L3 Sr No Support functions L3 Sr No
Corporate External 1
Information Development & Technology Bus. Solutions 1
Communications
Technology
Content Management 2
Functional Business Solutions 2
Internal 3
Global Business Partners 3
Marketing Communications 4 Global IT Infrastructure 4
Corporate Communications 5 Global Operations and Support 5
General Services General Services - Americas 1 IT Security & Governance 6
General Services - Australia 2 IT Transformation 7
General Services - Eastern Region KSA 3 Brazil IT 8
General Services - HQ / Central KSA 4 Internal Audit Audit Follow-Up 1
General Services- Europe 5 Auditor 2
General Services- UK 6 Internal Audit Policy & Standard 3
General Services- Western Region KSA 7 Legal Australia 1
Health / Safety & Environment & Sustainability 1 Brazil 2
Environment Europe 3
Fire & Security 2 Intellectual Property 4
Health 3 KSA 5
Occupational Safety and Safety culture 4 USA 6
Product Stewardship 5 Procurement International Procurement 1
SBU Downstream Process Safety 6 KSA Procurement 2
Procurement Center of Excellence 3
SBU Petrochemicals Process Safety 7
SBU Titanium Process Safety 8
Staff 9
Human Resources HR Analytics 1
HR Business Partner - Functions 2
HR Shared Services 3
Learning & Development - Program Design 4
Organizational Development 5
Reward 6
Talent Management 7
HR Business Partner 8

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Coding convention (continued) Support functions (L3)
Digit 9 Digit 9
Strategy L3 Sr No T&I L3 Sr No
Business Development Bus. Development - SBU 1 Corporate Research 1
T&I Corporate
Petrochemicals
Technology
Business Development - SBU 2 R&D Performance 2
Downstream Technology Management & Licensing 3
Business Development - New Business 3 Ti Powder 4
Business Development - SBU Titanium 4 T&I SBU Applications and Technical Support 1
Cost Estimation 5 Petrochemicals
Merger & Acquisition Investment Process Excellence 6 Facilities 2
Merger & Acquisition 1 R&D Laboratories 3
Strategy Competitive Intelligence 1 T&I Marketing 4
New Business Strategy 2 Upstream Process Technology 5
SBU Downstream Strategy 3 T&I SBU Titanium Americas Technology 1
SBU Petrochemicals Strategy 4 Asia Technology 2
SBU Titanium Strategy 5 Europe Technology 3
Process Technology TiO2 4
Transformation Transformation 1

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Coding convention (continued) Support functions (L4)
Digit 10 Digit 10
General Services L4 Sr. General Services Cont L4 Sr.
General Services Contractor 1 General Services- Europe General Services Staff 1
General Services -
Americas General Services- UK General Services Staff 1
General Services Staff-Bahia 2 General Services- Western General Services Contractor 1
General Services Staff-Brazil Mining 3 Region KSA
General Services Staff-HTV 4 Process monitoring 2
GS Supervisor - ASH 1&2 5 Real estate supervisor 3
General Services - General Services Contractor 1 Supervisor Jeddah 4
Australia Supervisor Jizan 5
General Services Staff - Broken Hill 2 Supervisor Yanbu 6
General Services Staff - Gingko / Snappe 3 Travel services supervisor 7
General Services Staff - Mildura 4
General Services Staff - North Shore / W 5
General Services - Eastern Abu Dhabi 1
Region KSA
Dammam 2
General Services Contractor 3
Other Jubail 4
Petrochemicals 5
Real Estate 6
General Services - HQ / Batteries 1
Central KSA
General Services Contractor 2
GS Hail Project 3
Head office 4
Process monitoring 5
Travel services supervisor 6

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Coding convention (continued) Support functions (L4)
Digit 10 Digit 10
Human Resources L4 Sr. Human Resources cont. L4 Sr.
HR Analytics HR Business Partner - SBU HR generalist Petchem. 1
Petrochemicals
HR Shared Services Employee services & payroll 1 HR Business Partner - SBU Downstream HR generalist Downstream 1
IT/HR Interfaces 2 (Batteries)
Learning & Development 3 HR Generalist Downstream 2
Recruiting 4 (Hail)
Learning & Development - Program Academy management 1 HR generalist Downstream 3
Design (Plastics)
L&D DS 2
L&D Petchem 3
L&D Support function 4
L&D Ti 5
Organizational Development Change mgmt 1
Job description 2
Organizational Development 3
Work force planning 4
Reward APAC 1
KSA 2
L1/L2/EU 3
NA/SA 4
Policy & mobility 5
Talent Management L1/L2 1
L3/L4 2
L5+ 3
HR Business Partner - Functions HR generalist Functions 1
HR Business Partner - SBU Titanium Americas 2
APAC 3
KSA/Projects 4
Stall / Euro 5
Thann 6

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Coding convention (continued) Support functions (L4)
Digit 10 Digit 10
Information Technology L4 Sr. Procurement L4 Sr.
International Procurement APAC 1
Development & Technology Bus. Business Intelligence 1
Solutions Category mgmt: Capital and LCC 2
SAP Tech 2 EU 3
Solution development 3 NA 4
Functional Business Solutions Finance and Controlling 1 SA 5
Human Capital Management 2 KSA Procurement BP - Downstream 1
PP/QM/PM/PS/EHSM 3
SCM/SD 4 BP - Petchem 2
Global Business Partners BP SBU Corporate 1 BP - Titanium 3
BP SBU Downstream 2 Category mgmt: Services and 4
BP SBU Petchem 3 projects
CM - Raw materials 5
BP SBU Tio2 4
CM: MRO + Consumables 6
Business Analysts 5
KSA Inbound Logistics 7
Global IT Infrastructure Data Center 1
Procurement Center of Excellence P&P 1
Network 2
System Admin 3
Perf. Mgmt 2
Unified communication 4
Procurement analyst 3
Global Operations and Support EU/AU CSS 1
Global SD 2
KSA CSS 3
US - CSS 4
IT Security & Governance Project management office 1
SAP security 2
Security and Performance 3
compliance
Security Operation Center 4
IT Transformation Project Manager 1
Brazil IT 1

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Coding convention (continued) Support functions (L4)
Digit 10
Finance Shared Service L4 Sr.
General Accounting Brazil 1
SBU D/S+Fn KSA (FA) 2
SBU D/S+Fn KSA (GL) 3
SBU P/C KSA (FA) 4
SBU P/C KSA(GL) 5
SBU Ti Intl (FA) 6
SBU Ti Intl (GL) 7
SBU Ti KSA (FA) 8
SBU Ti KSA (GL) 9
Order to Cash SBU D/S+Fn KSA 1
SBU P/C KSA 2
SBU Ti Intl 3
SBU Ti KSA 4
Procure to Pay SBU D/S+Fn KSA 1
SBU P/C KSA 2
SBU Ti Intl 3
SBU Ti KSA 4
Treasury Accounting SBU D/S+Fn KSA 1
SBU P/C KSA 2
SBU Ti Intl 3
SBU Ti KSA 4

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Governance
Human Resource
Going forward
HR should be the custodian of cost center project.

Should be able to link any new employee or transfers among cost centers and
between functions with the detailed cc structure elaborated above.
Should appoint one or two employee as a focal point for the cost center
coordination and maintenance.

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Existing Gaps

There are few Gaps as below;

1. Authorization to create shopping cart/PR for those cost centers for which they
are not the owner.
2. Cristal has been sold out. Any change in Cristal has to be minimum.
3. Legal issues with transfer of cost from one to another entity.

Explanation
1. Shared services/support function should have the flexibility to create the
shopping cart for those cost centers for which they are not the owner to cross
charge the related amount directly. For example Strategy function providing
services to a dedicated legal entity.

2. Minimal changes in Cristal.

3. We need to do more for the cost allocation and its justification when confronted
with legal authorities. SLAs should be detailed enough to satisfy the outside
stakeholders, when needed. e.g tax authorities.

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NON SAP Companies

Following are the NON SAP companies existing in Tasnee/Cristal;

1. FAHS - Tasnee
2. Khadamat - Tasnee
3. TUV - Tasnee
4. Brazil - Cristal
5. China - Cristal

Non SAP companies should provide and transfer data through JV in the format as prescribed
in the budget format, at minimum following should be linked/mapped to their GL codes in the
trial balance as per following categories.
Additional cost centers will be created for them for the charge in and out in HQ.

Data to be transferred should have the clear visibility of shared versus dedicated
classification (Four categories).
Salaries and Benefits Insurance
Telephone and utilities Depreciation/amortization
Communication Outside Services cost
Supplies Others/Miscellaneous
Computer Hardware and software
Rent
Leases
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Cost center Change - impact to consider

Project
s Purcha
OKB9 se Comments
Orders
Report
Interna Changes of cost centers have
l
s enormous impact on ERP
Orders
systems
Activit Cycles
y
Types
(Dist./A
ll.)
Especially mergers and splits
of cost centers cause high
effort
Settle
Variant
in Jobs
m.
Rules
New cost centers required
have to be created and added
Cost to existing structures
Derivat center Profit
ion change Center Final impact has to be
Rules s
evaluated carefully

Specifi
c
Assets
Progra
ms

Cost
Authori
Center
zations
Groups

Mappin
Budget
g
s/ Plan
Tables Recurri
ng ESS
Entries

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On the Cristal Landscape

Initial plan was to replicate new CC structure in Cristal, however due to Tronex
deal, plan changed. Now

Limited number of CCs will be created to allow reporting down to L3 level


where required.
CC positioning of many employees will be corrected

L4 reporting will be done by distribution costs by


formula (TBD by Function Heads) &
Internal charging - for level of dedication, (TBD by Cristal)

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Going Forward
Budget Control

Budget Control will be implemented in both Landscapes.

Implementing Budget Control will budgets to be split between Tasnee & Cristal
Budget Control will need to be tied up with MAS & PR Release Strategy.

Human Resource

HR will need to become the custodian of cost center project.

Should be able to link any new employee with the detailed cc elaborated above.
Should appoint one or two employee as a focal point for the cost center
coordination and maintenance.

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Time line for execution

June payroll should run from the new cost center structure.
Release strategy by the end of this month.

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Break out session

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Team A (Long term)
Scope
Steps that are required to be completed in order to be ready for budget
2018 baseline from new cost center model.
Governance: Roles and responsibilities per activity to ensure smooth
execution and sustainability of solution.

Ammar A. Taibah
Fawaz M. Al Fawaz Mohammed El. Sayed
Amer I. Albahiti Syed Adnan Adil
Ahmer Mahtab Omar K Al-Belali
Mohammad A. Al Ahmari Badr M. Mostafa
Muhammed A. Al-Mulhim
Abdulaziz S. Al Masoud
Osama M. Al-Wohabe
Sabir Ali

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Team B (Short term and governance)
Scope
Follow the desired steps towards closing old cost centers and ensure
transfer of linked items to the new cost center structure. Following SAP
linked map and defining further actions with ownership and timeline.

Amyn Merchant Abrar Khodari


Muhammad Haroon Saleh H. Al Suwaiti
Mohammed Akareb Turki Al-Johani
Muhammad I. Anees Suhail Zulqarnain
Haitham Darwish Mostafa Hasan A. Al-Shehri
Shamsuddeen Peruvankuzhiyil Muhammad S. Fareed
Haytham El Saweey
Wajahat I. Chaudhry
Mohammed Salman Al Otaibi
Emad K. Al-Haji

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THANK YOU

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What functions heads needs to do
Function leaders need to do;
Action Responsible Time Line

Mapping of the old cost center to the new one. FBPF Done

Split the budget between Tasnee/Cristal and level of dedication by Each By end of this
legal entity as per the cost center where people exits, for common Functions month
cost it should be always at the shared cost center level. head
Validate employee assignment to the new cost center structure (with -do- By 20th of this
the right level of dedication). Time line month
Define the allocation keys from any mix cost center under level 4 in -do- By 20th of this
order to ensure the right cost segmentation in the reporting (for month
Cristal).
HR to support in moving and shifting the people to the new cost HR By 17th of this
center created and update the org chart accordingly. month
Release strategy needs to be updated by IT and aligned with Procurement By 17th of this
procurement for the new structure. month

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