Professional Documents
Culture Documents
COST CENTER
SOLUTION
1
Old Cost Center Set Up
2
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
3
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.
4
Existing Constraints
5
Recent Development
In recent months from discussions with Finance BPs and Function Heads few things
emerged.
CC position of many people across functions in both Tasnee & Cristal Landscape
incorrect.
6
NEW COST CENTER SETUP
7
HQ as a Focal Point How it will work
2
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.
4
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
8
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.
9
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
10
Coding convention (continued) Further Details
11
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
12
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
13
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
14
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
15
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
16
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
17
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
18
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.
19
Existing Gaps
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.
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.
20
NON SAP Companies
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
21
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
22
On the Cristal Landscape
Initial plan was to replicate new CC structure in Cristal, however due to Tronex
deal, plan changed. Now
23
Going Forward
Budget Control
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
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.
24
Time line for execution
June payroll should run from the new cost center structure.
Release strategy by the end of this month.
25
Break out session
26
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
27
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.
28
THANK YOU
30
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
44