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Sharing SABIC Business Transformation Project
Experience

• Mansour Saleh Al-Kharboush
• Shared Sevice Vice President, SABIC
• March 20th 2007

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Sharing SABIC Business Transformation Project
Experience

• Table of Contents
• Introduction
• SABIC Business Transformation Project (Fanar)
• Fanar Change Management Program
• Lessons learned

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Sharing SABIC Business Transformation Project
Experience

• Table of Contents
• Introduction
• Why Change?
• How does the new Environment look like?
• SABIC Business Transformation Project (Fanar)
• Fanar Change Management Program
• Lessons learned

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SABIC organizations were compartmentalized by
SBU, Affiliate and function. Islands of
Excellence were highly valued and not to be
shared.
Human Resources
Customer Service
Supply Management
SBUs Marketing
Affiliates Production planning Maintenance
Sales offices
IT
Customers and Vendors
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Other Drivers behind the Change

• Competitive Challenge
• Globalization
• Improve Operational Efficiency

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The Competitive Challenge

• SABIC's eroding cost advantage
• Other Major players create even greater
  economies of scale through mergers
• Customers expect more from us

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Globalization

• SABIC must operate as a single coordinated unit
  in world marketplace
• Corporate, SBUs, International Offices
  Affiliates will all share common data
• SBUs will be able to manage products customers
  globally.
• Management information will be on-line
  real-time for faster decisions

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Improving Operational Efficiency

• World-class business processes will streamline
  SABIC efficiency / productivity
• Integrated supply chain can yield big cost
  savings
• Predictive plant maintenance
• Supplier managed inventory

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In the new environment, the SABIC organizational
structure has changed to be fully integrated,
with single face to customers and vendors.
IT
SBUs Marketing
Customer Services
Shared Services with Common Processes and a
single data base
Supply Management
Human Resources
Affiliates Production planning Maintenance
Affiliates Sales offices
Customers and Vendors
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Sharing SABIC Business Transformation Project
Experience

• Table of Contents
• Introduction
• SABIC Business Transformation Project (Fanar)
• Fanar Change Management Program
• Lessons learned

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Fanar project Encompasses ERP/SAP Implementation,
Shared Services Initiative, and supported by a
major Change Management Program
Shared Services
ERP/ SAP
Change Mnagement
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ERP ( SAP ) solution consists of eight fully
integrated business processes

• Finance
• Human Resources
• Production Planning
• Procurement
• Superior Customer Services ( Sales )
• Total Logistics Systems
• Plant Maintenance
• Project Systems

Note Approach was to use Standard SAP,
Customization only for legal reasons
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Shared Services Initiative covers the following
Business Processes and Support Functions

• Accounting Services
• Employee Services
• Engineering Project Management
• Supply Management
• Information Technology Services
• Facilities Management ( General Services )

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Shared Services is part of a new business model
adopted by SABIC to drive focus and step-change
improvement in performance
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Shared Services is not centralization
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Sharing SABIC Business Transformation Project
Experience

• Table of Contents
• Introduction
• SABIC Business Transformation Project (Fanar)
• Fanar Change Management Program
• Lessons learned

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Well-managed change shortens and lessens
performance disruptions
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Change management aligns people, processes and
technology
Change Management
CurrentState
People
Process
DesiredState
Technology
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Fanar Share Holders

• Subic's and Affiliates management
• Joint Venture partners
• Customers Suppliers
• Subic's Affiliates employees
• Shared Service in-scope employees
• SABIC and Consultants project team members
• ERP (SAP) System Integrator and Shared Services
  Consultants

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Key Processes

• Common Human Resource Processes country
  specific requirements.
• Common Sales Processes
• Profit-based customer management
• Global availability to promise
• Immediate order commitment and scheduling
• Common Logistics approach
• Common Maintenance Process and Design
• Common project management tracking approach 

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Key Processes (Continues..)

• Common Budgeting approach
• Common Global Chart of Accounts and a Global
  Asset System
• Common Cash Management processes
• Profitability analyses by Affiliate, SBU, Region,
  Product families, Product
• Common Employee master, Material Master, Vendor
  Master and Customer Master with central update

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SABIC Business Transformation Project was
supported by six Organization Change Programs

• Transition Management
• Change Readiness Assessment
• Change Advocacy (Change Leadership)
• Organization Design
• Job Design
• End User Training

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Transition Management Program focuses on
implementing approaches to manage risks

• How will the organization create and maintain
  a high performance project team?
• What needs to be communicated, when, and by
  whom?
• How will stakeholders be encouraged to support
  and promote changes?
• Are the right people participating to create
  acceptance for change?
• How will the organization know if its making
  progress?
• Are all the change initiatives aligned and
  properly paced?

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Change Readiness Program assesses the critical
implementation issues and is the basis for
Transition Management

• What types of change risk is the organization
  experiencing or likely to encounter?
• Do sponsors, leaders and line managers
  understand the impacts ERP SS will have on
  their organization?
• To what extent is the organization willing and
  able to change to new ways of working?
• Which are the critical things to be planned
  and managed to avoid unnecessary resistance?

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Change Leadership Program develops skills,
commitment, and sponsorship required for a
successful implementation

• What leadership roles are needed?
• Who needs to play a leadership role?
• How will leadership capabilities be
  strengthened?
• How will measurements be used by leaders to
  ensure progress against the business goal?
• What is the plan for critical leadership
  actions?

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Organization Design Program addresses the
structure, behaviors, and enablers needed to
support the new business model

• Which components of the organization need to
  be redesigned?
• What is the risk/value of doing so?
• What design points/principles need to be
  accommodated?
• What design implementation projects need to be
  incorporated into the overall transition plan?

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Job Design Program addresses skills, gaps,
measurements, rewards, and responsibilities

• Which role and jobs are changing?
• What are the responsibilities and
  accountabilities of the new job?
• What performance measures will align people
  with the new business goals?
• What security profiles will be required to
  match the new roles?
• What skills do people require versus the skills
  they have?

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End- users Training Requirements provide the
basis for end-user training strategy

• What are the training requirements for all
  affected end-users?
• What are the business benefits of alternate
  training approaches?
• What activities, responsibilities, and
  timelines need to be considered in an effective
  training solution design?

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Other important Critical Change Management
Programs (Tools)

• Business case by Affiliate (Customer)
• Service Level Agreement
• SS Staff Selection Process
• Non- selected staff Redeployment

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Sharing SABIC Business Transformation Project
Experience

• Table of Contents
• Introduction
• SABIC Business Transformation Project (Fanar)
• Fanar Change Management Program
• Lessons learned

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Lessons Learned - Transformation will take time...

• Transformation Projects affect virtually every
  employee
• Change, irrespective of its magnitude, is always
  very difficult
• Everyone must understand the absolute business
  necessity of successfully going through the
  change
• It is critical that all Senior and Middle
  Managers support such strategic effort

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Lessons Learned - Why Large Projects Fail

• Lack top executive support
• Uncommitted sponsors
• Inexperienced project management
• Lack of business involvement and ownership
• Unwillingness to commit resources
• Underestimating the importance and the need for
  an organizational change management Program
• Underestimated data conversion requirements
• Oversold, unrealistic expectations

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Lessons Learned Change Management

• Make sure concept is understood by everyone
  management, project team, affiliates, and
  end-users.
• Get a professional help
• Set up Change Mgmt. Program objectives, plans,
  tools, resources
• Design surveys and conduct analysis
• Schedule and deliver training
• Conduct risk assessment
• Develop communicate program
• Ensure site readiness organization and
  end-users
• Allocate enough budget and staff. Its not an
  area you want to make saving.

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Lessons Learned Communication

• Use all available tools and be creative
• Periodical messages from company CEO
• Website for the project
• News letter, Brochures, leaflets, booklets
• Group meetings
• Celebration of major mile stones
• Surveys
• Q A
• Weekly questions prizes for winners
• Promotional Gifts
• Communicate. Communicate, Communicate, Its
  never enough.

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Lessons Learned Watch for

• Competing initiatives
• Customization, Data cleansing, Authorization,
  Operation and Management reports