copyright © 2014, oracle and/or its affiliates. all rights reserved. | safe harbor statement the...

Copyright © 2014, Oracle and/or its affiliates. All rights reserved. | Oracle Confidential – Internal/Restricted/Highly Restricted 2

Safe Harbor StatementThe following is intended to outline our general product direction. It is intended for information purposes only, and may not be incorporated into any contract. It is not a commitment to deliver any material, code, or functionality, and should not be relied upon in making purchasing decisions. The development, release, and timing of any features or functionality described for Oracle’s products remains at the sole discretion of Oracle.

Copyright © 2014, Oracle and/or its affiliates. All rights reserved. |

Revenue Management Cloud ServiceHighlights and Customer Adoption [CON8402]

Tapomoy DeySenior Director, Financials Development


Agenda

Why Revenue Management

Solution Footprint

Solution Deep Dive

Customer Traction

Converged Revenue Standards (IFRS 15/Topic 606)

Q&A


• Pressure to comply– US GAAP Current Guidance ASC/ASU (SOP 97-2, EITF-08, etc.)– Auditable Transactions

• Many sources of truth– Spreadsheets– 3rd Party Bolt-On’s

• Demand for automation– Manual processes for key revenue recognition activities slow down the period close

Why Revenue Management The Business Challenges: Compliance, Integration, and Automation


Software License

Support

Consulting

Software License Support Consulting

Total

10020

80 200

Customer Bill

TPE

VSOE

ESP


Total

10020

80

200

Revenue Reallocation

Selling Adjusted

9826

76

200


Total

98.008.66

16.00

28.67

Revenue Schedule

Period I Period II

0.008.67

20.00

122.66 48.67

Period III

0.008.67

40.00

Why Revenue Management Use Case: A Software Contract


Agenda

Why Revenue Management?

Solution Footprint

Solution Deep Dive

Customer Traction


Q&A


Centralized workarea

Actionable Analytics and

ReportingSpreadsheet IntegrationREVENUE MANAGEMENT

Rev

enue

ac

coun

ting

Rev

enue

S

ourc

es

Ref

eren

ce

data

Automated Compliance

Solution FootprintCentralized, Automated Revenue Management Cloud Service


Revenue Management Cloud Service Co-Existence Functional Architecture

Audit & AnalyzeAudit & Analyze

• Calculate and manage Fair Market Value (FMV)

• Support Multiple Element Arrangements (MEA)

Create AccountingCreate AccountingCreate SchedulesCreate SchedulesManage ComplianceManage Compliance

• Separate revenue from billing

• Create ratable, immediate, and deferred revenue schedules

• Generate revenue and deferred revenue entries

• Automatically create compliance adjustment entries

• Seeded revenue reports for compliance reviews and audit

• Ad hoc reporting layer

EBS Order Management EBS ProjectsEBS Service

ContractsEBS Accounts

Receivable3rd Party

Revenue Events Extracted via Delivered Source ViewsRevenue Events Extracted via Delivered Source Views

Revenue Management

EBS Order Management

EBS Accounts Receivable EBS Costing

Payment Customer Acceptance Revenue

General Ledger

Accounting


Agenda


Solution Footprint

Solution Deep Dive

Customer Traction


Q&A


Automation of contract identification, fair value price and compliance adjustments

Centralized repository for reporting and accounting

Audit trails and approvals ensure accurate revenue

processing

AUTOMATION

ACCURACY

COMPLIANCE

Revenue Management Cloud ServiceKey Business Challenges Addressed


Demand for Automation

Automation of contract identification, fair market value

and compliance adjustments Identify Contracts• Automatically identifies elements as part of a Multiple Element

Arrangement (MEA)• Supports cross application and cross document MEA’s

Calculate and Manage Fair Market Value • Automatically groups stand alone sales based on user defined pricing

dimensions• Supports multiple representations of fair market value

Allocate Revenue• Automatic validation of compliance with fair market value• Creates adjustments based on residual, relative or two-step method

Key Business Challenges AddressedDemand for Automation


Establish VSOE Value

Calculate and Manage Fair Market Value Support VSOE TPE, and ESP


- Access to Bell Curve & Trend Graph and Underlying Standalone Sales

Calculate & Manage Fair Market ValueReview & Establish VSOE Values


Identify ContractsAutomate identification of Multiple Element Arrangements

Identification Rules

3 Sources

Line 1: Service Contracts

Line 3: Order Management


Allocate RevenueEnsure Appropriate Allocation Treatment

FMV Ranges Adjusted Revenue

Carved Amounts


Separate Revenue from Billing• Revenue document consists of line(s) from a source document and

encompasses the revenue timing and amount • Automatically assign contingencies to defer and recognize when

appropriate• Generate accounting entriesAdjust Revenue• Revenue allocations automatically calculated, accounted and visible on

the Revenue Document• Schedule, unschedule, add and expire contingencies when necessary

Manage Revenue• Workarea provides centralized view of revenue tasks and status• Central reporting platform for all revenue processing

ManySources of Truth

Centralized repository for reporting and accounting

Key Business Challenges AddressedMany Sources of Thruth


Separate Revenue from BillingRevenue Document Captures Key Revenue Processing

Source Info

Revenue Scheduling

New Internal Document


Adjust RevenueEnsure Accurate Revenue Accounting

Associated MEA

Selling Price vs. Revenue Price

Document Amounts


Adjust RevenueProcess Revenue Adjustments in Mass

Multiple Actions

Robust Search

Full History


Manage RevenueImmediate and Actionable Access to Revenue Transactions

Take Immediate Action

Immediate Notification


Pre-seeded Revenue Forecast Report by:CustomerPeriodsProductsSales Rep

Pre-defined Oracle Transactional Business Intelligence Subject Areas :Fair Market ValueMEA Carve-outRevenue RecognitionSource Documents

Manage Revenue Analytics and Tools


Audit Revenue Transactions• Understand all actions performed both by the system as well as the

user • Full audit trail provided when user overrides system derived

calculations

Approve Revenue Transactions • Require approvals and research to ensure appropriate compliance

handling• Process exceptions and adjustments with full audit trail capability

Comply with Accounting Guidance• Supports complex US GAAP revenue requirements

Pressure to Comply

Audit trails and approvals ensure accurate revenue processing

Key Business Challenges AddressedPressure to Comply


Audit Revenue TransactionsAdjustment History Tracks all Actions Performed (MEA)

Link to Revenue Doc Each Adjustment

Tracked Separately


Audit Revenue TransactionsAdjustment History Tracks all Actions Performed (Revenue Doc)

All Actions on the Revenue Document are Displayed


Approve Revenue TransactionsProactively Manage Compliance Approvals

MEA Approvals

Fair Value Approvals


Comply with Accounting GuidanceMeet Strict Revenue Accounting Requirements

Displays how Adjustment Amounts were Calculated

Compliance Details


Makes it easier to reconcile and validate your revenue and deferred revenue numbers with two pre-built interactive Business Intelligence Publisher (BIP) reports

Billing and Revenue Comparison ReportSupports Customer Level Comparison

• Net Revenue (Revenue Minus Net Billing)• Deferred and Recognize Revenue• Net Billing to Revenue Differences

Offers drill to underlying MEA and Revenue Document detail

Revenue Management Reconciliation ReportCompares Revenue and Deferred Revenue Balances in Revenue Management and General LedgerIdentifies Activities to enable reconciliationOffers drill to underlying activity and journal detail

Comply with Accounting Guidance Prepackaged Reconciliation Reports


Offers pre-defined Revenue Management specific Subject Areas and standard reports to analyze and audit:

• Fair Market Value• MEA Carve-out• Revenue Recognition• Source Documents

Increase your accuracy and efficiency in auditing and analysis of revenue related activities by:

Centralizing your revenue-related data into a single repository

Jump starting your analysis and auditing with standard reports

Creating your own custom reports using a robust platform and revenue specific subject areas

Comply with Accounting Guidance Audit and Analysis Tools


Agenda


Solution Footprint

Solution Deep Dive

Customer Traction


Q&A


Revenue Management Cloud Service

Generally AvailableRelease 8

RevenueManagement

21 Customersprovided

development and design feedback

Over 3,000 hours testing

7 Usability sessions

Week Longvalidation session


Revenue Management Cloud Service AdoptionCompany Profile Revenue Management Solution Footprint (in a variety of stages of

negotiation/planning/implementation)

A computer technology corporation developing and marketing computer hardware systems, enterprise software products, and subscriptions

Co-existence with EBS ERP along with a global BU operating on Fusion Projects

A provider of managed and cloud services for Oracle technologies and applications Co-existence with EBS ERP

A global supplier of IP gateways, session border controllers and FMC security solutions

Co-existence with EBS ERP operating primarily in project centric environment

A provider of positioning technology solutions for professionals and field mobile workers

Co-existence with EBS ERP with near term plan to migrate an entire division to Fusion

A manufacturer of advanced electronic and electrical products Co-existence with EBS ERP

Social media and professional networking companies Co-existence with EBS ERP

One of the world's leading media agencies Co-existence with EBS ERP

A multinational computer software technology company that provides speech and imaging applications

Co-existence with EBS ERP

A supplier of dental treatment systems for dentists and healthcare centers Co-existence with EBS ERP with special needs for revenue deferrals and contingency management through SOA Web-services

A company offering data and media management platform technologies and a data management platform to centralize offline and online marketing data

Fusion Financials


Revenue ManagementQuotes from Hands-on Validation Session

“Ability to drill from high level Fair Value information to the details with one click adds tremendous value for us.”

“We love the spreadsheet integration, this is key for us.”

“The workarea is great. Having all the information pushed to the users for action is terrific.”

“We really liked the flexibility for Multiple Element arrangement identification.”


Agenda


Solution Footprint

Solution Deep Dive

Customer Traction


Q&A


Converged Accounting Standards Timeline

• The new Revenue standard became both US GAAP and IFRS on May 28th, 2014– US GAAP Topic 606 published as ASU 2014-9– IFRS 15– Text is identical; references to GAAP and to IAS are different; minor difference to ensure identity of

meaning by reference to different glossaries; differences in transition and take up options

• Implementation Timeline:– Effective date is set for first new fiscal after January 1, 2017– 2 Options on Retroactive Reporting

M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D

Standard Final5/28

OOW9/28

Start data capture for transitional reporting1/1/2015

OOW2016

New Year2016

AllCompanies

Live on New Rules + FRM

1/12017

2014 201625 2017

OOW2015

2015


Converged Accounting Standards Applicability

• Industries– All, except Insurance and Lease vendors

• GAAPs– Changes to both US GAAP and IFRS

• Repeals (withdraws, cancels) the following US GAAP & IFRS statements– US GAAP (Codification):

Topics 340-20, 360-20, 430, 605-15, -20, -25, -28, -30, -35, -50, 908-605, 910-605, 912-210, 912-235, 912-605, 915-605, 920-310, 920-605, 920-845, 922-430, 926-430, 926-605, 926-845, 928-430, 928-305, 932-605, 940-605, 942-605, 948-605, 952-340, 952-720, 954-340, 970-605, 976-605, 978-605 and 985-605

– Amends many others.

– IFRS: IAS 11 and 18

Concept Applies to All Companies, All Industries, All Countries


Converged Accounting Standards Highlights

• All companies to identify Contracts – combinations of Customer Obligations that are related as a contract for accounting purposes. Example: Car + x years free service

• Recognize Revenue on performance obligations you have satisfied – a “positive” definition, as opposed to “what you have billed, less carve-outs” or “lifted contingencies”

• Recognize a monetary Customer Liability, “Performance Obligation”, (as opposed to deferring revenue) on performance obligations you have not satisfied but you do owe to customers

• Recognize a Receivable only on your right to receive cash where the only condition is the passing of time (e.g. 30 days)

• Recognize a Customer Asset, “Performance Asset”, on a conditional right to receive consideration for a satisfied obligation. A condition might be a requirement to complete satisfaction.

• An open order is a Performance Obligation but not a Performance Obligation liability (3 conditions)

• Value each obligation using “Observed Standalone” or “Estimated” Selling Prices apportioned to each element of the contract

• No longer amortize a sales invoice to the P&L; instead, track (recognize and value, list and audit) performance obligations to customers – “obligations times SSP or ESP”, not “invoice minus released”

“Performance Obligations” replace “Deferred Revenue”


Converged Accounting Standards – Core Principle


The 5 Steps and Revenue Management

• Revenue compliance• Receivables and

revenue reconciliation

Reporting• Identify

Contracts with Customers from multiple sources

• Identify obligations

Obligations

• Calculate Transaction Price

• Manage Revenue Pricing (SSP, ESP)

• Tolerances

Revenue Value• Performance Obligation

Liability• Revenue Valuation using

SSP, ESP• From Performance

Obligations to revenue on customer satisfaction

• COGSs• GL Posting

Revenue Recognition

1

2 4

53


Applying the 5 Steps Use Case 1: A Typical Software Solution Provider

Software License

Support

Consulting


Transaction Price

10020

80 200

Customer Bill


Transaction Total

10020

80 200

Performance Obligations

Invoice

Revenue Values

OSSP/ESP9826

76 200


Total

98.008.66

16.00

28.67

Performance Satisfaction Forecast

Period I Period II

0.008.67

20.00

122.66 48.67

Period III

0.008.67

40.00

Copyright © 2014, Oracle and/or its affiliates. All rights reserved. |Oracle Confidential – Internal/Restricted/Highly Restricted 41

Search through “order lines” from many

sources & Link

ID distinct performance

obligation from “order lines”

Establish linked

transaction price &

constraint

Apply relative observed SSP

or ESP

Recognize Revenue

Recognize CLRecognize CA

Revenue Bookkeeping

Source DetailContract

ID Perfomance Obligation

Amount To Bill

Revenue Amount

PO Xfr (from) / to

OM Software License 1000 1000-10 100 98 (2)OM Free Software 1000

SC Support 1000 1000-20 20 26 6

OM Consulting 1100 1100-30 80 76 (4) E.G.

Applying the 5 Steps Data Capture and Bookkeeping for Use Case 1 (Software Solution Contract)


Product

Maintenance

Custom Services

TruckCustom Rack & BedlinerTrailer 5-yr Maintenance10-yr Roadside Assistance10-yr Extended WarrantyCustom Trailer DoorsCustom HatchTransaction Price

5,000Free

1,000300250235400180

7,365

Customer BillCustom Rack & BedlinerTruckTrailer5-yr Maintenance10-yr RoadsideEtc…

Transaction Total

05,0001,000

300250

7,365

Performance Obligations

InvoiceRevenue Values

OSSP/ESP

4,0002,000

280270

7,365

PO 1000-10PO 1000-20PO 1000-30PO 1000-40Etc…

Total

4,0002,000

2.332.25

6.54

Performance Satisfaction ForecastPeriod I Period II

--

2.332.25

9,382.33 6.54

Period III

--

2.332.25

PO 1000-10

PO 1000-20PO 1000-30PO 1000-40

Applying the 5 Steps Use Case 2: A Specialty Vehicle Manufacturer

Copyright © 2014, Oracle and/or its affiliates. All rights reserved. |Oracle Confidential – Internal/Restricted/Highly Restricted 43

Search through “order lines” from many

sources & Link

ID distinct performance

obligation from “order lines”

Establish linked

transaction price &

constraint

Apply relative observed SSP

or ESP

Recognize Revenue

Recognize CLRecognize CA

Revenue Bookkeeping

Source DetailContract

ID Perfomance Obligation

Amount To Bill

Revenue Amount

PO Xfr (from) / to

PA Custom rack & bedliner 1000 1000-10 - 4,000 (1,000)OM Truck 1000 5,000

OM Trailer 1000 1000-20 1,000 2,000 1,000

OKS 5-yr maintenance 1100 1100-30 300 280 (20)

Excel 10-yr roadside assistance 1100 1100-40 250 270 20

OM 10-yr extended warranty 1100 1100-50 235 235 - PA Custom trailer doors 1200 1200-60 400 400 - PA Custom hatch 1200 1200-70 180 180 -

E.G.

Applying the 5 Steps Data Capture and Bookkeeping for Use Case 2 (Specialty Vehicle Contract)


Concepts in the New Standards Concepts in Revenue Management

Contract with Customer Multiple Element Arrangement

Performance Obligation Element of the Arrangement

Estimated Selling Price VSOE, TPE, ESP

Contract Liability Deferred Revenue

New Standards and Revenue Management Current Release


Concepts in the New Standards

Contract with Customer

Performance Obligation

Estimated Selling Price

Contract Liability

Concepts in Revenue Management

Contract with Customer

Performance Obligation

Estimated Selling Price

Contract Liability

Transition Arrangements

New Bookkeeping

Detail Rules

Customer, Big 4 Input

New Standards and Revenue Management Upcoming Releases


Choice of Transition Methods (Credit – KPMG)2012 and prior 2013 2014 2015 2016 2017 2018 and beyond

Cumulative Effect Method

Evaluate Existing Contracts for Cumulative Effect Adjustment

Maintain New Systems and Processes

Maintain Existing Systems and Processes for Legacy GAAP Reporting

Retrospective Method

Evaluate Existing Contracts for Cumulative Effect Adjustment

Consider Requirements for 5-year table Maintain New Systems and Processes

Maintain Existing Systems and Processes for Legacy GAAP Reporting

Dual reporting capability

Timeline is based on requirements applicable to a public entity with December 31 year end. Nonpublic entities may defer application of standard for one year beyond public entity effective date.

Dual reporting capability


Deferred Revenue Performance

Obligation

Full Retrospective TransitionModel new rules in Revenue Management, compare and iterate as needed, and cutover in FY 2017

Existing RevenueRecognition

Topic 606 / IFRS 15Using Fusion Revenue

Management

FY14, FY15, FY16,

General Ledger

Content

EPM &OriginalFinancial

Statements

FY 17 General Ledger

Content

EPM &OriginalFinancial

Statements

Old Rules & Restatement until last balance sheet before adoption (2017)

New Rules Apply

Cutover

Compare and contrast old

and new, in a tool of your

choice

FY2017

EPM &RestatedFinancial

Statements

ContractsInvoices

Perf. ObligationsRevenue Pricing

Old RevenueNew RevenueOther factors

Model and

Iterate


Agenda


Solution Footprint

Solution Deep Dive

Customer Traction


Q&A


Questions?

Copyright © 2014, Oracle and/or its affiliates. All rights reserved. | Oracle Confidential – Internal/Restricted/Highly Restricted 50

Safe Harbor StatementThe preceding is intended to outline our general product direction. It is intended for information purposes only, and may not be incorporated into any contract. It is not a commitment to deliver any material, code, or functionality, and should not be relied upon in making purchasing decisions. The development, release, and timing of any features or functionality described for Oracle’s products remains at the sole discretion of Oracle.

copyright © 2014, oracle and/or its affiliates. all rights reserved. | safe harbor statement the...

Documents

compliance separate

oracle andor

deferred revenue entries

deferred revenue schedules

revenue management use

rd party revenue events

automation slide

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