oracle ebs r121 how to leverage your upgrade to r12.1 with robust revenue recognition automation
DESCRIPTION
Oracle EBS R121 How to Leverage Your Upgrade to R12.1 With Robust Revenue Recognition AutomationTRANSCRIPT
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How to Leverage Your Upgrade to R12.1
with
Robust Revenue Recognition Automation
Presented by Patrick Glenn and Crystal Lieu, Leeyo Software
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Agenda
Revenue recognition overview
Why automation makes sense
Opportunities with R12.1
Profile of a project
Q&A
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Revenue Recognition
What It Is: Principle of accrual accounting that determines the period in which revenue is recognized
Revenue recognition is an earning process
There are rules and regulations on how and when you can recognize revenue
Under GAAP, there are four basic criteria:
o Evidence of an arrangement exists (governing contract & PO)
o Delivery has occurred (transfer title and risk of loss)
o Fee is fixed or determinable (normal payment terms)
o Collection is probable (customer has ability to pay)
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Revenue Recognition
Continuing revenue projects
o Modifying Multiple Element Arrangements (to include Best Estimate Selling Price) & Exclusion of Tangible Products from Software revenue Recognition Guidance Effective 2009
o FASB/IASB Joint Projects Draft format, expect to be finalized end of this year or beginning of next year
Accounting terminology you may hear FASB and IFRS guidelines, evidence of an arrangement, delivery, fixed fees, collection, software and non-software rules, multiple element arrangements, fair value (VSOE, BESP, TPE), relative selling price, revenue allocation, linked arrangements, acceptance, release events, contingencies, future upgrades, significant discounts, extended terms, software is essential to functionality, deferred revenue release, and so on.
In other words its HIGHLY TECHNICAL
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Why It Is Important
Most critical financial statement account
Most complex financial statement account
# 1 reason for public company restatements
# 1 account that is closed manually (i.e. not in ERP)
Its a key component of their SOX certification:
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What Options Exist
ETCH A SKETCH CRAYOLA CRAYONS
APPLE ENHANCED IIE MICROSOFT EXCEL
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The Next Generation Tool
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The Next Generation Tool
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Heres What It Looks Like
User-defined Revenue
Contingencies
Fair Value Analysis
Auto-accounting Rules
Amortization Methods
Revenue Automation
Engine
Contingencies Applied
FV Assignment & Allocations
Delivery Acceptance Cash Receipts Time-bound
Deferred Revenue &
COGS
Revenue & COGS Waterfall Schedules
Quote-to-Cash Process
Events
Quoting Booking Shipping Billing Collection
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Project Planning Is Critical
Alignment with business requirements
o Articulate unique requirements clearly avoid one size fits all
o Set clear expectations and coordinate closely
IT and business planning with all stakeholders
o Revenue-speak is different than IT-speak need a revenue champion
o 100% automation is not reality on day 1
o Internal project teams and management ensures success
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Project Planning Is Critical
Data integrity and flow
o Migrating from manual systems can be challenging
o Historical data may not be clean
Business process re-engineering
Scalability
o Business growth
o Path to future upgrades/enhancements
Training
o New tool requires practice
o Combined support from IT and revenue recognition experts
Systems Processes People
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Opportunity R12 Upgrade Technical stack software upgrade
o No changes to chart of accounts (COA) or organizational structure
o Limited configuration changes
o Minimal RICE components
Revenue automation will be driven by business user
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Opportunity R12 Upgrade
Re-Implementation
o Changes to chart of accounts (COA) and organizational structure
o Planned business process re-engineering
o Large number of RICE components
o Introducing new modules
Revenue automation is usually easy to justify
Dollars may be available due to larger overall project
Process improvements lessen automation customization
People and project resources are available and focused
New R12 module features can be leveraged
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Typical Implementation
Proof of concept (optional)
Business requirements document (BRD)
Design and configuration
Training and conference room pilot (CRP)
User acceptance testing (UAT)
GoLive
Post GoLive support, e.g. quarter-end close
Stabilization and enhancements
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Enhancing R12 with RevPro
Leeyos RevPro is a complete suite of software that automates and manages every process in the revenue cycle seamlessly integrating with the quote-to-cash processes of any ERP system.
Features:
Upload fair values (VSOE, TPE, ESP)
Identify arrangements and link transactions
Allocate revenue and post carve-outs to A/R or G/L Features:
Define release events to auto-release revenue from deferred
Manage contingencies
Revenue waterfall with real-time forecast
Features:
Real-time revenue analytics with drill-down capabilities
Pre-built adapters for OBIEE, SAP BW, BOBJ, Cognos
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Oracle R12 Integration
Oracle ERP Inbound sources
Standard Adapters
Sales orders, service contracts, invoices, credit memos, RMA orders, master data (item, customer)
RevPro Staging
Area
Adapter extracts data to RevPro staging per defined schedule
RevPro Modules
Revenue calculations and output
RevPro data Collection
Data gets collected to RevPro system
RevPro Archive
Processed data gets archived
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Automation Process Flow
COLLECTION PROCESS
If FVAssign Error
1. Pre-Processor 2. Data Collection 3. Grouping 4. Post Processor
Review and Fix the Error
Yes
REVENUE ALLOCATION PROCESS
Checks if all lines in the Arrangement is
Within range
Perform Relative
Allocation
Checks for 97-2 lines in
Arrangement
YesResidual
AllocationRelease Contingency
(AUTO Release/ Manual )
TRANSFER ACCOUNTING PROCESS
ExcludeArrangements in Hold Accounting
Create TransferAccounting Batch
TransferAccounting Entries
Download Accounting Summary& Transaction Details
END
FAIR VALUE ANALYSIS
Create FV BatchFrom FV Template
Collect Historical Data to derive
Fair Value
Transferred to Source System
GL / AR
Compliance Check
Review Fair Value Result
Finalize Fair Value
FinalizedFAIR VALUE
For Allocation
FAIR VALUE (Manual Upload)
Create FV Batch
Fair Value File in .CSV format
FV File UPLOAD
Finalize FV batch
Finalized Fair Value for Allocation
Apply ContingencyBased on rulesOn INV Lines
BuildAccountingSchedules
Allocation Begins
If FV Eligible for Transaction
Line
Assign FV for Eligible
Transaction Line
DATA EXTRACT PROCESS
EXTRACT from SOURCE(SO, INV,
Serv.Cont)
REVPRO STAGING TABLE
Customor
External data
upload
Create Batch from Arrangement
Template
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Where We Find Success
Customer profiles
Public or pre-IPO company $50M to +$20B revenue
Existing manual processes or custom solutions for revenue calculation
U.S. GAAP reporting required or planned
Concerned about upcoming changes (e.g. IFRS exposure draft)
Desire to improve controls on revenue
Market high technology and expanding
Software
Networking equipment
Consumer equipment
SaaS
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Wrap-up
Q&A
Contacts
o Crystal Lieu Director of Customer Service
(408) 988-5800 x143
o Patrick Glenn Vice President, Business Development
(408) 515-8959