leeyo software, inc
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How to Leverage Your Upgrade to R12.1 with Robust Revenue Recognition Automation. Presented by Patrick Glenn, Leeyo Software. Leeyo Software, Inc. Confidential. 1. Agenda. Revenue recognition overview Addressing the challenges What’s needed Opportunities with R12.1. - PowerPoint PPT PresentationTRANSCRIPT
Leeyo Software, Inc. Confidential 1
How to Leverage Your Upgrade to R12.1 with Robust Revenue Recognition Automation
Presented by Patrick Glenn, Leeyo Software
Revenue recognition overview Addressing the challenges What’s needed Opportunities with R12.1
AGENDA
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REVENUE RECOGNITION
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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)
REVENUE RECOGNITION
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Continuing revenue projectso 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 – it’s HIGHLY TECHNICAL
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) It’s a key component of their SOX certification:
WHY IT IS IMPORTANT
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WHAT OPTIONS EXIST
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ETCH A SKETCHCRAYOLA CRAYONS
APPLE ENHANCED IIE MICROSOFT EXCEL
Fits to existing IT infrastructure Minimizes IT and maintenance requirements Is flexible, scalable, and has a low total cost of ownership Implements in a short time Improved internal controls on revenue System-based data repository Systematically integrates revenue best practices Globalizes and standardizes of revenue processes
THE NEXT GENERATION TOOL
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Eliminates time-consuming and error-prone manual systems Accelerates period-end close and financial reporting cycles Automates all key revenue recognition requirements Handles the most complex revenue recognition issues Simplifies revenue and COGS management Enables real-time revenue monitoring Accurately forecasts revenue Stays current and in compliance with the latest revenue guidance
THE NEXT GENERATION TOOL
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HERE’S WHAT IT LOOKS LIKE
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User-defined Revenue
Contingencies
Fair ValueAnalysis
Auto AccountingRules
AmortizationMethods
Revenue Automation
Engine
ContingenciesApplied
FV Assignment &Allocations
• Delivery• Acceptance• Cash Receipts• Time-bound
DeferredRevenue &
DCOGS
Revenue & COGSWaterfall Schedules
Quote-to-Cash Process
Events
Quoting Booking Shipping Billing Collection
Understand the business requirementso Articulate unique requirements clearly – avoid “one size fits all”o Set clear expectations and coordinate closely
IT and business planning with all stakeholderso Revenue-speak is different than IT-speak – need a revenue ‘champion’o 100% automation is not reality on day 1o Internal project teams and management
ENSURING SUCCESS
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Data integrity and flowo Migrating from manual systems can be challengingo Historical data may not be readily available
Business process re-engineering Scalability
o Business growtho Path to future upgrades/enhancements
Trainingo New tool requires practiceo Combined support from IT and revenue recognition experts
ENSURING SUCCESS
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SystemsProcessesPeople
Technical stack software upgradeo No changes to chart of accounts (COA) or organizational structureo Limited configuration changeso Minimal RICE components
OPPORTUNITY – R12 UPGRADE
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Revenue automation will be driven by business user
Re-Implementationo Changes to chart of accounts (COA) and organizational structureo Planned business process re-engineeringo Large number of RICE componentso 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
OPPORTUNITY – R12 UPGRADE
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Leeyo’s 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
ENHANCING R12 WITH REVPRO
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ORACLE R12 INTEGRATION
Oracle ERP • Inbound sourcesStandard 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 systemRevPro
Archive
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
TYPICAL IMPLEMENTATION
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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 accounting guidance changes• Desire to improve IT controls on revenue
Market – high technology and expanding• Software• Networking equipment• Consumer equipment• SaaS
WHERE WE FIND SUCCESS
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Q&A Contacts
o Patrick Glenn – Vice President, Business Development• [email protected] • (408) 515-8959
WRAP-UP
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