How to Leverage Your Upgrade to R12.1
with
Robust Revenue Recognition Automation
Presented by Patrick Glenn, Leeyo Software
Leeyo Software, Inc.
Confidential
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AGENDA
 Revenue recognition overview
 Addressing the challenges
 What’s needed
 Opportunities with R12.1
Leeyo Software, Inc.
Confidential
2
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)
Leeyo Software, Inc.
Confidential
3
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 – it’s HIGHLY TECHNICAL
Leeyo Software, Inc.
Confidential
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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)
 It’s a key component of their SOX certification:
Leeyo Software, Inc.
Confidential
5
WHAT OPTIONS EXIST
CRAYOLA CRAYONS
ETCH A SKETCH
APPLE ENHANCED IIE
MICROSOFT EXCEL
Leeyo Software, Inc.
Confidential
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THE NEXT GENERATION TOOL
 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
Leeyo Software, Inc.
Confidential
7
THE NEXT GENERATION TOOL
 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
Leeyo Software, Inc.
Confidential
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HERE’S WHAT IT LOOKS LIKE
User-defined
Revenue
Contingencies
Fair Value
Analysis
Contingencies
Applied
Revenue
Automation
Engine
FV Assignment &
Allocations
Quoting
Booking
Shipping
Auto Accounting
Rules
Amortization
Methods
Events
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•
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•
Delivery
Acceptance
Cash Receipts
Time-bound
Billing
Collection
Revenue & COGS
Waterfall Schedules
Deferred
Revenue &
DCOGS
Quote-to-Cash Process
Leeyo Software, Inc.
Confidential
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ENSURING SUCCESS
 Understand the 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
Leeyo Software, Inc.
Confidential
10
ENSURING SUCCESS
 Data integrity and flow
o Migrating from manual systems can be challenging
o Historical data may not be readily available
 Business process re-engineering
 Scalability
People
Processes
Systems
o Business growth
o Path to future upgrades/enhancements
 Training
o New tool requires practice
o Combined support from IT and revenue recognition experts
Leeyo Software, Inc.
Confidential
11
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
Leeyo Software, Inc.
Confidential
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OPPORTUNITY – R12 UPGRADE
 Re-Implementation
o
o
o
o
Changes to chart of accounts (COA) and organizational structure
Planned business process re-engineering
Large number of RICE components
Introducing new modules
Revenue automation is usually easy to justify
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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
Leeyo Software, Inc.
Confidential
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ENHANCING R12 WITH REVPRO
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
Leeyo Software, Inc.
Confidential
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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 data
Collection
• Data gets collected to RevPro system
RevPro
Modules
• Revenue calculations
and output
RevPro
Archive
• Processed data
gets archived
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
Leeyo Software, Inc.
Confidential
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WHERE WE FIND SUCCESS
 Customer profiles
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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
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•
•
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Software
Networking equipment
Consumer equipment
SaaS
Leeyo Software, Inc.
Confidential
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WRAP-UP
 Q&A
 Contacts
o Patrick Glenn – Vice President, Business Development
• Patrick.Glenn@Leeyo.com
• (408) 515-8959
Leeyo Software, Inc.
Confidential
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