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RAR

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  • New Revenue Recognition and Lease

    Accounting Solutions

    Pete Graham, Romeo DeLeon, Peter Muller

    June 8, 2015

  • 2015 SAP SE or an SAP affiliate company. All rights reserved. 1

    Legal Disclaimer

    The information in this presentation is confidential and proprietary to SAP and may not be disclosed without

    the permission of SAP. This presentation is not subject to your license agreement or any other service or

    subscription agreement with SAP. SAP has no obligation to pursue any course of business outlined in this

    document or any related presentation, or to develop or release any functionality mentioned therein. This

    document, or any related presentation and SAP's strategy and possible future developments, products

    and/or platforms directions and functionality are all subject to change and may be changed by SAP at any

    time for any reason without notice. The information on this document is not a commitment, promise or legal

    obligation to deliver any material, code or functionality. This document is provided without a warranty of any

    kind, either express or implied, including but not limited to, the implied warranties of merchantability, fitness

    for a particular purpose, or non-infringement. This document is for informational purposes and may not be

    incorporated into a contract. SAP assumes no responsibility for errors or omissions in this document, and

    shall have no liability for damages of any kind including without limitation direct, special, indirect, or

    consequential damages that may result from the use of this document. This limitation shall not apply in

    cases of intent or gross negligence.

    All forward-looking statements are subject to various risks and uncertainties that could cause actual results

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    looking statements, which speak only as of their dates, and they should not be relied upon in making

    purchasing decisions.

  • 2015 SAP SE or an SAP affiliate company. All rights reserved. 2

    Your presenters

    Pete Graham

    Director,

    Finance Solutions & Mobility

    Romeo De Leon

    Vice President,

    Product Management

    Peter Muller

    Director,

    Partner Development

  • 2015 SAP SE or an SAP affiliate company. All rights reserved. 3

    Whats in it for you?

    Revenue recognition is a mainly a

    compliance topic first

    However, if customers adopt SAP as their

    revenue recognition platform, Simple

    Finance and S/4 HANA adoption is much

    more likely based on results that we have

    to date with the initial customers of SAP

    Revenue Accounting and Reporting.

    For the Telco industry, their complexity and

    volume means that they may look at HANA

    as part of tackling their revenue

    recognition challenge.

  • 2015 SAP SE or an SAP affiliate company. All rights reserved. 4

    Agenda

    Revenue Recognition Topic Overview

    Implementation Timeline

    Capture revenue contract data during the technical accounting assessment

    SAP Lease Administration by Nakisa

    Case study at Nakisa, Inc.

    Simplify and automate revenue accounting

    SAP Revenue Accounting and Reporting (v1.0 GA March 31, 2015*)

    Case study at SAP Ariba

    Wrap-up

    *SAP Revenue Accounting and Reporting 1.0 Generally Available (GA) beginning March 31, 2015 principles.

    http://www.news-sap.com/sap-simplifies-new-revenue-recognition-standard-sap-revenue-accounting-and-reporting/

  • Revenue Recognition Topic

    Overview

  • 2015 SAP SE or an SAP affiliate company. All rights reserved. 6

    Revenue Recognition Standard Guidelines A Long and Thorough Process Is Concluding

    2002

    2008

    2010

    2011

    2012

    2017

    Deliberations began

    Discussion paper issued

    First exposure draft issued

    First comment period

    Redeliberations

    November 14, 2011 Second exposure draft

    Effective date (IFRS preparers can early adopt)

    March 13, 2012 Second comment period ended

    April/May Roundtables/outreach July to December Redeliberations

    May 28 2014 Final standard published IFRS 15 and FAS 2014-09

    2014

    *The revenue standard will be effective for annual reporting periods beginning on or after January 1, 2017.

    Early application will be permitted in IFRS countries. On April 1, 2015, FASB proposed to delay the effective

    date by 1 year to 2018 and permit early adoption under US GAAP. The IASB followed on April 29.

    Final standard

    published May 2014

    Effective date latest 2017* (early adoption

    possible for IFRS

    preparers)

    2017*

    2013 Q2 2013 Effective date (latest 2017) and

    transition decided

  • 2015 SAP SE or an SAP affiliate company. All rights reserved. 7

    NEW Revenue Recognition Accounting and Reporting

    Affecting All Revenue Contracts (IFRS 15, FAS 2014-09)

    Final standard published May 2014

    Effective date latest 2017* (early

    adoption possible for IFRS

    preparers)

    New single principled 5-step model

    (SSP) for recognizing revenue

    Disclosure changes include both quantitative and qualitative information

    about the amount, timing, and uncertainty

    of revenue from contracts with customers

    and the significant judgments used

    All companies (public and private) will

    be required to prepare their revenue

    contracts now to comply with this new

    regulation by 2017*

    1 Identify the contract with the customer

    2 Identify the separate performance obligations in the contract

    3 Determine the transaction price

    4 Allocate the transaction price to the separate performance obligations in the contract

    5 Recognize revenue when (or as) a performance obligation is satisfied

    *The revenue standard will be effective for annual reporting periods beginning on or after January 1, 2017. Early

    application will be permitted in IFRS countries. On April 1, 2015, FASB proposed to delay the effective date by 1

    year to 2018 and permit early adoption under US GAAP. The IASB followed on April 29.

  • 2015 SAP SE or an SAP affiliate company. All rights reserved. 8

    IFRS Revenue Recognition Impact for Telcos

    IFRS Revenue Recognition

    Telco related scope

    Accounting for multiple performance obligations

    Uncertain or variable considerations/ determining the transaction price

    Collectability Allocation of the transaction price and

    establishing standalone selling prices

    Equipment installation revenues Contract costs/customer acquisition cost

    Example*:

    Customer closes 24 month contract

    Monthly fee: 40 Activation fee: 30 Phone: 0 (100% subsidized) Phone stand alone selling price: 300 Phone purchase price: 290

    Current IFRS:

    Total recognized revenue: 990 Activation fee of 30 regarded as revenue, phone 0 revenue

    (Contingent Revenue Cash-Cap-Method)

    The phone price of 290 is recognized as cost of goods

    New IFRS:

    Total recognized revenue: 990 [24 x 40 + 30 = 990 ]

    Activation fee is not regarded as independent revenue

    (no standalone service)

    The delivery of the phone needs to be regarded as separate liability,

    236 revenue are recognized (Contract Asset activated) [300 / (24 x 40 + 300 ) x 990 = 236 ]

    The remaining 754 are delimited over the contractual period of 24 months [754 / 24 = 31,41 ]

    Contract

    start

    Month

    1

    Month

    2

    Month

    3

    Month 4-24

    Total

    Current

    IFRS

    30 40 40 40 840 990

    New

    IFRS

    236 31,42 31,42

    31,42

    659,74

    990

    The complex regulations and the new

    calculation schemes require a

    software solution, which fully

    complies with the new accounting

    standards, provides flexibility, and

    supports an end-to-end audit trail * Source: IRZ, 2013, p. 17 (Patrick Lpold, PWC AG)

  • 2015 SAP SE or an SAP affiliate company. All rights reserved. 10

    Impact on Various Industries

    Less impact

    Invoice-Driven Revenue Recognition

    Customer gets an invoice, pays and receives the good or service at the same time

    Telecommunication

    High Tech

    Professional

    Service Provider

    Automotive

    Retail

    Wholesale Construction

    &

    Engineering

    Commodity (e.g., Oil & Gas, Mill, etc.)

    Media

    Pharmaceuticals

    Healthcare (e.g., Diagnostic)

    - Impact +

    Utilities

    Considerable impact

    Multiple Element Arrangements Appropriate revenue allocation

    Mass Volume Automatic rule based revenue recognition required

    Accrued revenues Long term projects

    Long term shipment process

  • 2015 SAP SE or an SAP affiliate company. All rights reserved. 15

    Simplify and Automate Revenue Accounting Average Volume & Complexity High Volume High Volume & Complexity

    SAP Revenue Accounting and

    Reporting

    SAP Revenue Accounting and

    Reporting

    SAP Data Hub on HANA

    SAP Revenue Accounting and

    Reporting

    SAP Data Hub on HANA

    SAP Simple Finance

    SAP Revenue Accounting and Reporting

    Deployment Options

  • 2015 SAP SE or an SAP affiliate company. All rights reserved. 16

    Implementation Timeline Revenue Recognition

    2014 2015 2016 2017*

    Accounting

    May 28, 2014:

    Regulation

    announced

    Dual Reporting Period

    Ends IFRS Go-Live

    Date

    Begin Accounting

    Assessment Project

    Prepare Opening

    Balance Sheet Under

    IFRS Rules

    Solutions

    SAP Lease

    Administration by

    Nakisa**

    SAP Revenue

    Accounting and

    Reporting***

    Benefits

    Capture revenue

    contract data during the

    accounting assessment

    Automate and Simplify

    Revenue Accounting

    **Licensed from the SAP price list, ***Included with maintenance for existing SAP Financials customers

    *Proposed 2018 effective date pending

  • 2015 SAP SE or an SAP affiliate company. All rights reserved. 17

    Revenue Contract Abstraction

    Technical Accounting

    Assessment

    Sub-set

    abstracted

    manually

    Accounting assessment under new Revenue Recognition

    SAP Revenue Accounting

    and Reporting Blueprint

    Sales

    contracts,

    Orders, Bills,

    Invoices,

    Revenue Accounting

    and Reporting

    Rules (BRF+)

    ERP Financials

    Typically a one-time manual process

    Automatic process after implementation of SAP Revenue Accounting and Reporting

  • Capture Revenue Contract Data During the Accounting Assessment

    SAP Lease Administration by Nakisa

  • 2015 SAP SE or an SAP affiliate company. All rights reserved. 19

    SAP and Nakisa partnering to deliver

    Jointly developed with SAP

    Part of the product and enhancement pack roadmap

    Meets SAP premium qualification

    Validated against SAPs product standards for security, performance, supportability, accessibility and documentation

    Sold and supported by SAP

    Around the globe

    Exceptional user experience

    Intuitive UI for transparency and role-based insights

  • 2015 SAP SE or an SAP affiliate company. All rights reserved. 20

    SAP Lease Administration by Nakisa

    Sold and supported globally by SAP

    Supports ERP, HANA DB, HANA Cloud

    Platform (HCP), Simple Finance

    Compelling events: new regulations

    New Revenue Accounting regulation Finalized in May 2014 and affects all public

    and private companies

    New proposed Lease Accounting regulation updated Exposure Draft expected to be

    finalized in 2015

    Land with SAP Lease Administration

    and expand with additional solutions

    for Accounting and Financial close

    New Solution Now Available

  • 2015 SAP SE or an SAP affiliate company. All rights reserved. 21

    Whats in it for you?

    Incremental license revenue for VARs

    Implementation revenue on SAP Lease

    Administration by Nakisa

    Implementation of related SAP solutions

    (SAP ERP Financials, Simple Finance,

    SAP Revenue Accounting and Reporting,

    SAP Real Estate Management, Treasury,

    Plant Maintenance)

    Advisory services on Revenue Recognition

    and upcoming Lease Accounting

    regulations

    Change Management consulting

    Data Migration services

  • 2015 SAP SE or an SAP affiliate company. All rights reserved. 22

    Accounting and financial close process

    Reporting and Analysis

    Entity Close Management

    Disclosure Management

    Notes Management

    Consolidation Intercompany Reconciliation

    General Ledger

    Sub-Ledger

    Revenue Recognition

    Lease Accounting

    Financial

    Accounting

    Entity Close Corporate

    Close

    Reporting and

    Disclosure

    Internal Controls

    Master Data Governance for Financials

    Financial Close

    Governance

  • 2015 SAP SE or an SAP affiliate company. All rights reserved. 23

    Solution capabilities for abstraction of revenue & lease contracts SAP Lease Administration by Nakisa

    Increased

    visibility

    Collection and

    Unification

    Validation and

    Traceability

    Collaboration

    Collection & unification Designed to provide visibility into your lease

    and revenue contract exposure

    Automated and effective data collection

    Unification of data in one single repository

    Collaboration Open collaboration framework to engage and

    align business decision-makers

    Simulation capabilities to analyze best response to business changes

    Efficiently evaluate lease vs. buy scenarios

    Validation & traceability Validated true and useful data

    Efficient traceability for compliance

    Readiness for reporting requirements

  • 2015 SAP SE or an SAP affiliate company. All rights reserved. 25

    Visibility to Revenue contracts Revenue Recognition

    Analytics to help you

    understand and

    manage your

    revenue

    exposure

  • 2015 SAP SE or an SAP affiliate company. All rights reserved. 26

    Leveraging the simple 5-step

    process as outlined

    by IASB/FASB to

    abstract Revenue

    contracts

    IASB/FASB process alignment Revenue Recognition

  • 2015 SAP SE or an SAP affiliate company. All rights reserved. 27

    Easy-to-use data collection

    forms

    Highly configurable

    extensible data

    model

    End-user productivity tools Revenue Recognition

  • 2015 SAP SE or an SAP affiliate company. All rights reserved. 28

    Share comments for specific

    Revenue

    contracts

    Discussions with multiple users

    Collaboration Revenue Recognition

  • 2015 SAP SE or an SAP affiliate company. All rights reserved. 29

    Generate contract summary and

    export to PDF

    Contract summary Revenue Recognition

  • 2015 SAP SE or an SAP affiliate company. All rights reserved. 30

    Executive Summary Contract Data Abstraction and Revenue Recognition Use Case by Nakisa

    Company:

    Nakisa Inc.

    Industry:

    Software

    Revenue Streams:

    Licenses

    Maintenance

    Consulting

    Training

    Assessment of a sample of 37 contracts, originated since 01/2015

    Contract types

    Software licenses: 11

    Consulting: 12

    Change requests: 14

    Solution

    SAP Lease Administration by Nakisa

    Solution requirement gathering from Nakisa Finance team

    Configuration of data fields according to Nakisas contracts

    Implementation

    Implemented on-premise

    Duration: Installation several hours; Implementation 25+ man hours

    Process

    Contract upload through PDF

    Data capture following the new 5-step process for revenue recognition

  • 2015 SAP SE or an SAP affiliate company. All rights reserved. 31

    5. Revenue Recognition Impact on Revenue Schedule

    Recognizing revenue for the same contract will be different for maintenance services

    Nakisa would need to change the internal revenue accounting process to allocate

    transaction prices and recognize revenue for maintenance services based on the

    standalone selling prices of the corresponding performance obligations

    Year: 2015 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total

    Licenses $106,250

    Maintenance $903 $903 $903 $903 $903 $903 $903 $903 $903 $903 $903 $903

    Total $107,153 $903 $903 $903 $903 $903 $903 $903 $903 $903 $903 $903 $117,091

    Licenses $97,576

    Maintenance $1,626 $1,626 $1,626 $1,626 $1,626 $1,626 $1,626 $1,626 $1,626 $1,626 $1,626 $1,626

    Total $99,202 $1,626 $1,626 $1,626 $1,626 $1,626 $1,626 $1,626 $1,626 $1,626 $1,626 $1,626 $117,091

    Cu

    rre

    nt

    Ne

    w

    Revenue recognized for Q1 under current practices is

    108,959.00 compared to 102,454.00 under the new

    standard for the same contract

    Note: All data in Nakisas contracts and reports have been modified to preserve the confidential information

  • Partner Program

  • 800+ enterprise

    customers

    subscribers

    4M+ Available in

    languages

    18

    Utilized in

    125 countries

    Caters to

    24+ industries

    Providing solutions

    since 2001

    Headquartered in Canada

    Leader in Finance, Org &

    Talent Management

    Tier 1 SAP partner

    since 2007

    Partners

  • 2015 SAP SE or an SAP affiliate company. All rights reserved. 34

    Global Sales Play

    SAP customers with SAP ERP Financials or SAP Real

    Estate Management (or any

    net-new customer)

    Concerned about meeting IFRS Revenue Recognition

    or Lease Contract

    regulations

    Titles to target: CFO/VP, Accounting/

    Chief Accounting Officer

    Head of Compliance/ Financial Reporting

    Manager of Accounting Comptroller

    For Lease Administration: Transportation Oil & Gas Construction All industries with

    complex and large

    volumes of lease

    portfolios

    For Revenue Recognition: Telecommunications High Tech Pharmaceuticals Engineering &

    Construction

    Entertainment & Media Aerospace & Defense All industries that have

    revenue contracts

    Solution Extension to SAP ERP Financials SAP Simple Finance SAP Real Estate

    Management

    Support for HANA Cloud

    Platform (HCP)

    HANA Cloud/On-premise/

    Hybrid deployment

    Target customer profile Target industries Target customer profile Target industries Target solutions

  • Your opportunity!

    Strong market demand for Nakisa Financial products and

    implementation resources

    Complete and extend your Financial service offerings

    Nakisa customers want to work with local Nakisa Solution

    Provider

    Services Revenue through Consulting services and

    implementation enhancements

    & integration

    2015 SAP SE or an SAP affiliate company. All rights reserved. 36

  • 2015 SAP SE or an SAP affiliate company. All rights reserved. 37

    Nakisa Partnership Process Whats next for you?

    IDENTIFY ENGAGE ENABLE RUN

    Partner evaluation

    based on Partner

    Selection Criteria

    Sign Partner

    Agreements

    Partner listing on

    Nakisa website

    GTM business

    planning with

    objectives

    Partner Portal &

    Demo Center

    Access

    Sales Training &

    Technical

    Certification

    Monthly pipeline calls to

    review progress on

    objectives

    Joint Go-To-Market

    strategy

    Marketing Funds

    Full Sales & Technical

    Support

  • Tra

    inin

    g

    Co

    nte

    nt

    Pra

    cti

    ce

    Access to a demo license of Nakisa software to provide a playpen work environment for

    trained consultants to increase their skills and knowledge and to build their own custom demos

    to showcase their skills and innovative prototypes

    Access to a library of marketing assets, sales

    enablement material and product

    documentation via the partner portal

    Secured access to Nakisa solutions

    demonstration systems

    On-demand expert

    classes for SAP

    Lease Administration

    by Nakisa

    hands-on

    implementation

    training

    Functional ramp-up

    through

    self-paced learning Free Sales and Pre-

    Sales Training

    Demo license

    Partner portal Demo systems

    Partner Enablement

  • 2015 SAP SE or an SAP affiliate company. All rights reserved. 39

    Next steps

    WHITEPAPER

    Getting smart about revenue recognition and lease accounting

    www.nakisa.com/whitepapers-revenue-recognition-lease-accounting

    WEBINAR

    Upcoming changes in lease accounting standards:

    How technology can help with costs savings today and regulatory

    compliance tomorrow

    www.nakisa.com/webinar-lease-accounting-standards

    WEBINAR

    New revenue recognition standards:

    What the rule changes mean for your business

    www.nakisa.com/webinar-revenue-recognition-standards

    For more information and to sign up: www.nakisa.com/partners

  • 2015 SAP SE or an SAP affiliate company. All rights reserved. 40

    Implementation Timeline Revenue Recognition

    2014 2015 2016 2017*

    Accounting

    May 28, 2014:

    Regulation

    announced

    Dual Reporting Period

    Ends IFRS Go-Live

    Date

    Begin Accounting

    Assessment Project

    Prepare Opening

    Balance Sheet Under

    IFRS Rules

    Solutions

    SAP Lease

    Administration by

    Nakisa**

    SAP Revenue

    Accounting and

    Reporting***

    Benefits

    Capture revenue

    contract data during the

    accounting assessment

    Automate and Simplify

    Revenue Accounting

    **Licensed from the SAP price list, ***Included with maintenance for existing SAP Financials customers

    *Proposed 2018 effective date pending

  • 2015 SAP SE or an SAP affiliate company. All rights reserved. 41

    Revenue Contract Abstraction

    Technical Accounting

    Assessment

    Sub-set

    abstracted

    manually

    Accounting assessment under new Revenue Recognition

    SAP Revenue Accounting

    and Reporting Blueprint

    Sales

    contracts,

    Orders, Bills,

    Invoices,

    Revenue Accounting

    and Reporting

    Rules (BRF+)

    ERP Financials

    Automatic process after implementation of SAP Revenue Accounting and Reporting

    Typically a one-time manual process

  • Automate and Simplify

    Revenue Accounting

    SAP Revenue Accounting and Reporting

  • 2015 SAP SE or an SAP affiliate company. All rights reserved. 43

    Revenue Recognition

    A revenue solution providing

    advanced capabilities while ensuring

    multi-GAAP compliance

    Covers advanced revenue recognition scenarios,

    such as multi-element arrangements

    Tackles multiple accounting standards, including

    the most recent IFRS/FASB regulations

    Integrated with your financials and multiple logistics

    systems

    Solution Vision

  • 2015 SAP SE or an SAP affiliate company. All rights reserved. 44

    SAP IFRS Revenue Recognition Background

    A project for a new revenue recognition standard has been set

    up to meet:

    Changes in accounting standards, e.g., US-GAAP SOP 97-2, EITF 08-

    1, EITF 09-3, etc., replaced with one

    standard for contracts with customers

    Parallel accounting and cost recognition

    Ongoing globalization

    Increasing demand for high performance revenue recognition

    due to new business models (e.g.,

    digital sales)

    Ongoing Development Project

    SAPs Chief Accounting Officer, Christoph Huetten, is Vice-

    Chairman of the IFRS/IASB

    Advisory Board

    SAP meets with the IASB staff regularly

    SAP accountants are part of the first corporate review team for the

    upcoming rev. rec. standard

    SAP meets with the Big 4 regularly

    SAP has met with 100+ customers on revenue recognition in the last 2

    years

  • 2015 SAP SE or an SAP affiliate company. All rights reserved. 45

    Customer Engagement Initiative Revenue Recognition Fantastic Customer Involvement!

    In Detail

    Large Pharmaceutical

    Large consumer tech (2)

    Telco

    Media content provider

    Large software Inc.

    SAP

    Info

    Large IT consulting Inc.

    Consumer phone Inc.

    Defense contractor

    Consumer good Inc.

    Large chemical Inc.

    Telco

    Review

    Construction equipment

    Storage technology

    Large printer Inc.

    Consumer software

    Large consumer tech

    Large medical supply

    Large industrial Inc.

  • 2015 SAP SE or an SAP affiliate company. All rights reserved. 46

    Customer Engagement Initiative Testers

    In Detail

    Large consumer tech (2)

    Telco (2)

    Large software Inc.

    SAP

    Large IT consulting Inc. (3)

  • 2015 SAP SE or an SAP affiliate company. All rights reserved. 47

    The Business Benefits Our Goals For Key Stakeholders Revenue Managers from Day 1

    Automation

    Simplification

    Easy to

    Manage

    Easy to Use

    Clear

    Visibility Auditability

    Detailed

    Transparency

    Insight

    Flexibility

    Compliance

  • 2015 SAP SE or an SAP affiliate company. All rights reserved. 48

    SAP Revenue Accounting and Reporting* Value Proposal: Automate and Simplify Revenue Accounting

    Automate

    and

    simplify

    revenue

    accounting

    IFRS Bodies of Leadership

    Christoph Hutten Chief Accounting Officer of SAP AG and Vice-Chairman

    IFRS Advisory Council Tracking new

    rev rec standard with accounting boards

    Cross-functional internal products team, including SAP corporate accounting

    Time to Market for IFRS-

    Compliant Solution

    Rev Rec Engine will be GAd in 2015

    30+ customers currently in co-engineering collaboration with us on

    this solution

    SAP Ariba division live in production

    Proven Experience Delivering Revenue

    Recognition Solutions

    18,000+ customers using SAP for revenue recognition

    Long history of solving finance and accounting challenges for large

    enterprises

    Market leadership in developing innovative solutions

    Robust and Flexible Solution

    Enables tracking and flexible enforcement of Performance

    Obligations

    Rev rec rules and rules engine are decoupled from order entry and

    billing systems

    Experience and software tools to address data quality issues

    inherent within multi-vendor

    environments

    Designed to provide Massive scalability

    Designed to address IFRS-specific requirements, also capable of

    addressing local GAAPs

    Ease of use for accountants Compatible with portfolio approach

    *Included with maintenance for existing SAP Financials customers

  • 2015 SAP SE or an SAP affiliate company. All rights reserved. 49

    SAP Revenue Accounting and Reporting Automate and Simplify Revenue Accounting

    Order

    or

    Invoice

    Determine

    Revenue

    Accounting

    Contract

    Allocate

    Revenue

    Apply rules,

    determine

    performance

    obligations

    Events

    Recognize

    Revenue

    Give revenue managers

    flexibility and control of

    the revenue accounting

    process

    Complies with new and

    existing revenue

    recognition standards

    Determine

    Transaction

    Price

  • 2015 SAP SE or an SAP affiliate company. All rights reserved. 51

    Revenue Accounting Contract

    What is a Revenue Accounting Contract?

    A revenue accounting contract is an object that consists of performance

    obligations that belong together. It represents the financial view of an

    operational document, such as a sales order.

    A revenue accounting contract serves as a container for performance

    obligations. It typically represents an operational document that originates on

    the back-end operational system, such as a sales order created on a Sales

    and Distribution system. However, it can also represent an aggregate of

    multiple operational documents in certain business scenarios.

  • 2015 SAP SE or an SAP affiliate company. All rights reserved. 52

    SAP Revenue Accounting and Reporting

    Decoupled Sales and Revenue Accounting

    Revenue Accounting is like a sub ledger of FI

  • 2015 SAP SE or an SAP affiliate company. All rights reserved. 54

    Overview of SAP Roadmap for Revenue Accounting Roadmap highlights

    Future direction Recent innovations Planned innovations

    SAP Revenue Accounting and

    Reporting 1.0 (GA March 31, 2015)

    Multiple Element Arrangement support

    Multiple accounting principle support

    SD Order integration

    Rules based support of POB creation

    Supporting IFRS 15 guidance in presenting contract assets and

    contract liabilities

    SAP Revenue Accounting and

    Reporting 1.1

    General enhancements

    Granular posting run

    Migration enhancements

    Accounting of contract modifications enhancements (Prospective Changes)

    Archiving

    Processing of return orders

    Improvements for Telcos, High

    Technology, and other industries

    including:

    BRIM Integration incl. basic requirements for usage based revenue recognition

    Assumptions for invoices

    Account determination in adapter

    SAP Revenue Accounting and

    Reporting 1.x

    Additional improvements Telcos, High Technology

    Improvements for Aerospace and Defense, Engineering and

    Construction, Professional

    Services, and other industries:

    Project based revenue recognition (limited)

    Transition capabilities for new standard

    Cost Recognition

    Improvements in accounting for variable considerations and

    material rights

  • 2015 2015 SAP SE or an SAP affiliate company. All rights reserved. 55

    Overview of SAP Roadmap for Revenue Accounting Roadmap highlights (cont.)

    Future direction Recent innovations Planned innovations*

    SAP Revenue Accounting and

    Reporting 1.0 (in Ramp-Up)

    Multiple Element Arrangement support

    Multiple accounting principle support

    SD Order integration

    Rules based support of POB creation

    Supporting IFRS 15 guidance in presenting contract assets and

    contract liabilities

    SAP Revenue Accounting and

    Reporting 1.1

    General enhancements

    Granular posting run

    Migration enhancements

    Accounting of contract modifications enhancements (Prospective Changes)

    Archiving

    Processing of return orders

    Improvements for Telcos, High

    Technology, and other industries

    including:

    BRIM Integration incl. basic requirements for usage based revenue

    recognition

    Assumptions for invoices

    Account determination in adapter

    SAP Revenue Accounting and

    Reporting 1.x

    Additional improvements Telcos, High Technology

    Improvements for Aerospace and Defense, Engineering and

    Construction, Professional

    Services, and other industries:

    Project based revenue recognition (limited)

    Transition capabilities for new standard

    Cost Recognition

    Improvements in accounting for variable considerations and

    material rights

    *Currently targeted for a 2H 2015 release, subject to change

  • 2015 2015 SAP SE or an SAP affiliate company. All rights reserved. 56

    Overview of SAP Roadmap for Revenue Accounting Roadmap highlights (cont.)

    Future direction Recent innovations Planned innovations

    SAP Revenue Accounting and

    Reporting 1.0 (in Ramp-Up)

    Multiple Element Arrangement support

    Multiple accounting principle support

    SD Order integration

    Rules based support of POB creation

    Supporting IFRS 15 guidance in presenting contract assets and

    contract liabilities

    SAP Revenue Accounting and

    Reporting 1.1

    General enhancements

    Granular posting run

    Migration enhancements

    Accounting of contract modifications enhancements (Prospective Changes)

    Archiving

    Processing of return orders

    Improvements for Telcos, High

    Technology, and other industries

    including:

    BRIM Integration incl. basic requirements for usage based revenue recognition

    Assumptions for invoices

    Account determination in adapter

    SAP Revenue Accounting and

    Reporting 1.x*

    Additional improvements Telcos, High Technology

    Improvements for Aerospace and Defense, Engineering and

    Construction, Professional

    Services, and other industries:

    Project based revenue recognition (limited)

    Transition capabilities for new standard

    Cost Recognition

    Improvements in accounting for variable considerations and

    material rights

    *Currently targeted for a 1H 2016 release, subject to change

  • 2015 SAP SE or an SAP affiliate company. All rights reserved. 57

    User Experience Shall Reflect Generic Guidance from

    Standard

    Revenue Accounting

    Contracts (Search/List view)

    1. Contract identification (e.g., contract combination)

    2. Determination of Perf. Obligations (e.g., determine distinct/non-distinct performance

    obligations)

    3. Determination of Transaction Price (e.g., time value of money, variable

    considerations)

    4. Allocation of Transaction Price (e.g., based on SSP, SSP Range)

    5. Satisfaction of Performance Obligation (e.g., time-based, event-based)

    Other activities (e.g., contract overview, analytics/disclosures,

    administration)

  • 2015 SAP SE or an SAP affiliate company. All rights reserved. 58

    SAP Revenue Accounting and Reporting Value Proposal: Automate and Simplify Revenue Accounting

    Automate

    and

    simplify

    revenue

    accounting

    IFRS Bodies Leadership

    Time to Market for IFRS

    Compliant Solution

    Proven Experience

    Delivering Revenue

    Recognition Solutions

    Robust and Flexible

    Solution

  • SAP Revenue Accounting

    and Reporting

    Implementation for Ariba

  • 2015 SAP SE or an SAP affiliate company. All rights reserved. 60

    Legal Disclaimer

    The information in this presentation is confidential and proprietary to SAP and may not be disclosed without the permission of SAP. This

    presentation is not subject to your license agreement or any other service or subscription agreement with SAP. SAP has no obl igation to pursue

    any course of business outlined in this document or any related presentation, or to develop or release any functionality mentioned therein. This

    document, or any related presentation and SAP's strategy and possible future developments, products and/or platforms directions and

    functionality are all subject to change and may be changed by SAP at any time for any reason without notice. The information on this document

    is not a commitment, promise or legal obligation to deliver any material, code or functionality. This document is provided without a warranty of

    any kind, either express or implied, including but not limited to, the implied warranties of merchantability, fitness for a particular purpose, or non-

    infringement. This document is for informational purposes and may not be incorporated into a contract. SAP assumes no responsibility for

    errors or omissions in this document, and shall have no liability for damages of any kind including without limitation direct, special, indirect, or

    consequential damages that may result from the use of this document. This limitation shall not apply in cases of intent or gross negligence.

    All forward-looking statements are subject to various risks and uncertainties that could cause actual results to differ materially from

    expectations. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their dates, and

    they should not be relied upon in making purchasing decisions.

  • 2015 SAP SE or an SAP affiliate company. All rights reserved. 62

    Achievements

    core cross-functional project resources

    representing development, IT, accounting &

    reporting partnered to implement Revenue

    Accounting

    11 Ariba entities live with Revenue

    Accounting (phased go-live approach)

    65,100 contracts migrated from legacy

    systems

    12 revenue accountants actively using tool

    3 quarters closed using Revenue

    Accounting for some Ariba entities

    Early adoption of Revenue Accounting

    facilitated business input to improve the tool

    and user experience (co-innovation

    approach)

  • 2015 SAP SE or an SAP affiliate company. All rights reserved. 67

    Common Sense Approach & Lessons Learned

    Data migration is complex and resource intensive depending on contract

    complexity and quality of source data

    Consider staggered go live for multiple entities with high contract volumes

    Dress rehearsal of data migration in test system improved data quality in

    production

    Understand how sales documents influence contract setup and changes

    End to end testing recommended, possibly including quote to order to

    contract to reporting

    Identify process and reports up front to reconcile data to legacy systems

    Simulate initial posting for migrated contracts as an additional validation

    step for data migration

  • 2015 SAP SE or an SAP affiliate company. All rights reserved. 73

    Where to Find More Information General Information

    Where to go for more information?

    www.sap.com/finance

    http://go.sap.com/product/financial-

    mgmt/revenue-recognition.html

    SAP Revenue Accounting (internal) SAP Revenue Accounting and Reporting 1.0 was

    built from the ground up to handle the new revenue

    recognition regulation announced May 28, 2014 to

    be effective January 1, 2017 in countries adhering to

    both US GAAP and IFRS. The solution automates

    the revenue recognition and accounting process and

    simplifies the tasks of revenue accountants in

    following the new accounting guidelines published

    May 28, 2014.

    http://help.sap.com/revacc_10

    https://cfoknowledge.wordpress.com/2014/09/18

    /the-new-revenue-recognition-standard-is-here-

    now-what/

    SAP Revenue Accounting Ramp Up SAP Revenue Accounting and Reporting 1.0 Ramp-

    Up information

    Ramp-Up Page - SAP Revenue Accounting and Reporting

    | Online Nomination Request

  • 2015 SAP SE or an SAP affiliate company. All rights reserved. 74

    Key Learnings

    The new revenue recognition standard will have an effective date of January 1, 2017; start preparing now for this standard; it will affect all industries, not just High Technology

    The new revenue recognition standard will dramatically change the process of revenue recognition

    The upcoming expected 5-step process for revenue recognition must be followed, so start training your revenue recognition personnel now and consider using SAP Revenue Accounting and Reporting for your system needs

    The technical accounting assessment has to be completed up-front or in advance of implementing the system or any parts of the system solution

    Remember that revenue recognition may have impacts on parallel reporting and on the financial close. Be well prepared to handle such situations.

    This is not a big bang project; work in iterations across accounting, technology (system), and people (processes)

    Use the new standards as an opportunity to improve systems, processes, and lower TCO for revenue recognition and lease administration activities within your finance departments

  • Questions?

  • 2015 SAP SE or an SAP affiliate company. All rights reserved.

    Thank You!

    Global Partner Support from Nakisa Global Solution Support from SAP

    Romeo De Leon

    VP, Product Management

    P +1 (514) 605-2642

    E [email protected]

    Pete Graham

    Director of Solution Management

    P +1 (610) 661-5279

    E [email protected]

    Peter Muller

    Director, Partner Development

    P +1 (514) 473-3444

    E [email protected]

    Catherine Moran

    Global Partner Director

    P +1 (773) 685-3099

    E [email protected]

    Who to contact

  • 2015 SAP SE or an SAP affiliate company. All rights reserved.

    Thank You!

    Pete Graham

    Director, Finance Solutions and Mobility

    SAP America, Inc.

    3999 West Chester Pike

    Newtown Square, PA 19073

    [email protected]

    Solution Management

    Joseph (Joe) R. Svoboda, CPA

    Sr Consulting Manager, Global Head Services, Finance and Controlling, North America Application Services

    SAP America, Inc.

    Highland Landmark III

    3010 Highland Parkway, Suite 900

    Downers Grove, IL 60515

    [email protected]

    Consulting Services

  • 2015 SAP SE or an SAP affiliate company. All rights reserved. 78

    2015 SAP SE or an SAP affiliate company.

    All rights reserved.

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