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Copyright © 2014, Oracle and/or its affiliates. All rights reserved. | Safe Harbor Statement The following is intended to outline our general product.

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Presentation on theme: "Copyright © 2014, Oracle and/or its affiliates. All rights reserved. | Safe Harbor Statement The following is intended to outline our general product."— Presentation transcript:

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2 Copyright © 2014, Oracle and/or its affiliates. All rights reserved. | Safe Harbor Statement The 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. Oracle Confidential – Internal/Restricted/Highly Restricted2

3 Copyright © 2014, Oracle and/or its affiliates. All rights reserved. | Revenue Management Cloud Service Highlights and Customer Adoption [CON8402] Tapomoy Dey Senior Director, Financials Development

4 Copyright © 2014, Oracle and/or its affiliates. All rights reserved. | Agenda  Why Revenue Management  Solution Footprint  Solution Deep Dive  Customer Traction  Converged Revenue Standards (IFRS 15/Topic 606)  Q&A

5 Copyright © 2014, Oracle and/or its affiliates. All rights reserved. | Pressure to comply – US GAAP Current Guidance ASC/ASU (SOP 97-2, EITF-08, etc.) – Auditable Transactions Many sources of truth – Spreadsheets – 3 rd 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

6 Copyright © 2014, Oracle and/or its affiliates. All rights reserved. | Software License Support Consulting Software License Support Consulting Total Customer Bill Software License Support Consulting Total Revenue Reallocation SellingAdjusted Software License Support Consulting Total Revenue Schedule Period IPeriod II Period III Why Revenue Management Use Case: A Software Contract

7 Copyright © 2014, Oracle and/or its affiliates. All rights reserved. | Agenda  Why Revenue Management?  Solution Footprint  Solution Deep Dive  Customer Traction  Converged Revenue Standards (IFRS 15/Topic 606)  Q&A

8 Copyright © 2014, Oracle and/or its affiliates. All rights reserved. | Centralized workarea Actionable Analytics and Reporting Spreadsheet Integration Revenue accounting Revenue Sources Reference data Automated Compliance Solution Footprint Centralized, Automated Revenue Management Cloud Service

9 Copyright © 2014, Oracle and/or its affiliates. All rights reserved. | Revenue Management Cloud Service Co-Existence Functional Architecture Audit & Analyze Calculate and manage Fair Market Value (FMV) Support Multiple Element Arrangements (MEA) Create Accounting Create Schedules Manage 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 Projects EBS Service Contracts EBS Accounts Receivable 3 rd Party Revenue Events Extracted via Delivered Source Views Revenue Management EBS Order Management EBS Accounts Receivable EBS Costing PaymentCustomer AcceptanceRevenue General Ledger Accounting

10 Copyright © 2014, Oracle and/or its affiliates. All rights reserved. | Agenda  Why Revenue Management?  Solution Footprint  Solution Deep Dive  Customer Traction  Converged Revenue Standards (IFRS 15/Topic 606)  Q&A

11 Copyright © 2014, Oracle and/or its affiliates. All rights reserved. | Automation of contract identification, fair value price and compliance adjustments Centralized repository for reporting and accounting Audit trails and approvals ensure accurate revenue processing AUTOMATIONACCURACYCOMPLIANCE Revenue Management Cloud Service Key Business Challenges Addressed

12 Copyright © 2014, Oracle and/or its affiliates. All rights reserved. | Demand for Automation 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 Addressed Demand for Automation

13 Copyright © 2014, Oracle and/or its affiliates. All rights reserved. | Establish VSOE Value Calculate and Manage Fair Market Value Support VSOE TPE, and ESP

14 Copyright © 2014, Oracle and/or its affiliates. All rights reserved. | -Access to Bell Curve & Trend Graph and Underlying Standalone Sales Calculate & Manage Fair Market Value Review & Establish VSOE Values

15 Copyright © 2014, Oracle and/or its affiliates. All rights reserved. | Identify Contracts Automate identification of Multiple Element Arrangements Identification Rules 3 Sources Line 1: Service Contracts Line 3: Order Management

16 Copyright © 2014, Oracle and/or its affiliates. All rights reserved. | Allocate Revenue Ensure Appropriate Allocation Treatment FMV Ranges Adjusted Revenue Carved Amounts

17 Copyright © 2014, Oracle and/or its affiliates. All rights reserved. | 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 entries Adjust 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 Many Sources of Truth Many Centralized repository for reporting and accounting Key Business Challenges Addressed Many Sources of Thruth

18 Copyright © 2014, Oracle and/or its affiliates. All rights reserved. | Separate Revenue from Billing Revenue Document Captures Key Revenue Processing Source Info Revenue Scheduling New Internal Document

19 Copyright © 2014, Oracle and/or its affiliates. All rights reserved. | Adjust Revenue Ensure Accurate Revenue Accounting Associated MEA Selling Price vs. Revenue Price Document Amounts

20 Copyright © 2014, Oracle and/or its affiliates. All rights reserved. | Adjust Revenue Process Revenue Adjustments in Mass Multiple Actions Robust Search Full History

21 Copyright © 2014, Oracle and/or its affiliates. All rights reserved. | Manage Revenue Immediate and Actionable Access to Revenue Transactions Take Immediate Action Immediate Notification

22 Copyright © 2014, Oracle and/or its affiliates. All rights reserved. | Pre-seeded Revenue Forecast Report by: Customer Periods Products Sales Rep Pre-defined Oracle Transactional Business Intelligence Subject Areas : Fair Market Value MEA Carve-out Revenue Recognition Source Documents Manage Revenue Analytics and Tools

23 Copyright © 2014, Oracle and/or its affiliates. All rights reserved. | 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 Addressed Pressure to Comply

24 Copyright © 2014, Oracle and/or its affiliates. All rights reserved. | Audit Revenue Transactions Adjustment History Tracks all Actions Performed (MEA) Link to Revenue Doc Each Adjustment Tracked Separately

25 Copyright © 2014, Oracle and/or its affiliates. All rights reserved. | Audit Revenue Transactions Adjustment History Tracks all Actions Performed (Revenue Doc) All Actions on the Revenue Document are Displayed

26 Copyright © 2014, Oracle and/or its affiliates. All rights reserved. | Approve Revenue Transactions Proactively Manage Compliance Approvals MEA Approvals Fair Value Approvals

27 Copyright © 2014, Oracle and/or its affiliates. All rights reserved. | Comply with Accounting Guidance Meet Strict Revenue Accounting Requirements Displays how Adjustment Amounts were Calculated Compliance Details

28 Copyright © 2014, Oracle and/or its affiliates. All rights reserved. | 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 Report Supports 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 Report Compares Revenue and Deferred Revenue Balances in Revenue Management and General Ledger Identifies Activities to enable reconciliation Offers drill to underlying activity and journal detail Comply with Accounting Guidance Prepackaged Reconciliation Reports

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

30 Copyright © 2014, Oracle and/or its affiliates. All rights reserved. | Agenda  Why Revenue Management?  Solution Footprint  Solution Deep Dive  Customer Traction  Converged Revenue Standards (IFRS 15/Topic 606)  Q&A

31 Copyright © 2014, Oracle and/or its affiliates. All rights reserved. | Revenue Management Cloud Service Generally Available Release 8 Revenue Management 21 Customers provided development and design feedback Over 3,000 hours testing 7 Usability sessions Week Long validation session

32 Copyright © 2014, Oracle and/or its affiliates. All rights reserved. | Revenue Management Cloud Service Adoption Company ProfileRevenue 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 applicationsCo-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 productsCo-existence with EBS ERP Social media and professional networking companiesCo-existence with EBS ERP One of the world's leading media agenciesCo-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 centersCo-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

33 Copyright © 2014, Oracle and/or its affiliates. All rights reserved. | Revenue Management Quotes 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.”

34 Copyright © 2014, Oracle and/or its affiliates. All rights reserved. | Agenda  Why Revenue Management?  Solution Footprint  Solution Deep Dive  Customer Traction  Converged Revenue Standards (IFRS 15/Topic 606)  Q&A

35 Copyright © 2014, Oracle and/or its affiliates. All rights reserved. | Converged Accounting Standards Timeline The new Revenue standard became both US GAAP and IFRS on May 28 th, 2014 – US GAAP Topic 606 published as ASU – 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 MJJASONDJFMAMJJASONDJFMAMJJASOND Standard Final 5/28 OOW 9/28 Start data capture for transitional reporting 1/1/2015 OOW 2016 New Year 2016 All Companies Live on New Rules + FRM 1/ OOW 2015

36 Copyright © 2014, Oracle and/or its affiliates. All rights reserved. | 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 , , 430, , -20, -25, -28, -30, -35, -50, , , , , , , , , , , , , , , , , , , , , , , , , and – Amends many others. – IFRS: IAS 11 and 18 Concept Applies to All Companies, All Industries, All Countries

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

38 Copyright © 2014, Oracle and/or its affiliates. All rights reserved. | Converged Accounting Standards – Core Principle

39 Copyright © 2014, Oracle and/or its affiliates. All rights reserved. | The 5 Steps and Revenue Management Revenue compliance Receivables and revenue reconciliation Revenue compliance Receivables and revenue reconciliation Reporting Identify Contracts with Customers from multiple sources Identify obligations Identify Contracts with Customers from multiple sources Identify obligations Obligations Calculate Transaction Price Manage Revenue Pricing (SSP, ESP) Tolerances 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 Performance Obligation Liability Revenue Valuation using SSP, ESP From Performance Obligations to revenue on customer satisfaction COGSs GL Posting Revenue Recognition 12453

40 Copyright © 2014, Oracle and/or its affiliates. All rights reserved. | Applying the 5 Steps Use Case 1: A Typical Software Solution Provider Software License Support Consulting Software License Support Consulting Transaction Price Customer Bill Software License Support Consulting Transaction Total Performance Obligations Invoice Revenue Values OSSP/ESP Software License Support Consulting Total Performance Satisfaction Forecast Period IPeriod II Period III

41 Copyright © 2014, Oracle and/or its affiliates. All rights reserved. |Oracle Confidential – Internal/Restricted/Highly Restricted41 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 CL Recognize CA Revenue Bookkeeping SourceDetail Contract ID Perfomance Obligation Amount To Bill Revenue Amount PO Xfr (from) / to OMSoftware License (2) OMFree Software1000 SCSupport OMConsulting (4) E.G. Applying the 5 Steps Data Capture and Bookkeeping for Use Case 1 (Software Solution Contract)

42 Copyright © 2014, Oracle and/or its affiliates. All rights reserved. | Product Maintenance Custom Services Truck Custom Rack & Bedliner Trailer 5-yr Maintenance 10-yr Roadside Assistance 10-yr Extended Warranty Custom Trailer Doors Custom Hatch Transaction Price 5,000 Free 1, ,365 Customer Bill Custom Rack & Bedliner Truck Trailer 5-yr Maintenance 10-yr Roadside Etc… Transaction Total 0 5,000 1, ,365 Performance Obligations Invoice Revenue Values OSSP/ESP 4,000 2, ,365 PO PO PO PO Etc… Total 4,000 2, Performance Satisfaction Forecast Period IPeriod II , Period III PO PO PO PO Applying the 5 Steps Use Case 2: A Specialty Vehicle Manufacturer

43 Copyright © 2014, Oracle and/or its affiliates. All rights reserved. |Oracle Confidential – Internal/Restricted/Highly Restricted43 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 CL Recognize CA Revenue Bookkeeping SourceDetail Contract ID Perfomance Obligation Amount To Bill Revenue Amount PO Xfr (from) / to PACustom rack & bedliner ,000 (1,000) OMTruck1000 5,000 OMTrailer ,000 2,000 1,000 OKS5-yr maintenance (20) Excel10-yr roadside assistance OM10-yr extended warranty PACustom trailer doors PACustom hatch E.G. Applying the 5 Steps Data Capture and Bookkeeping for Use Case 2 (Specialty Vehicle Contract)

44 Copyright © 2014, Oracle and/or its affiliates. All rights reserved. | Concepts in the New StandardsConcepts in Revenue Management Contract with CustomerMultiple Element Arrangement Performance ObligationElement of the Arrangement Estimated Selling PriceVSOE, TPE, ESP Contract LiabilityDeferred Revenue New Standards and Revenue Management Current Release

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

46 Copyright © 2014, Oracle and/or its affiliates. All rights reserved. | Choice of Transition Methods (Credit – KPMG) 2012 and prior 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 tableMaintain 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

47 Copyright © 2014, Oracle and/or its affiliates. All rights reserved. | Deferred Revenue Performance Obligation Full Retrospective Transition Model new rules in Revenue Management, compare and iterate as needed, and cutover in FY 2017 Existing Revenue Recognition Topic 606 / IFRS 15 Using Fusion Revenue Management FY14, FY15, FY16, General Ledger Content EPM & Original Financial Statements FY 17 General Ledger Content EPM & Original Financial 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 FY 2017 EPM & Restated Financial Statements Contracts Invoices Perf. Obligations Revenue Pricing Old Revenue New Revenue Other factors Model and Iterate

48 Copyright © 2014, Oracle and/or its affiliates. All rights reserved. | Agenda  Why Revenue Management?  Solution Footprint  Solution Deep Dive  Customer Traction  Converged Revenue Standards (IFRS 15/Topic 606)  Q&A

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

50 Copyright © 2014, Oracle and/or its affiliates. All rights reserved. | Safe Harbor Statement The 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. Oracle Confidential – Internal/Restricted/Highly Restricted50

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

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