Leeyo Software, Inc.

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


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)

REVENUE RECOGNITION


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


WHAT OPTIONS EXIST


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


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


HERE’S WHAT IT LOOKS LIKE


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


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


SystemsProcessesPeople

Technical stack software upgradeo No changes to chart of accounts (COA) or organizational structureo Limited configuration changeso Minimal RICE components

OPPORTUNITY – R12 UPGRADE


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


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


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


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


Q&A Contacts

o Patrick Glenn – Vice President, Business Development• [email protected] • (408) 515-8959

WRAP-UP


mailto:[email protected]

Leeyo Software, Inc.

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