Overview of RAR
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Transcript of Overview of RAR
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
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© 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
What’s 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
Σ 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 Lüpold, 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 SAP’s 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
What’s 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 Nakisa’s 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 Nakisa’s 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 What’s 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
SAP’s 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 GA’d 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
• ŸGranular 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
• ŸGranular 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
• ŸGranular 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
Pete Graham
Director of Solution Management
P +1 (610) 661-5279
Peter Muller
Director, Partner Development
P +1 (514) 473-3444
Catherine Moran
Global Partner Director
P +1 (773) 685-3099
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
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
Consulting Services
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© 2015 SAP SE or an SAP affiliate company.
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In particular, SAP SE or its affiliated companies have 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 SE’s or its affiliated
companies’ strategy and possible future developments, products, and/or platform directions and functionality are all subject to change and may be
changed by SAP SE or its affiliated companies at any time for any reason without notice. The information in this document is not a commitment,
promise, or legal obligation to deliver any material, code, or functionality. 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.