What is Oracle Revenue Management Cloud?

Oracle Revenue Management Cloud is a centralized, automated revenue

management product that enables you to address the ASC 606 and IFRS 15
accounting standard for Revenue from Contracts with Customers. This
Revenue Management product provides a configurable framework to
automate the identification and creation of customer contracts and
performance obligations, their valuations and resulting accounting entries,
and the ability to recognize the revenue over time or at a point in time.

Revenue Management enables you to manage customer contracts and

performance obligations easily to help you address the mandates of the new
accounting guidance.

Can Revenue Management process transactions from Oracle E-Business Suite

and third party source applications?

Oracle Revenue Management Cloud has the capability to work with any
source application. The product is integrated with both Oracle Financials
Cloud and with Oracle E-Business Suite (Release 12.1.3 or higher). Robust
integration is available with third party applications. Integrated data includes
sales orders, sales invoices, and other relevant sales and fulfillment data.
Data from the various source systems is processed and managed centrally in
Revenue Management.

How does Revenue Management identify contracts and performance

obligations?

Revenue Management analyzes the documents from multiple source

applications that represent the contract with customers for sales of goods or
services to automatically identify and create accounting contracts and
performance obligations. These source documents can be integrated from
Oracle E-Business Suite, Oracle Financials Cloud and any third-party
application.

Revenue Management enables you to define flexible Contract Identification

Rules utilizing a variety of attributes to establish common identifiers for
source documents from various source systems to determine if the source
documents should belong to the same accounting contract. For instance, an
entity can specify in the Contract Identification Rules that all source
documents with the same customer purchase order number and the same
bill-to customer within a time frame of 90 days belong to one accounting
contract.
In addition, Performance Obligation Identification Rules can be configured
utilizing a variety of attributes to identify how source document lines should
be transformed into performance obligations within an accounting contract.
The rules can be used to identify when an individual source document line
should result in a distinct performance obligation being created such as for a
tractor and when multiple source document lines should be grouped into a
single performance obligation, such as for a fire truck and custom ladder
where the fire truck would only work with that specific custom ladder.

How does Revenue Management allocate the expected consideration to

performance obligations?

Once an accounting contract and its performance obligations are identified

and created by Oracle Revenue Management Cloud, the system
automatically ensures that the total expected consideration is allocated to
the performance obligations using the relationship of the total transaction
price to the total standalone or estimated selling prices.

Revenue Management can automatically calculate Standalone Selling Prices

if you upload historic standalone sales, and you can review and decide to
establish such values for use in subsequent allocations.

If you already have identified Estimated Selling Prices or Standalone Selling

Prices, you can upload these through the Create Standalone Selling Prices
spreadsheet.

Is billing a part of Revenue Management?

No. In Revenue Management you can manage revenue recognition

separately from billing. Revenue is recognized when performance obligations
are satisfied, either over time or at a point in time. Billing is managed
separately by billing applications such as Oracle E-Business Suite
Receivables, Oracle Receivables Cloud, or any third party billing application.
You do, however, import billing data into Revenue Management, so that
billing can be tracked, matched to the contract asset "right to invoice," and
compared to the performance obligation valuations. You can gain real-time
insight into the accounting contracts by comparing the total transaction
price, revenue recognized and billed amount at the contract level, as well as
at the performance obligation level. Billing information is also used by
Revenue Management to generate conditional accounting to ensure that the
performance obligation contract asset balance is reduced when billing
amounts are integrated from a Receivables application.
How can I address transition requirements for retrospective adoption with
Oracle Revenue Management Cloud?

Oracle Revenue Management Cloud is engineered so that you can import

data from your existing sales cycle (such as 2016 sales cycle source data)
and process it using your initial views of the new rules. You can use this
capability to do what-if iterative studies of how you might implement the
new rules, such as the impact of different definitions of contracts and
performance obligations, different pricing paradigms, different satisfaction
criteria, and so forth. Oracle Revenue Management Cloud will apply your
rules to the related data, and if you dont like the results, you can discard the
contracts, edit your configuration rules, and do it again. The imported data
remains available for the next iteration.

Oracle recommends that you compare the results of each iteration to each
other and to your current accounting in an Enterprise Performance
Management Tool (EPM) tool, such as Oracles Essbase standalone
dimensional database, Oracle Planning and Budgeting Cloud, or Oracle
Hyperion Planning. Each iteration could be managed as a scenario. To help
you easily tabulate the results for comparison and analysis, you can apply
the Oracle seeded accounting rules for Revenue Management Cloud to help
you address ASC 606 and IFRS 15 accounting standard and post the
accounting entries to a secondary ledger from which you can extract data to
populate into your EPM tool. This way you can ensure that you do not affect
your old rules accounting of your primary ledger during the transition
period.

While you are modeling your compliance and preparing for adoption, reverse
the journal entries in the secondary ledger, so that they dont aggregate
after you have updated data in the EPM tool. That way, the next iteration in
the secondary ledger will be clean.

Once you have completed the modeling stage, you can use that secondary
ledger normally. When the adoption date comes, the new accounting rules,
as proven, can be directed to your primary ledger for on-going use.

At the time of adoption, ASC 606 and IFRS 15 both require you to revise the
opening balance sheet for existing contracts and process new contracts
using your rules. The balances you have built using Revenue Management in
the Secondary Ledger will support the transition entry and revised opening
position.

How does Oracle Revenue Management Cloud generate the appropriate

accounting entries?
Oracle Revenue Management Cloud is fully integrated with the centralized
and flexible Subledger Accounting rules engine, which provides a new
seeded event class called Revenue Contract with three accounting events to
generate the appropriate accounting entries, which in simple terms can be
summarized as follows:

1. Initial Performance Accounting impact: Recognizes your

performance obligation liability when either party acts (the promise
turns into an obligation to the customer). The offset is often recognition
of a performance obligation asset.
2. Billing Clearing Accounting impact: Books to a clearing account and
reduces and offsets the Customer Asset in respect to the right to
invoice, and adjusts the Allocation Discount account for the differences
between the invoice and performance obligation values.
3. Satisfaction Accounting impact: Upon customer satisfaction with your
performance, you book the revenue. Satisfaction is noted to Revenue
Management by Satisfaction schedules in respect of over time
obligations, and by satisfaction events in respect of point in time
obligations. In general, satisfaction clears the contract liability accrual,
although customer satisfaction in advance of any other action will
create a right to bill asset.

How can I easily review account balances by contract and performance

obligation?

Oracle Revenue Management Cloud provides a seeded Revenue Contract

Account Activity Business Intelligence Publisher report which gives a
breakdown of account balances by contracts and performance obligations.
You can, for instance, use this report as an extract for slicing and dicing of
data in an analytical tool, such as Oracles Essbase, during your transition
period. Customers can also easily build additional operational reports by
using the Revenue Contract Account Activity report as a template.