Achieving Success with SAP RevRec, Part 2: Aligning the Stakeholders

It’s a joint effort – Part 2 – Stakeholders

Part 1 of this blog series outlined the key elements for success with the new SAP Revenue Accounting and Reporting Application. This post focuses on the importance of bringing together all of the stakeholders.

The multitude of projects our consultants at Bramasol have been working on in the area of SAP revenue recognition have made it very clear to us that projects run only well if all major stakeholders are engaged and work together.

The new guidelines are mandatory for all entities reporting under them – so they are all facing the same deadline. Still, we have discussions with customers where it becomes obvious that in some cases, only a single interested party in an organization seems to really drive the project – with others abstaining or worse yet, impeding progress.

We also have discussions where it is clear that the whole organization has realized the importance of close coordination between all stakeholders – these projects sometimes bring together managers and specialists for the first time, but they pull together as one. The difference is not whether a project will be completed – it has to, there is no alternative -, the difference lies in how painful the process will be, what time and effort it will have cost to complete.

It will take Revenue Accounting Staff

This is the starting point: The understanding of the revenue sources, flows, and relations of all revenue streams is at the center of understanding the current treatment for recognition, the future treatment according to the new IFRS guidelines, and the differences between the two.

Astonishingly enough, in real-life projects, we have found that often, needed analytical knowledge of revenue accounting seems to go amiss in the daily calculations: Staff dealing with processing individual revenue streams may not have a clear overview of all of the organization’s revenues – and management sometimes seem to have gotten overwhelmed by aggregating and hurried quarterly reporting. This in turn leads to problems early on in the project lifecycle, when identifying main scenarios is needed for a PoC, or the final scope for the full implementation is wanted.

It will take Technical Accounting, General Accounting and Auditors

SAP’s Revenue Recognition module posts revenue per the new IFRS guidelines, strictly following its 5-step model.

To interpret what this means in specific cases, will take understanding and analysis of the current revenue recognition principles applied, the new ones, and the difference between the two. This is not only an internal task, as the external auditors, who themselves in many cases are uncertain how to interpret the new rules, have to sign off on the changes. On some projects, we have made the experience that there seems to be an unrealistic hope that implementing a solid tool, which the new Revenue Recognition engine is, answers these questions. Unfortunately, it does not – to the contrary: it takes the answers to these questions to configure the tool properly, to automate the process.

Also, the tool covers the new requirements by using a number of additional accounts which are used for technical reasons, and implementing the new guidelines may not always allow to keep the same revenue detail as the organization is used to, at least on a GL account level. This means that there have to be new accounts, in the right ranges, and reports have to be adapted accordingly. This requires analysis, understanding and decisions to be taken by various Accountants, which again may run counter to prior expectations of being able to keep all accounts the same.

It will take IT Staff and Management

The Revenue Recognition module is new, and has only recently been generally released. While with the general release, many notes solving first issues were combined (mainly into Support Packs 3 and now 4), it is to be expected that, as more customers near going live, more notes will follow. This means a customer’s SAP Basis staff has to be agile in applying notes and working on issues with little or no experience values to go by. We have had implementations where weeks were lost waiting for movement on the resolution of technical issues, causing crucial delays.

Besides Basis, there are interface impacts – to start project work, a simple web dynpro access will work, but there are vital transactions and reports in the tool which make use of the Netweaver Business Client mandatory.

As a last technical aspect, the customer will need to build competency in the Business Rules Framework (BRF+) tool. Together with classic SAP BADIs, it is what gives the solution the flexibility to cover the wide spectrum of business scenarios, functional and system footprints. While we at Bramasol have the knowhow and experience developing solutions with both tools, our aim is that after go live, the implementing organization should be self-sustaining, and that will take developing qualified resources during the project.

Part 3 of this series will address the need for a Structured and Phase Approach to Implementation.

In the meantime, to gain a broader understanding of the overall challenges presented by the new revenue recognition standards, you can download one of the Bramasol ebooks on getting “RevRec Ready” or request a free consultation to discuss your specific requirements.

RevRec Ready eBook “Getting Ahead of the Curve” Read it Here
RevRec Ready “Checklist for Success”
Request RevRec Consulting Support