Last month, FASB and the International Accounting Standards Board (IASB) reaffirmed amendments they had previously proposed to in order to clarify principal vs. agent guidance in the new, converged revenue recognition standard (See more detail at Journal of Accountancy).

It’s a joint effort – Part 3 - Using a Structured and Phased Approach

Revenue recognition projects will only succeed if they follow a solidly structured approach. At Bramasol, we have found that one of the aspects causing confusion – in addition to the already complex subject matter – is lack of understanding how to best introduce the SAP Revenue Accounting and Reporting module to an organization, how to prepare good decisions, and when to take those decisions.

Both for consultants, as well as for customers, it is necessary to develop, coordinate, and manage expectations to the benefit of the project.

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.

More and more customers are realizing that they do not have to work with interfaced, outside, non-integrated 3^rd party revenue recognition software anymore. Instead they can implement and take advantage of SAP’s new Revenue Accounting and Reporting Solution, now that it has been officially released.

The new software is a module in ECC, and also works with the Business Suite on HANA. It is separate from SD, and allows information from outside systems to be processed. The approach SAP has taken is that sales and fulfillment operations should not have to be changed in order for a complete and correct revenue accounting treatment in line with the new Accounting Guidelines by the IFRS.

In those cases where extensive customizations were used for revenue recognition purposes, in SD or outside of it, the new module will lead to a simplified approach, as most, if not all, of these custom objects can be removed after the implementation of SAP Revenue Accounting and Reporting. Needless to say, given that it is “state-of-the-art” programming, it also ties in seamlessly with SAP’s approaches to parallel accounting.

So, what are the keys to achieving success with the new SAP application?