Background and challenge
A $3 billion global technology company was undergoing a major finance transformation effort,
including implementation of an SAP RAR revenue automation tool and data management platforms, to
cater to the new demands of ASC 606. As a rapidly growing and continually evolving company, they
found themselves left with an incomplete ERP implementation. Complexity of its business, compounded
by poor planning, management, and execution and by the previous Big 4 consulting firm, resulted not
meeting the go-live deadline substantially risking the company’s investment and strategic goals of
recording revenues using RAR to support their growth.
In need of rapid assistance, Bough was engaged to evaluate the current state of the ERP, execute
changes where necessary, build and deliver on the SAP RAR implementation mandate, and guide the
accounting operations team to future deadline success.
Approach
Our approach was founded on the principles of strategic alignment, prioritization, and collaboration
– designed to deliver immediate value and set the stage for long term success
Planning and executing for success
Need for better data governance
At the very onset Bough realized, to ensure the success of transformation efforts, there was a need
to review, standardize, enhance, and automate some of the existing mission critical F&A processes.
Given, the more detailed and comprehensive disclosures of ASC 606, created new demands on data
capturing and analysis processes. For instance, the introduction of performance obligations and
contract balance movements reports meant that a new level of data had to be identified, compiled,
integrated, or stored.
To meet this sub-mandate, we extended the support in streamlining data entry and reporting across
the business units – incorporating best practices and partnering with client stakeholders and other
implementation vendors on the project. Our focus was to narrow down on all additional data that will
be required and work with business IT to identify the data sources, provide the transformational
logics, design the reporting capabilities and the IT infrastructure to meet the brief.
ERP evaluation and execution
With an ERP implementation left incomplete and an accounting department heavily understaffed, our
team immediately stepped into the role to much provide the much-needed expertise to see the
initiative to the finish line. We evaluated the critical business requirements, the current state
and pain points, reporting gaps, change readiness, and communication plans. Gathering data and
information where appropriate and making necessary changes to the system set-up while continuously
trouble shooting system issues to deliver a functioning and correctly modified ERP
Pre-migration readiness
This was the most critical phase of the project with project success heavily reliant on ensuring
minimum data quality and performance of all pre-migration controls. Prior to our arrival, historical
data validation and optimization were never successfully completed. We led a full reload of five
years of historical data and completed the validation, cleansing and optimization of all key revenue
data – including evaluation of legacy contract combinations, material and product master data,
customer master data, project data and transactional revenue data. The pre migration controls
revolved around
completeness and accuracy of all this data flowing into RAR and making sure all
known issues were appropriately flagged and addressed prior to cutover and there are no unknown
surprises.
As part of pre-migration readiness, we were also involved in reviewing the design of the SAP Project
System (PS) modules. This entailed ensuring all projects migrating to RAR had standard project
structures developed, project costs are appropriately reflecting, and WBS details are accurate and
complete, and the calculated project percentage of completion is reasonable and consistently flowing
into RAR for computation of professional services revenues.
Post-migration balance sheet reconciliations
Given the differences on how the legacy revenue reporting tool and the new SAP RAR tool operated, we
had expected differences between Legacy system positions vs New system (RAR) positions. We knew this
would be no mean feat, and given our past experiences with system implementations, this is one of
the most complex and time intensive exercise. Hence we deployed our A-team of 5-10 resources
tackling individual business scenarios and working relentless to identify the root cause and
reconcile the differences.
Our team performed a deep-dive comparison of legacy GL balances with RAR balances and also were
accountable to post the correction entries to ensure the opening balance to be loaded to new system
was correct. Depending on the root cause and business scenario identified, we devised a mapping
matrix logic, to map revenue arrangements to appropriate solution codes with their unique and
appropriate accounting treatments; to ensure that future revenues/postings reflect correctly.
Identifying the customer
We identified significant weaknesses in how the company went about their contract combinations and
modifications. Given, ‘Identifying the customer’ is the first step of the 5-step ASC 606 rev. rec.
model, if we didn’t get this right, then all downstream impacted processes and eventual rev. rec.
would also be incorrect. Our team deployed a dedicated data governance team and invested a
significant amount of time to audit the upfront quoting and opportunity creation process and the
contract combination rules and logics deployed in the front-end deals configurator system. We worked
closely with sales and enterprise architecture teams to correct the logic issues, bridge the process
gaps, and provide extensive training on combination rules and data entry to the sales and delivery
team who enter the data.
Given how contract combinations impact the timing and amount of revenues being recognized, the
auditors were keenly interested to see what we have in place as a company to ensure comfort. To meet
this request, we designed and implemented an automated review process that addresses the risk or
under and over grouping of contracts to meet audit requirements. With this the company had a good
sense of its contracts, deals, and nature of modification on them, if any and depending on the
underlying business rules whether it merited a retrospective or a prospective accounting treatment
Ready for the future
In preparation for the post go-live world of the ERP implementation Bough provided extensive change
management support and trainings including, training coordination, custom training materials,
cut-over plan, and mitigation plan. Change management toolkits were designed to identify key
stakeholders and conduct change impact analysis. All these factors ensured for a smooth transition,
timely team communication and involvement of key and impacted stakeholders.
Achieving project goals and creating efficiency and standardization
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Bough proficiently saw the project through to a very successful go-live of SAP RAR. The
implementation of this new revenue recognition automation tool laid the foundations, both
procedurally and technically, for future increases in efficiency in finance and accounting.
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Reduced the time spent on closing the quarter and reduce workload of the accounting teams
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Cleaner data and well documented post migration reconciliations significantly reduced manual
reconciliation work and has now largely automated gross postings and increased transparency in
the finance department. To aid our reviews we created multiple reporting templates from the
system to adhere to reporting demands and requirements. Our team also successfully created
months of back logged reports to get the accounting department up to date on reporting
requirements.
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Compared to the legacy revenue recognition engine, SAP RAR provided real time revenue accounting
capabilities, synchronization of cost recognition with revenue recognition, and the availability
of various new, compulsory disclosures (e.g., reports showing the disaggregation of revenues by
different categories, contract balance movements and upcoming revenues expected for outstanding
POBs) etc.; helping the company realize the true benefits of RAR
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Transparent cost tracking for all project phases (from offer to order processing to completion
phase) thanks to standard project structures
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Bough’s combination technical accounting, process improvement, and system implementation
expertise shortened the month-end close by several days and reduced the number of resources
involved in the deferred revenue calculation and recognition and monthly reporting processes
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With Bough assistance, the Company was able to standardize finance & accounting processes
throughout the organization. Our team provided technical accounting expertise and functional
design best practices to streamline future state policies, procedures, and controls. We built
tools to enhance training across all business units with detailed desktop manuals to be utilized
by the Company in the future to maintain industry leading practices.
