A closer look at revenue recognition automation for a public network technology company
Large enterprise companies often deal with high value contracts that span years at a time and contain complex performance obligations and bundling of offerings. While this caters well for a customized sales pitch, it often ends up being difficult to manage in the revenue department. Add in the complications of ASC 606 compliance and the rev rec team is feeling the heat.
We interviewed the Senior Manager of Revenue Assurance at a major public network technology company, discussing his role as Project Manager for the company’s ASC 606 project. Part of this project involved consideration of revenue automation using an out-of-the-box revenue management solution over upgrading their existing home grown systems.
The revenue team at this company existed in a high touch environment. The team relied on a home-grown revenue management solution, supported by internal IT to manage ASC 605. Over time, the solution was becoming cumbersome for this growing $2.6 billion public company. With the addition of ASC 606 compliance, the accounting team needed a revenue recognition solution that could handle their complex, multi-element arrangements and bundling. This is the buy vs. build story that many large companies face.
Revenue Management Issues:
We focused our interview with the Revenue Manager around the specific pain points and needs within his company, and how this impacted their decision making:
1. Growing revenue stream pressures in a high touch environment
2. Increasing contract complexity
3. Heavy reliance from finance on IT for system configuration
4. Audit risks and the need to control errors and build for compliance
5. Board of Directors (BOD) and stakeholder concerns around compliance
6. Inefficient financial planning and reporting
The telecom company involved had the knowledge and resources to build a viable revenue recognition software program. After fair consideration however, they chose to buy an out of the box solution, mitigating areas of concern expressed both internally and from their BOD. Buy over build, enabled them to move quickly, become self reliant in terms of change management, and have an audit approved system.
Management teams, and even more so in public companies, need dependable, accurate information that they can produce in a timely fashion. Automation does this.
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