First-hand knowledge.

Reading Sample
The IFRS 15 standard is here—that means it‘s time for your compa-
ny to become compliant! SAP Revenue Accounting and Reporting
and IFRS 15 contains the foundations of the IFRS 15 standards, the
usage and migration process of SAP RAR, and business cases from
telecom and high-tech industries. In this sample, explore the foun-
dations of IFRS, the impact of the new standards (IFRS 15), and
SAP‘s answer: SAP RAR.

“Introduction to IFRS 15 and SAP

Revenue Accounting and Reporting”
Contents

Index

The Authors

Dayakar Domala, Koti Tummuru

SAP Revenue Accounting and Reporting and
IFRS 15
376 Pages, 2017, $99.95
ISBN 978-1-4932-1436-5

www.sap-press.com/4206
Contents

Foreword ......................................................................................................... 13

1 Introduction to IFRS 15 and SAP Revenue Accounting

and Reporting .......................................................................... 15

1.1 Global Accounting Standards ........................................................ 16

1.1.1 New Accounting Guidelines ............................................ 16
1.1.2 Business Challenges ......................................................... 17
1.2 IFRS 15 ........................................................................................ 18
1.2.1 Five-Step Framework for Revenue Recognition ................ 19
1.2.2 Impact of the New Standards .......................................... 22
1.2.3 Existing Tools and Vendor Analysis Matrix ....................... 25
1.2.4 How SAP Is Addressing the New Requirements ............... 27
1.2.5 Functionality Overview ................................................... 28
1.2.6 Licensing Options ............................................................ 39
1.2.7 Architecture and Landscape ............................................ 39
1.2.8 Integration with Existing Revenue Applications ............... 45
1.3 Summary ...................................................................................... 50

2 Project Execution Approach ..................................................... 53

2.1 Project Management .................................................................... 53

2.1.1 Agile Methodologies ....................................................... 53
2.1.2 Traditional SAP Implementations (ASAP Methodology) ... 55
2.2 Project Preparation and Scope ...................................................... 57
2.2.1 Project Preparation ......................................................... 57
2.2.2 Defining the Scope .......................................................... 58
2.2.3 Project Organization ....................................................... 59
2.2.4 Project Timelines ............................................................. 61
2.2.5 Change Management Considerations .............................. 63
2.3 Project Blueprinting ...................................................................... 64
2.3.1 Plan and Collect or Develop Use Cases ............................ 64
2.3.2 Organize Business Requirements Workshops ................... 66
2.3.3 Create Business Requirements Document ........................ 67
2.3.4 Validate and Get BRD Sign-Off from Business .................. 68
2.4 Project Design and Build .............................................................. 69
2.4.1 Prototype Use Case Solution ........................................... 69

7
Contents Contents

2.4.2 Identify Solution Gaps .................................................... 71

2.4.3 Identify Master Data, Integration, Change Management,
4 Processing Revenue Accounting Contracts .............................. 151
and Migration Requirements .......................................... 72
4.1 Revenue Accounting Items ........................................................... 151
2.4.4 Key Design Decisions ..................................................... 74
4.1.1 Generating RAIs from SD and Non-SD Applications ........ 151
2.5 Project Testing and Go-Live ......................................................... 75
4.1.2 Stages or Status of RAI Processing ................................... 153
2.5.1 Test Strategy and Execution ............................................ 75
4.1.3 Processing RAIs through the Adapter Reuse Layer ........... 158
2.5.2 Outline Best Practices, Challenges, and Risk-Mitigation
4.1.4 Customizing and Enhancing RAI Items ............................. 159
Strategy .......................................................................... 78
4.2 Revenue Accounting Contracts ..................................................... 160
2.5.3 Cutover Planning ............................................................ 80
4.2.1 Contract Processing: Navigation, Revenue Schedule,
2.5.4 Go-Live and Post-Go-Live Considerations ....................... 81
Amortization, and POBs .................................................. 160
2.6 Summary ..................................................................................... 82
4.2.2 Price Allocation: Prorations, Standard Options,
and More ........................................................................ 171
3 Configuring SAP Revenue Accounting and Reporting ............. 83 4.2.3 Contract Combinations .................................................... 175
4.2.4 Contract Fulfillment ........................................................ 178
3.1 Understanding Your Configuration Options ................................. 83 4.2.5 Invoices in Revenue Accounting Contracts ...................... 182
3.2 Application Installation Process ................................................... 85 4.2.6 Contract Asset/Liability Postings ...................................... 184
3.2.1 System Requirements ..................................................... 85 4.2.7 Revenue Recognition Process and Postings to FI ............. 188
3.2.2 Installing SAP RAR ......................................................... 86 4.2.8 Reporting and Disclosures ............................................... 199
3.2.3 Setting Up Item Classes .................................................. 89 4.2.9 Archiving Revenue Contracts ........................................... 203
3.2.4 Setting Up SAP Business Client ....................................... 89 4.3 Best Practices ............................................................................... 203
3.2.5 Integrating with SAP Business Warehouse ...................... 90 4.4 Version 1.3 Functionality .............................................................. 204
3.3 Configuration .............................................................................. 94 4.4.1 Foreign Currency Exchange Processing ............................ 205
3.4 Step-By-Step Configuration Guide ............................................... 96 4.4.2 Simplifications for High Volume Invoice Processing ......... 209
3.4.1 Inbound Processing ........................................................ 97 4.4.3 End to End Consistency Checks ....................................... 211
3.4.2 Revenue Accounting Contracts ....................................... 105 4.5 Summary ...................................................................................... 213
3.4.3 Revenue Accounting Postings ......................................... 131
3.4.4 Integration with SD and Non-SD Applications ................ 136
3.4.5 Configure UI/Web Dynpro .............................................. 137
5 Migrating Current IFRS Contracts to IFRS 15 Using
3.4.6 Postconfiguration Requirements ..................................... 141 SAP RAR ................................................................................... 215
3.4.7 Best Practices for Configuration and Technical Settings ... 142
3.5 BRF+ Integration ......................................................................... 142 5.1 Migration Strategy and Planning ................................................... 215
3.5.1 Architecture and Features .............................................. 143 5.1.1 Migration Strategy .......................................................... 216
3.5.2 BRF+ Applications .......................................................... 145 5.1.2 Migration Plan ................................................................ 220
3.5.3 BRF+ Decision Tables ..................................................... 146 5.1.3 Migration Challenges ...................................................... 222
3.5.4 Account Determination in BRF+ ..................................... 146 5.1.4 Migration Timelines ........................................................ 223
3.5.5 Version and Transport BRF+ Applications ....................... 148 5.1.5 Migration Scenarios ........................................................ 224
3.6 Summary ..................................................................................... 149 5.1.6 Migration Risks and Plans for Contingencies .................... 225
5.2 Migration Process ......................................................................... 227
5.2.1 Migration Configuration .................................................. 227
5.2.2 Migrating SD-Based In-Process Contracts ........................ 232
5.2.3 Test Strategy and Considerations for Migration Process ... 248
5.2.4 Reconcile Migrated Contracts .......................................... 250

8 9
Contents Contents

5.2.5 Migration in Cutover Process .......................................... 250 7.2.4 Implementing SAP RAR in the High-Tech Industry .......... 328
5.2.6 Error Handling during Migration ..................................... 251 7.2.5 Best Practices and Lessons Learned ................................. 341
5.3 Best Practices in Migration .......................................................... 252 7.3 Summary ...................................................................................... 341
5.4 Summary ..................................................................................... 253
8 Conclusion ................................................................................ 343
6 Transition Strategy and Options .............................................. 255
8.1 Don’t Take IFRS 15 Projects Lightly .............................................. 343
6.1 Possible Effects during Transition ................................................. 257 8.1.1 Implementation Date ...................................................... 344
6.1.1 The Black Hole Effect ..................................................... 257 8.1.2 Requirements .................................................................. 344
6.1.2 Recycling of Revenues .................................................... 260 8.1.3 Internalizing the Five-Step Model ................................... 345
6.1.3 Capitalization of Contract Costs ...................................... 263 8.2 Choose the Right Transition Method ............................................ 345
6.2 Full Retrospective Transition Approach ........................................ 266 8.2.1 Hybrid Model-I ............................................................... 346
6.3 Modified Retrospective or Cumulative Catch-up Transition 8.2.2 Migration Scenarios ........................................................ 347
Approach .................................................................................... 271 8.2.3 Third-Party Systems ......................................................... 348
6.4 Modified Retrospective Transition Approach with Retrospective 8.3 Good Project Management Makes for Successful
Pro Forma (Hybrid Transition Method 1) ..................................... 273 Implementation ............................................................................ 348
6.5 Modified Retrospective Transition Approach with Prospective 8.3.1 Scope and Milestones ..................................................... 348
Pro Forma (Hybrid Transition Method 2) ..................................... 274 8.3.2 Big Bang versus Agile ...................................................... 349
6.6 Parallel Accounting ...................................................................... 278 8.3.3 Resources ........................................................................ 349
6.6.1 Account-Based Solution ................................................. 278 8.3.4 Prototyping ..................................................................... 350
6.6.2 Ledger-Based Solution .................................................... 280 8.3.5 Focus .............................................................................. 350
6.6.3 Dual Reporting ............................................................... 282 8.3.6 Roles and Responsibilities in an IFRS 15 Project .............. 350
6.7 Transitioning Example (End-to-End Flow) .................................... 283 8.4 Choose the Best Design for Reporting ........................................... 352
6.7.1 Current Postings under IFRS (IAS 11/IAS 18) .................. 284 8.4.1 Considering Both GAAPs ................................................. 353
6.7.2 Transition Steps .............................................................. 284 8.4.2 Ledger versus Account Approach .................................... 353
6.8 Transactions Overview ................................................................. 294 8.4.3 Meeting Disclosure Reporting ......................................... 354
6.9 Best Practices .............................................................................. 296 8.4.4 Reconciliation ................................................................. 354
6.10 Summary ..................................................................................... 297 8.5 Overcome Technology Challenges ................................................ 355
8.5.1 Special Landscaping Requirements .................................. 356
7 Business Cases: Telecom and High-Tech ................................. 299 8.5.2 Testing ............................................................................ 358
8.6 Links and Additional Information .................................................. 359
7.1 Telecom Industry Business Case ................................................... 300
7.1.1 Use Case Overview ......................................................... 300 Appendices ...................................................................................... 361
7.1.2 Impact of IFRS 15 on the Telecom Industry .................... 300
7.1.3 Challenges for Many Telecom Companies ....................... 302 A SAP RAR Application FAQs ...................................................................... 361
7.1.4 Implementing SAP RAR in the Telecom Industry ............ 306 B The Authors ............................................................................................. 369
7.1.5 Best Practices and Lessons Learned ................................ 324
7.2 High-Tech Industry Business Case ................................................ 325 Index ............................................................................................................... 371
7.2.1 Use Case Overview ......................................................... 325
7.2.2 Impact of IFRS 15 on the High-Tech Industry ................. 326
7.2.3 Challenges for High-Tech Companies .............................. 327

10 11