Devolve Performance Obligations in Revenue Management Cloud

The idea here is to devolve a single performance obligation into a series of performance obligations at contract inception. What does it mean to devolve? Let's think of it as converting one parent obligation into a series of smaller obligations. It allows you to convert that parent performance obligation into a series of obligations underneath children obligations.

An example would be a telecommunications company. They want to devolve or splitting or extending a year's commitment to provide services, and they want to devolve that commitment into 13 billing periods, instead of 12 periods.

Revenue Management will automatically devolve a performance obligation based on setup.

It devolves into a series of performance obligations by accounting period. So the methodology here is going to be the accounting period. And so we discussed a moment ago the example of the telecommunciations company wanting to stretch, extend, that obligation, that year commitment, into 13 billing periods. It creates an initial performance event on the obligation series-- in our case, the transaction price-- and recognizes and manages revenue on the obligation series.

Once that parent obligation is devolved, Revenue Management will go through the five steps to revenue recognition. And once that particular performance obligation is satisfied, the series of performance obligations are satisfied, that revenue is going to be recognized.

This is going to happen at contract inception. And so the identified customer contracts program will identify the performance obligation that needs to be devolved.

You have to tell Revenue Management which performance obligations need to be devolved so that it can capture that information and proceed to a split or to convert that one obligation into a series.

What is the business value of this new feature?

The idea is that these can be done automatically. Once you do the configurations, you don't have to do manual adjustments. There's nothing to do in GL where you have to enter a journal entry to make a correction. This is something that's going to be originated and taken care of in Revenue Management for each accounting period.

What happens in scenarios where you have returns and revisions if the performance obligation has been devolved?

When this happens, Revenue Management will recalculate amounts. What are those amounts that we are thinking about? We are thinking about our performance obligation amounts, Allocation, revenue recognition amounts

how is it going to recalculate? It's going to recalculate based on the revised amounts for the parent performance obligation. So it's going to look at this revised amount of the parent performance obligation.


Besides returns, the revision can be that a new line is being added to an existing contract in a material update or immaterial update. In both situations, Revenue Management is going to recalculate as safe as we've established here.

Setup Components

There are two key setup components: the performance obligation identification rules, and the implied performance obligation template (optional).

Manage performance obligation identification rules. there is an  attribute there called "devolved performance obligation". This is something that you specify on the rule level. These rules are specific to the identification of performance obligation.

Implied performance obligation templates. This allows you to capture performance obligations that might not be in your source system.

There is the flag all the way to the end there called, devolve performance obligation.