Reference Information for Contracts and Performance Obligations Identification Rules

What is Reference Information?

Reference Information for Contracts and Performance Obligations can be used to populate important information from other systems (such as EBS, non-Oracle systems or other Fusion Cloud applications), into an extensible attribute. It can be the quote number, a Purchase Order number or any other information that may help end-users search for contracts.

Both Contract Identification Rules and Performance Obligation Identification Rules can use Reference information as shown below:

This is Reference information can then be used as a search criteria from the Revenue Management work area. Click on the Tasks icon, and from there, you go to "Manage Customer Contracts". There is a field named "Reference" where you can use to search for the said contract. If you copied that particular data point as a reference, then your users can use that to find specific contracts.

Note that the field might be hidden from the Basic View. Follow the steps below to display the field.

1. Click on the Advanced Button:

2. Click on the Add Fields Button:

3. Click on the "Reference" selection to display the field

4. The field "Reference" can then be used to search for transactions

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Managing Contract Identification Rules in Oracle Revenue Management Cloud

What is a Contract identification Rule?

Contract identification Rules is going to determine which transaction lines are included in a contract. The idea here is to use source document attributes to match the lines so that you can group them into a contract. Examples of those can be quote numbers, purchase order numbers, etc. If you have multiple transactional lines with the same quote number, then that can mean that these lines can be grouped into a customer contract. These rules are executed on a priority.

How do we create a Contract identification Rule?

To create a contract identification rule, navigate to the Functional Setup Manager, select the Financials offering and choose the Revenue Management functional area. And then the right, select All Tasks and navigate down to "Manage Contract Identification Rules".

Below is a quick video tutorial on creating Contract Identification Rules in Oracle Fusion applications:

A contract can include multiple source document types, so the relationship between a customer contract and a source document type does not have to be one-to-one.

Think about long and hard about defining Grouping Attributes. Grouping Attributes defines the attributes that you want the system to use for automatic customer contracts identification.

For example, we are saying that we're going to look at the customer name, the purchase order number and the quote number. If the system detects you have multiple transaction lines with the same customer, purchase order number and the quote number, it will group those together to form a customer contract.

Usually, Contract Identification Rules use Extensible Header attributes, while Performance Obligation Identification Rules use Extensible Line attributes. Extensible attributes can use up to 90 attributes each for header data and lines data.

There is an available FBDI template to upload Contract Identification Rules in bulk.

You can also add Reference Information for Contracts and Performance Obligations Identification Rules. Reference Information for Contracts and Performance Obligations can be used to populate important information from other systems (such as EBS, non-Oracle systems or other Fusion Cloud applications), into an extensible attribute. It can be the quote number, a Purchase Order number or any other information that may help end-users search for contracts.

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Revenue Management Cloud Implementation Considerations

Below are some questions that you may have to answer before implementing Revenue Management Cloud for your organization:

1. Contract Identification Rules. What are the common links or attributes across all contract lines?

The keyword here is "common link". What is the attribute that is going to allow your organization to take transactional lines and group them into a customer contract? Is that a sales order number? Is that a purchase order number? These will allow you to define these rules and allow your organization to meet that first step of the new revenue recognition standard: Identify contracts with customers. Check out a separate article for more information on Contract Identification Rules.

2. Performance Obligation identification rules. Once you've identified the customer contract, then you need to identify performance obligation. Performance Obligations are the promises that you have made to the customer. Similar to Contract identification Rules, think about the common elements of the obligation. What are those attributes that I can use to identify the promises that I have made to the customer? It can be some inventory ID, or a product description, or things of that nature. That will clearly identify what is the promise that has been made to the customer. Check out a separate article for more information on Performance Obligation Identification Rules.

For Items 1 and 2, The goal is to have minimal manual intervention in the creation of these contracts. Oracle has predefined three Performance obligation identification rules and contract identification rules but you can define your own. You would need to understand your transactional data, your revenue data, so that you can then define these rules in a way that you will get to that minimum manual intervention that we are looking for.

3. Revenue Price effective periods or Standalone Selling Price (SSP) effective periods. The term "revenue prices" has been outdated and the latest and most updated terminology we use is "standalone selling price".

One of the five steps to revenue recognition involves allocating transaction price, with standalone selling price as a basis. So the question here is, how often are your pricing policies being updated? You would need to observer how frequently you need to update your pricing. Depending on how you answer that question, you're going to appropriately define those effective periods. Is it monthly? Is it quarterly?

4. Threshold Amounts. Another question would be, do you want to subject price changes to manual review? There's some threshold attributes there, and one of those has to do with manual review. Subject is customer contracts based on their amounts to manual review. That can be set in system options. What is the proper amount? Are contracts over $5,000 be subjected to manual review? It all depends on your organization or industry. You're going to come up with a threshold amount, and then any contracts exceeding that threshold amount are going to be reviewed by a human being.

5. Integrations. With regards to Integration with third-Party Applications (EBS and Non-Oracle Systems), below are some additional key implementation decisions:

1. Evaluate if you will continue using EBS or any other ERP versus implementing Financials Cloud. Although we allow that integration with E-Business Suite and other third-party non-Oracle systems, but this is something you might want to think about in terms of maintenance and complexity of the integrations.
2. If you continue to use EBS, you want to make sure you determine which document sources and receivables transactions need to integrate with Revenue Management. 
3. Determine the method that you will use to bring over customers and items to Revenue Management.

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