Automated Revenue Recognition: Customization Vs. Configuration

Software as a Service is supposed to be quick and easy, right? A company simply pays a subscription and leaves the rest to the SaaS provider. Better yet? SaaS customers are entitled to the latest and greatest from their vendors as the software continually improves over time. Compared to the old days of on-premises software, which required lengthy and expensive implementations to install and customize software on the customer’s own servers, SaaS is a big improvement.

Automated Revenue Recognition: Customization Vs. Configuration

The reality, however, is that SaaS often falls far short of its promise. In many cases, enterprises still spend a lot of time and money customizing cloud software before they start using it. These companies still pay a subscription fee, but they don’t benefit from the latest software because any updates risk breaking their customizations.

In the world of revenue recognition where accuracy is critical, this customization conundrum becomes particularly painful. Every business is unique, and many revenue teams are hands-on with their numbers in Excel: “Surely customized software is the only way to automate my revenue recognition, right?”

It’s tempting to think this way, but it’s short-sighted. Many revenue teams are still wrestling with the sins of the past-- business processes designed for a system limitation that no longer exists, or a specific formula somebody designed for an edge case that’s actually immaterial. Are these reasons to overdesign (and overspend on) a customized solution that won’t age with the business?

Adapting to the new ASC 606 revenue recognition guidance is an opportunity for business transformation through automation.

When automating your revenue recognition, teams should choose flexibility to future-proof their solutions. Not only should they be able to enjoy continuous SaaS upgrades without affecting their financial disclosures, but they should also be prepared for any business changes that alter the way they recognize revenue.

It pays to avoid customization altogether by taking advantage of SaaS solutions designed around built-in configuration options.

Revenue teams need a system that can stay up to date to the latest guidance and best practices, but they also need the option to apply judgement to their own business scenarios. The right kind of cloud-based, automated revenue recognition system enables customers to switch new features on or off, as needed.

A configuration-driven solution also allows teams to adapt to new business scenarios on the fly. If your company runs a promotion that allows customers a money-back guarantee for the first three months of service, then you will need to delay revenue recognition. You might be able to support the change manually for a while, but that’s not feasible over the long term if these kinds of promotions prove useful to the business.

With a solution that provides configurable options, you can easily make a policy change via a drop-down menu. There’s no need to call IT specialists to help make that change or consultants to alter code. That’s costly and time consuming. You need cloud software that provides your business users with the ability to point and click to make a change that works over the long term.

This self-serve capability makes good on the promise of software as a service, providing speed, ease of use, and efficiency.

Sure, a customized solution might get something that exactly matches your current business processes, but that customization comes at a price that’s only going to grow over time.

Learn more about how the right automation software can transform your revenue recognition processes to support your business today and in the future.

By JD Casaletto | December 11th, 2018 | RevSym

About the Author: JD Casaletto

JD Casaletto

JD Casaletto leads product management for RevSym and is responsible for supporting revenue recognition automation under ASC 606/IFRS 15 within SAP Customer Experience. Prior to SAP, JD built his quote-to-cash expertise through pre-sales and product roles ranging from seed-stage startup to established enterprises, including Zuora and Forrester Research.