NetSuite Advanced Revenue Management Helping Companies Contend with Evolving Revenue Recognition Landscape

By Tony Kontzer, Guest Blogger

With new, more onerous revenue recognition regulations due to take effect over the next couple of years, revenue management is already a really big deal.

Judging from crowd of SuiteWorld attendees who packed an afternoon session Tuesday, many companies want to get in line with the new regulations before they actually arrive.

More specifically, they wanted to know how NetSuite's Advanced Revenue Management module might help them prepare for and comply with the new regulations, which are being adopted in large part to recognize today's evolving business models and the thus fast-changing revenue streams that come with them.
John Peacock, NetSuite's Software Vertical Product Manager, told the hundreds in attendance that getting started early isn't just smart—it's essential.

"This is not trivial," Peacock said. "You're not just flipping a switch."

When Does Advanced Revenue Management Make Sense?
Peacock acknowledged that some companies may be able to comply with the new standards using NetSuite's Revenue Recognition Classic. But for more complex businesses that are expecting the regulations to affect them, he said, "the strategy should be let's look at this sooner rather than later."

The implications of the new revenue recognition are especially pertinent to industries such as software and publishing, which have experienced significant business model disruption in recent years.

For instance, talent management application provider Cornerstone OnDemand went live on NetSuite Advanced Revenue Management (ARM) in January, and the company is seeing numerous benefits ahead of having to comply with the new regulations.

Erin Keller, senior manager of revenue accounting, told the SuiteWorld audience that Cornerstone was saddled with manual processes and excessive duplication of tasks that bogged down its revenue recognition processes. Keller said the company wanted to build an engine in ARM that would allow it to migrate its complex pricing calculations and formulas, as well as automate more of its revenue deferrals.

The company was able to accomplish both things, and has cut at least half of the time it previously spent on its revenue recognition review process.

"We were able to automate even our most complex use case," Keller said. "We can see the formula, report on it, and show it to auditors."

Searching for Simplicity
Meanwhile, Bankrate Inc., publisher of numerous consumer finance sites, including its flagship sites, bankrate.com, creditcards.com and caring.com, wants to get a handle on its deceptive complexity.

Eric Luehmann, senior director of financial systems, said the company has only one revenue stream, but that the picture is not as simple as it sounds. For example, one of those streams recognizes click-through revenue that's based on how it presents its customers' advertisements.

Bankrate also has numerous deals that are tied to each other, or single customers that are touched by multiple deals. It's looking to use ARM to simplify that picture during the revenue recognition process.

"What we're using ARM for is looking at a customer holistically rather than deal by deal," said Luehmann. "It's almost like an abstraction layer between customers and deals."

NetSuite ARM includes a number of features that have already become favorites among early adopters. These include revenue arrangement capabilities, flexibility for accommodating new revenue streams, improved reporting, fair value pricing formulas, and a framework for supporting alignment with the evolving standards.



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