Part Two: Selecting a vendor and scoping the project
At Aptitude RevStream’s annual user conference – RevConnect 2017 – Aptitude RevStream customer Andy Nickerson, Finance Manager at Houghton Mifflin Harcourt (HMH), discussed his finance office and their adoption of automation.
After analysis of their current business needs, HMH set out to test the revenue management vendor marketplace armed with their Revenue Recognition Automation Wish List.
- Cloud for power and speed.
- Full control over contract arrangements - post contract adjustments, credits that have to be applied.
- An automated system that could click, unblock and move arrangements.
- Automated stand-alone selling price - important because each product and customer are unique.
- Ease of configuration and ease of implementation.
- End-user functionality - one single interface from one screen.
- Robust disclosure reporting - ASC 606 increases disclosures.
- Long-term partnership. “The customer experience between our revenue management vendor and us needs to be a highly effective relationship. We need to be able to get our questions answered and add components as needed,” Nickerson stated.
"RevStream dominated each category. Met our requirements and exceeded with effective communication. They understood the need for solutions orientation.”
Andy Nickerson, Finance Manager, HMH.
What does an ASC 606 rev rec automation project look like?
With only two major pure players in the revenue recognition software space, Aptitude RevStream was the right fit and choice for HMH. Implementation was a 14-month project to get to the point they could meet ASC 606 compliance. The project had four distinct phases: contract data collection and cleansing, software implementation, upstream data loading, and testing. Most of the time on HMH's project was spent getting the data clean and ready. HMH found that with 606 there was a huge amount of combing through original contracts. The actual software implementation itself was quick they noted, but the PM needed to ensure time was also allocated for the testing phase. Ordinarily, the company’s IT team will direct this before the implementation is confirmed to “go live”.
The project team was a 15-person cross-functional project team. It included an auditor and HMH's technical partner (CFGI). Executive oversight was also in place and provided important buy-in and kept the project on track. The company used an agile project management methodology. It took many components, departments, and people to complete this project and this allowed each component to be tested independently and then as a whole. The size of the team, from customer experience, ran in line with the complexity of revenue and their expectations of how much of their revenue is material under ASC 606.
One of the reasons HMH had complex revenue was due to ASC 606's need for recognition of performance obligations. This can be common for SAAS type business models. If you would like to read more, download our Case Study on Automating Performance Obligations (POBs).
With thanks to Andy Nickerson for his thoughtful insights, as seen at RevConnect 2017.
Aptitude Software offers two levels of revenue recognition solutions: Aptitude Revenue Recognition Engine – a powerful, high-volume revenue automation tool, and Aptitude RevStream – a robust, user-configured, cloud-based, revenue management solution.
Catch up on the HMH story:
Part 1 - ASC 606 Project with HMH - Business Model Challenges