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EBS Oracle Service Contracts: Strategies to Increase Service Revenue

Susan FlierlProduct Strategy Director

Martyn LangleyGPO & Senior Director Business Operations

The following is intended to outline our general product direction. It is intended for information purposes only, and may not be incorporated into any contract. It is not a commitment to deliver any material, code, or functionality, and should not be relied upon in making purchasing decisions.

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relied upon in making purchasing decisions.The development, release, and timing of any features or functionality described for Oracle’s products remains at the sole discretion of Oracle.

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Program Agenda

• Strategies to increase service revenue

• Oracle solutions

• Oracle Service Contracts @ Oracle

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Business Environment

A Time of Change

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Change

RepeatableRepeatable

High MarginHigh Margin

DifferentiatingDifferentiating

Service contracts as an annuityLess volatile revenue stream

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Service ContractsService

Contracts

Contract base segmentation

Quote by Sales Rep500k

100kOn-line renewal

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100k

50k

On-line renewal

Evergreen

Many companies neglect their smaller

accounts

Contract Leakage Example

STRATEGIC NON-STRATEGIC

Customer Base Allocation 28.5% 71.5%

Support Revenue $85,500,000 $21,450,000

Support Revenue Allocation

80.0% 20.0%

Current Renewal Rate 92.0% 53.0%

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Current Renewal Rate 92.0% 53.0%

Percent of Revenue Lost 8.0% 47.0%

Targeted Renewal Rate 92.0% 92.0%

Net Increase in Revenue $8,365,500 7%

Oracle Service Contracts

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Contracts

Oracle Service Contracts Solution

Service Provider / Product Manufacturer

Sales

Contract Mgr

T&CsT&Cs

ServiceContractsRepository R

e

CreateContract

VerifyEntitlement

DefineCoverage

Proposals, Quotes1

Products & WarrantiesService / Usage Agmts

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Bill & Invoice3

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CustomerCustomer Service

Contract Mgr

• AR, Invoicing

• OM, Quoting

• Service

• Install Base

Other

Application

Components

enew

ProvideService

Bill &Collect

IntegrationReturns, RMAs

Service Requests4

Renewal Notifications5

Uplift renewal rates

– Improved customer experience with Flexible Assignment Rules for

Customer Communication Templates and Online Acceptance Portal

Enhancements

– Faster renewal cycle times with Service Contracts Administration

Workbench

– Improved renewal rate analysis with Service Line and Covered Level Cancellation

Oracle Service ContractsR12 & R12.1 Release Overview

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Cancellation

Reduce financial risk

– Standardize customer coverage with Standard Coverage Definition

– Improve revenue recognition compliance with Partial Period Revenue Recognition and Defer Revenue for Customer Acceptance Contingencies

– Secure customer payment information with Credit Card Security

Streamline contract administration

– Provide global contract administration tools with Multi-Org Access Control

– Improved service contract visibility when managing customer’s assets

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Evergreen renewals

• Automatically renew contracts based on pre-defined rules to maximize retention rates and ensure service continuity

• Zero-touch web based process automatically renews low value contracts upon expiration

Renewal Rule Renew Contract

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500k

100k

50k

•Credit Status = OK

•Contract > ThresholdValue Value

•Expire days < 30

•Update Contract

•Notify Sales / Service Rep

•Notify Customer

On-line renewals

Notify

customer

• Quote layout determined by BI publisher templates

• On-line portal for customer to accept or request assistance

• Customer can modify payment methods on-line

•

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500k

100k

50k

Customer

acceptance

Approve &

Activate

• Service contract approval optional

Accept, reject or request assistance

Online Acceptance PortalR12 Enhancements

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View quote in pdf format

Online Acceptance PortalR12 Enhancements

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Comprehensive payment formats

Attach image of PO or check

High value renewals

Expiration

Alert

Create

Opportunity

Approve /

Activate

Sales rep

• Receives automated expiration alert

• Converts expiring contracts into sales opportunities

• Evaluate complementary products / servicesfor cross-sell & up-sell

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500k

100k

50k

Quote /

Negotiate

Customer

Acceptance

for cross-sell & up-sell opportunities

• View transaction and interaction history

• Customer acceptance: manual or on-line

R12 Service Contracts Workbench

Quick search for your new and renewal contracts

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Displays your open contracts

“We have realized significant savings with the upgrade to

Oracle E-Business Suite Release 12. In particular, we

streamlined our renewal process, which has increased

customer satisfaction and retention. And, we minimized costs

with an out-of-the-box deployment strategy for Oracle Service

Contracts.”

What ProQuest Is Saying

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Contracts.”

– Timothy Hall, Senior Technology Manager, Global Management Systems, ProQuest

Service Contracts @ Oracle

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@ Oracle

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Program Agenda

• Strategies to increase service revenue

• Oracle solutions

• Oracle Service Contracts @ Oracle– Global Single Instance – The story so far

– Scaling Efficiently via renewal automation

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– Scaling Efficiently via renewal automation

– R12 – Transactional to Sales tool

Service Contracts @ OracleIntroductions

Martyn Langley – Senior Director & Global Process Owner Support

• Manage system footprint and roadmap for Customer Services

• System & Process requirements

• Solution review/sign off

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• Release process

• Partnering with IT

• Integrating acquisitions

Global Single Instance –

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Global Single Instance –Overview

• 65+ ERP instances

• 40 Data Centres

• Inconsistent business processes

• Fragmented data

• Decentralized decision making

1998

• 1 E-Business Suite instance

• 2 data centres (including backup)

• Global standard processes

• Consistent data and global business intelligence

NOW

Global Single InstanceThen and Now

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• Decentralized decision making

– Geography

– Line of business

• Consistent decision making

– Global Process Owner

– Global Application Owner

• Key enabler for acquisitions

Human Resources & Payroll

Advanced Benefits

Human Resources

Human Resources Intelligence

Payroll

Time and Labor

Global Payroll Interface

Appraisals

Talent Management

Compensation Workbench

iRecruitment

Self Service Human Resources

Financials

General Ledger

Fixed Assets

Treasury

Cash Management

Subledger Accounting

iAssets

E Business Tax

Response Capture

Procurement

iProcurement

Purchasing

Accounts Payable

Internet Expenses

Payments

Property Manager

Applications Supported by AITE-Business Suite Products Implemented

Projects

Projects

Project Resource Management

Project Management Ordering

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Self Service Human Resources

Learning Management

Project Management

Support Sales Systems

Service Contracts

Contracts Intelligence

Installed Base

Internal Support Systems

Teleservice

Knowledge Management

iSupport

Customer Support

Manufacturing & Distribution, Advanced Product Catalog and Pricing

Materials Requirement Planning

Bill of Materials

Inventory Management

Warehouse Management System

Work in Progress

Engineering

Shipping Delivery Based

Advanced Pricing

Quoting

Order Management

Contracts Core

XML Gateway

iStore

Incentive Compensation

Service Contracts@OracleImplementation at September 2010

Contracts Intelligence

Installed Base

GlobalSingleInstance

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Service Contracts

Order Management

Accounts Receivable

Siebel Territories

My Oracle Support

Service Contracts@OracleTimeline

2001 2002 2003 2004 2005 2006 2007 2008 2009

US to OKS 11i (GSI)

GSI to 11.5.6

E. Europe/APAC to GSI

Online Renewals

R12 Upgrade, Siebel CRM

2010

12.1.3 upgrade

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E. Europe/ APAC to OKS 11i

W. Europe to OKS 11i

11.5.8 upgrades

W. Europe to GSI

11.5.10 upgrade

12.1.1 and 11g upgrade

Scaling Efficiency via

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Scaling Efficiency via Renewal Automation

Service contracts is the single application Oracle utilizes to manage it’s annuity based services business

June 2010 Oracle contract base

• > 500k contracts

• $16BN

Challenge is how to efficiently manage an ever increasing contract

Service Contracts @ OracleContract base management

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Challenge is how to efficiently manage an ever increasing contract base?

Contract base segmentationContract base management

$782 M

R12 sales features

ORACLE

Businesssegmentation

Applicationfeatures

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11,000 Customers (Includes Canada)

17,522 contracts

$138 M

Auto Reminder

Micro Renewals

Renewals automation @ Oracle

-120 days renewal event fires

Quote Sent Contract

renewed

Renewal

+15 days Contract Cancelled

-90 days Reminder 1

Automated feed to delivery system

Sales rep assigned from territory

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Customer accepts

Renewal Workflow

Start date – Final reminder and

notice to cancel

-60 days Reminder 2

-30 days Reminder 3

Customer Invoiced

400 + XMLquotes letters

FTP - Service Suspended

Micro Renewals – ‘Low touch’ processing

• Identify MR upon renewal

– Qualifying service

– Not in Customer exclusion list

– < $5k global threshold

• Contract renews and publishes online

• Customer directed to online site via email

Renewals Automation at OracleLeveraging and extending standard functionality

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• Customer directed to online site via email

• Customer can Accept / Decline / Request assistance

• Upon acceptance contract automatically approved

Fail to Pay – Suspending Service for non payment

• < $k global threshold

• Customer invoice > 90 days overdue

• FTP program suspends service in Service contracts

Contract Approvals utilizing AME

• Contract approvals ensure compliance to specified business rules

• Global team of 35 verifying submitted contracts prior to booking

• 11510: approvals assigned to country leader

• Acquisitions increasing volume of approvals– 1600+ per 24 hours

Renewals Automation at OracleLeveraging and extending standard functionality

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– 1600+ per 24 hours

• R12: use AME to route to the best approver– Value

– Region

– Service

– Approver Workload and availability

• Increased QA custom checks to 50+ assisting automation and controlling headcount costs

• Approvers log their start/end times

– Approver User Ids and group membership in custom lookups

• AME assigns approvers to contracts:

– Contract Attributes determine which AME Rule is True

– Region, Value (dollars), Service Level: e.g. EMEA 100K - 500K

R12 - Contract Approvals via AMER12 Solution

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– AME assigns approver from approval group tied to Rule

– Availability and Workload determine approver

– Dynamic group winner defined by sql statement

• June 2010 Sun IB & Service Contracts migrated into GSI

Sun to Oracle Installed Base Service Contracts Integration R12 Solution

Description Service Contracts

IB instances on Contract

IB instances off Contract

Sun Volumes 138,008 4.1M 12M

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• Utilized IB & Service Contracts 12.1.1 open APIs to load data

• 10 days to load & reconcile all data including

• IB instances

• Service Contracts

• IB configurations

Sun Volumes 138,008 4.1M 12M

Service Contracts -

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Service Contracts -Transition to a Sales Tool

R12 Service contracts - Sales Tool CapabilitiesAdministrator Workbench

HTML UI displaying consolidated view of a sales rep’s contracts

– Entry point for day to day management with personalized views to support individual territory profiles

• Manage renewals pipeline

•Mass update capabilities

•Email/print

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• Update status and forecast data

• Launch contracts to Online portal

•Email/print quote

• Enable/Disable Reminders

• Run QA Check

• Submit for Approval

R12 Service contracts - Forecasting

Bookings ForecastFull Value

Forecast = >50%

Mass update functionality has enabled Oracle to transition to automated renewals forecasting

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At-Risk ForecastFull Value

Forecast = 0%Cancellation ForecastFull Value

Forecast = 1 - 50%

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Oracle OpenWorld

Latin America 2010

December 7–9, 2010

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December 7–9, 2010

Oracle OpenWorld

Beijing 2010

December 13–16, 2010

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December 13–16, 2010

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