The Power of Subscription

Based Fulfillment via Oracle

Service Contracts
The end-to-end solution for your subscription
business that can save you time and money.
Prepared by: Lee Huff, Grant Thornton LLP

Session ID: 10098

Your presenter

Lee Huff
Senior Associate, Grant Thornton
Kansas City, MO

Executive summary

Lee Huff is a Senior Associate with Grant Thornton in the Technology Solutions practice. Lee works specifically within
the Oracle E-Business Suite and Oracle Cloud ERP spaces. His experience spans the Order to Cash, Procure to Pay,
and Project to Profit business flows across several industries. He is also an Oracle Certified Implementation Specialist
in Oracle Receivables R12 and Cloud Project Portfolio Management (PPM).

Lee has experience across all phases of a project and brings expertise in planning, designing, building, testing and
deploying solutions within the Oracle EBS and Cloud ERP environments.

April 2-6, 2017 in Las Vegas, NV USA #C17LV

About Grant Thornton
We are the U.S. member firm of Grant Thornton International, a global organization of member
firms providing audit, tax and advisory services to clients for more than 90 years.

Over 10% revenue growth in

the U.S. last year with a $1.56bn
revenues
13% increase in headcount
PEOPLE

• 35% of the companies on the 2015 Fortune 1000 list

• 39% of the companies on the 2015 Fortune 500 list
• 54% of the companies on the 2015 Fortune 100 list
PARTNERS
• 25% of the companies on the Russell 2000 list

OFFICES

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Committed Oracle partner

Specialized Partner of the JD Edwards Excellence Excellence Award, 2015 (Fusion Middleware JD Edwards Excellence
Year, 2014 (EPM, NA) Award, 2015 Innovation at Serta Simmons Bedding) Award, 2016

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Session Introduction
• Focus on XaaS and subscription business1
• Provides value for both customer and company
• customer – convenience, flat rate, hassle-free
• company – predictable recurring revenue, more easily calculate lifetime value of customer
• Proven Success in several industries
• Technology, Entertainment, Home Goods, Transportation, Healthcare
• Examples of Successful Subscription Businesses
• Dollar Shave Club
• Home Goods – subscription only business (product)
• Provides consumable product as a service (hair razors)
• Purchased by Unilever in July 2016 for a reported $1.0 B
• Netflix
• Entertainment – subscription only business (content)
• Provides streaming content as a service
• Considered largely responsible for replacing Blockbuster
• Truven Health Analytics (IBM Watson Health)
• Healthcare Technology – partial subscription business (software)
• Provides software and content as a service via various media
• Spun off from Thomson Reuters in 2012 for $1.25 B, purchased by IBM in February 2016
for $2.6 B
1. Longanecker, Chuck. "Why You Should Use a Subscription Business Model." Entrepreneur. Entrepreneur, 19
Mar. 2015. Web. 28 Feb. 2016.

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Session introduction (cont.)
• Focus on Oracle Service Contracts module of EBS
• Connection points with Receivables, Inventory, Installed Base, and Order
Management also explored
• Session will not cover TeleService, Field service, Depot Repair or other
service/CRM modules
• Emphasis on subscription related functionality and features
• Subscription agreements, subscription contract lines, subscription
templates/fulfillment schedules, item instances, and sales orders.
• Session will not cover functionality or features related to service, warranty or
usage.
• NOTE: While this session is "release agnostic", the functionality described is
specific to R12.1
• Specific differences between R12.1 and R12.2 are discussed later
• R12.2 does introduce significant technical enhancements

April 2-6, 2017 in Las Vegas, NV USA #C17LV

Agenda
• Introductions
• How service contracts enables subscription businesses in EBS
• Service contracts overview
• Service contracts subscription fulfillment flow
• Key components of service contracts subscription fulfillment
• Subscription items
• Customer accounts, sites, and contacts
• Subscription agreements
• Subscription agreement contract lines
• Subscription templates/fulfillment schedules
• Billing schedules
• Item instances
• Sales orders
• Conclusion
• Q&A

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How Service Contracts enables
subscription businesses in EBS
Service Contracts overview

• Depicts typical service or warranty related integrations

• TeleService serves as the hub of most interactions.
• However not all modules are required for all situations
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Subscription fulfillment flow

• Integrations specific to subscription agreements

• Note that some integrations vary from previous slide.
• Most important components/integrations discussed later
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Key components of Service
Contracts subscription
fulfillment flow
Subscription items
• Managed in Oracle
Inventory
• Focus on service
attribute group
• Contract item type =
subscription
• Template is
subscription
template used for
fulfillment schedules
(SC setup)
• Track in Installed
Base is required

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Customer accounts, sites and
contacts
• Uses standard TCA
customer setup
• Bill To and Ship To sites
required
• Contacts available but
not required
• Account Relationships
also in play but not
required

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Subscription agreements

• Contract category = subscription agreement

• Only contract category to allow subscription lines
• Party roles available are merchant OU, subscriber, and third party
• Subscriber and third party have to be customers
• Includes standard SC information
• Customer info, contract dates, price lists, renewal info

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Subscription agreements contract lines

• Designated by subscription line type

• Attributes cascade from header but can be changed on lines
• Dates can be changed to shorter than header dates
• Pricing and tax automatically calculated
• Subscription Template pulled from item setup

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Intangible subscription templates

• Subscription type and media type extensible

• Represent type of product and associated medium
• Only used for reporting
• Fulfillment channel set to none
• No seeded fulfillment solution for intangible products
• Frequency
• Used only for reporting

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Tangible subscription templates /
fulfillment schedules

• Fulfillment channel = order management

• Activates schedule pattern and interface schedule
• Frequency used to default schedule.
• Schedule pattern can be adjusted to change schedule
• Sales orders are created in OM for every line on schedule
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Billing schedules

• Independent from fulfillment schedules

• Allows for scheduling of billing separately
• Similar to fulfillment, billing scheduling can be adjusted for multiple
combinations of periods
• Invoices are created in receivables for every line on the schedule

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Item instances

• Automatically created in installed base for all subscription contract

lines
• Uniquely identifies every instance of an item and customer
combination
• Provides consolidated view of a subscription
• Includes customer info, item info, status info, and subscription dates
• Ideal source of information for intangible item fulfillment
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Sales orders

• Created in Order Management via Subscription Fulfillment Program

• Always created as $0 orders
• Remember that all billing is done from SC
• Orders have Ship Only workflow and are Booked automatically
• Subscription Sales Orders are ready for shipment via Shipping
Execution or other 3rd party solution

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Conclusion
Subscription fulfillment flow

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Differences in Releases
• Drawbacks in R12.1
• No public Import APIs
• Service Contracts Import does not allow tangible lines
• Service Contracts Import only allows 3 billing streams
• Service Contracts Import does not allow DFFs
• Enhancements in R12.2
• All Service Contracts Import fixes are added in R12.2
except the ability to import tangible lines
• Subscriptions can be ordered via Order Management
and interfaced from OM to SC
• Public Import APIs available
• New HTML web forms available (versus Java)
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23
Conclusion
• Service Contracts powerful enablement of subscription
businesses
• End-to-end solution for order to cash processes related to
subscriptions
• Strengthened by other module features: Order Management,
Receivables, Installed Base
• While there is no seeded fulfillment for intangible items, installed
base has robust API capability that allows you to easily integrate
to any platform
• Also great flexibility for billing
• Leverages existing EBS environment
• If you're already using financials and/or CRM you have a leg up
• Ultimately saving you time and money!

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24
Q&A
Upcoming events
Find Grant Thornton at these upcoming events:

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Session ID: 10098

 Thank You!
Lee Huff
Technology Solutions – Senior Associate
Grant Thornton LLP
Lee.Huff@us.gt.com

April 2-6, 2017 in Las Vegas, NV USA #C17LV 28