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Global Sponsor

Managing Governance
Challenges in the
Rebate Lifecycle
Motorola Solutions Inc.
Case Study
Sonal Sood Manager - Deloitte Consulting
LLP
Earl Eldridge Sr. Director - Oracle Corporation
02-Oct-2014

Brands Ultimate Goal

Increase sales

Differentiate products from the competition


Increase product visibility and brand awareness
with the customers
Increase products consumption rate

Enlarge a products market segment penetration

Introduce new products and services in the market


place

This presentation should not be interpreted as a representation about or endorsement of any third party products, including Oracle software.

2012 Deloitte Global Services Limited

Adopt a Go-To-Market Strategy


Sales Channel

Brand

Direct

Go-To-Market

Reseller

Customer

Brand

In-Direct

Brand

Distributor

Reseller

In-Direct

Engage companies
sales force
Ecommerce
Own-branded store
Re-seller represents
and sells a companys
products or services
Other terms: LAR
(Large Account
Reseller), VAR(Value
Added Reseller), Direct
Market Reseller(DMR)
Distributor is engaged
to reach a larger market
often via multiple
channel partners
Other terms: Value
Added Distributor (VAD)

Sales channel is the conduit that drives the transaction


5

This presentation should not be interpreted as a representation about or endorsement of any third party products, including Oracle software.

2012 Deloitte Global Services Limited

Go-To Market Funding Strategy & ROI


Allocate Funds

Marketing/Trade Promotion activities

t
irec
d
n
I

Di
re

Marketing
Funds

ct
&

In-Direct

Expense Realization

Advertising on TV and Radio


Marketing Collateral
development
Campaigns and Road shows
Online Promotions
Marketing R&D

Recruit new channel partners


with special "jumpstart"
allowances
Maintain and extend existing
partner relationships through
co-marketing efforts
Trade/Promotional allowances
to channel partners to boost
sales
Improve channel readiness by
enabling training, certification

US GAAP : Report
as incurred
expenses as part of
Selling, General
and Administrative
expenses
SOX and FASB :
Expenses incurred
as part of
promotional
allowance programs
are viewed more as
perks, or simply
rewards for sales
performance, and
should be classified
as contra revenue

ROI

An investment in
supporting your
greatest asset, your
brand
Evaluate and
measure across
common expense to
sales ratios to
determine their
effectiveness
Perform Average
Selling price
analysis

Marketing expenses that successfully produce sales can offer a high return on investment
6

This presentation should not be interpreted as a representation about or endorsement of any third party products, including Oracle software.

2012 Deloitte Global Services Limited

Trade Promotions Spend

70% of
marketing spend

10-25% of sales

2nd largest expense


item on P&L

67% of the Consumer & Industrial Product Companies indicate increasing trade promotion spend in 2014*

Types of Trade Promotions


Off-Invoice
Discounts

Manufacturers deduct
some percentage from the
invoice price for purchases
made during the deal
period
Quantity based and price
reduction in the form of
additional merchandise

Performance
Incentives

Discounts on merchandise
that the retailer sells at a
discount to its customers
Manufacturer pays the
channel after having
verified the sales
performed to end users

Sales Quotas

Discounts or rebate
payments offered to
retailers who meet the
manufacturers sales
quota

Marketing
Development Fund

CO-OP

Program provides
partners with
marketing allowance
that accrue as a
percentage of sales.

Discretionary funds
provided by
manufacturers to their
eligible channel
partners based on the
negotiated goals.

Having an effective trade promotion strategy and process is critical in order for companies to benefit from ROI and
allocate funds for other strategic initiatives
* http://www.acosta.com- The_Trend_Behind_The_Spend/trend-behind-spend.pdf

2012 Deloitte Global Services Limited

How to design effective Trade Promotion execution plan?


Effective trade promotion practices involve the coordination of strategy, process, people and
technology.

3
2

Technology

Post implementation analysis and tracking


Accurate revenue forecasting analytics at
product/customer level

Integrated planning, funding, rebate


accrual, payment and accounting system
Automation of rebate accrual and
accounting along with robust approval
workflow

People

Train resources on global standard processes

across the organization

Well defined roles and responsibilities


Incentives to maintain KPIs.

Process

Promotional Fund allocation and management


How funds are earned - discretionary or earned
accruals

Trade Promotional Plan creation and eligibility


criteria
Performance tracking for disbursing rebates

Strategy

Increase sales, overall or for a specific


product
Focus spending behind specific
products(new product introductions or endof-life items

Increase utilization rates for select partners,


or select geography
Up-sell and Cross-sell products

Accounting, claim audit and deduction


management, and settlement
Robust post-implementation monitoring and
adjustment

Target new market segments


Onboard new channel partners

Channel Marketing is one of the most comprehensive disciplines in the business environment which extends corporate initiatives across multiple
disciplines including sales, marketing, finance, supply chain and sales operations
8

This presentation should not be interpreted as a representation about or endorsement of any third party products, including Oracle software.

2012 Deloitte Global Services Limited

Trade Promotion Management process Leading Practice

Strategize

Historic sales data


Historic consumption
data
Past Promotion
results
Distributor/Retailer
performance
Marketing Plan
Promotional Strategy
for the brand/Product
Understanding of the
customer

Allocate
Budget

Establish Allocation
method
Topdown/Lump
sum
Bottom-up
Accrual based
Allocate to customer
account group,
region, or specific
account
Get approval from
Go-To-Market team

Create
Promotion
Plan

The process to create


a plan should be reuseable on
quarterly/yearly basis
Review and approve
Products included in
the promotion
Rebate accruals
based on expected
sales
Payment methods
(off-invoice, bill back,
separate check etc.)
Eligibility criteria

Internal/
Customer
Approval

Discretionary trade
promotion allowances do
not require approval as
they are executed behind
the scene
Other promotions need
approval from the
customer
Share the promotion plan
in detail
Communicate how
performance will be
measured in order for
customers to be eligible
for the promotion
Lock down the payment
method for settling claims
against rebates

This presentation should not be interpreted as a representation about or endorsement of any third party products, including Oracle software.

Execute
Promotion
Plan

Evaluate

Review actual product


Evaluate whats
shipments to calculate
working and
rebate accruals
whats not working
Authorize
Shift funds
payments/settle claims Performance
against rebate accruals
Metrics
% Lift
if customer is eligible
Make payments (Check,
PassCredit Memo, Onthrough
account etc.)
analysis
Reconcile deductions
Trade
against the promotion
Margin
plan and proof of
Analysis

performance
Profit and
Restrict booking manual
cost per
accounting entries
incremental
sale etc.
2012 Deloitte Global Services Limited

Trade Promotion Governance Process Leading Practice


Review actual product shipments sent to customers
LOREM
ReviewIPSUM
actual consumption data (sell through) rather than
on is
shipments
prevent
buying
diverting
This
dummy texttoit is
not hereforward
to be read.
This isand
dummy
text it is not
to be read.
This is dummy text
it is not against
here to berebate
read. This
is dummy
here
Authorize
payments/settle
claims
accruals
text
it
is
not
here
to
be
read.
This
is
dummy
text
it
is
not
here
to
be
read.
Reconcile deductions against the promotion plan and proof
This is dummy text it is not here to be read.
of performance

Strategize

Allocate
Budget

Create
Promotion
Plan

Align program with the current forecast of total


sales, spending and customer performance
Ensure promotions programs align with strategic
goals and plan
Modify the program to account for variances
Obtain approval for revisions as it has an impact
on projected revenues or budget
Discontinue promotions which are not profitable
Make accounting adjustments where applicable
10

Execute
Plan

Customer
Approval

Adjust

This presentation should not be interpreted as a representation about or endorsement of any third party products, including Oracle software.

Evaluate

Monitor

Track Average Selling Price


(ASP)
Track Actuals vs. Plan
Actual revenue generated
Participation
Compliance with Promotional
parameters
Prevent Out-of-Stock during
promotional period
Expenses and Liabilities

Enable business process with Channel Revenue Management

Strategize

Allocate
Budget

Create
Promotion
Plan

Execute
Plan

Internal
Approval

Evaluate

Adjust

Process
Enablement
11

Oracle Channel Revenue Management

This presentation should not be interpreted as a representation about or endorsement of any third party products, including Oracle software.

Monitor

Case Study

About Motorola Solutions


TECHNOLOGY
LEADERS

GOVERNMENT

ENTERPRISE

NEXT
GENERATION
ASTRO

PCR

TETRA

PRIVATE
BB

iC&C

iDEN

MCD

ADC

RFID

WLAN

CEC

SOLUTIONS
DRIVEN
PRODUCT
+ APPS
+ SERVICES

CUSTOMER
FOCUSED
VERTICALS
GOVERNMENT

13

MANUFACTURING
& FIELD MOBILITY

TRANSPORTATION
& LOGISTICS

RETAIL &
HOSPITALITY

Footer
This
presentation should not be interpreted as a representation about or endorsement of any third party products, including Oracle software.

ENERGY &
UTILITIES

EDUCATION &
HEALTHCARE

2012 Deloitte Global Services Limited

Motorola Solutions Inc. Channel Go-To-Market Strategy


Goals

Strategy

End-User

Motorola Solutions Inc.

Marketing Distribution

Distributor

14

Reseller

Increase Sales of Products


and other value-added
services by engaging more
reseller in new markets
Drive transactions at the
point of sales by having
channel partners promote
products vs. the competitions
Improve channel readiness
by enabling training and
sales incentive programs
Promote cross-sell and upsell

Reseller

Trade Promotions

Promotion Construct

MOU( Memorandum of
Understanding) : Channel

Significant business
volume and complex
rebates structure e.g.;
Tired discounts by
dollar volume and
quantity

150+ MDF, CO-OP,


MOU, SF) across 12
countries

Country specific
requirements adds
another layer of
complexity

partners earn a rebate on


their purchases once their
revenue
target/KPIs/measureable
criteria are reached

MDF(Marketing
Development Funds):
Discretionary funds
allocated to partners to help
them create and participate
in joint marketing and
business development
programs that can help to
increase sales of Motorola
Solutions products and their
value-added services.

CO-OP: Designed to help


business partners leverage
valuable resources to
enhance business
development initiatives

This presentation should not be interpreted as a representation about or endorsement of any third party products, including Oracle software.

2012 Deloitte Global Services Limited

Issue-to-Impact
Issue
Process
Rebate calculation inaccuracies due to lack of system
capabilities to use accurate data to compute simple to
complex rebates
Manual creation of JE for Expense and Liabilities in GL
results in transaction traceability and audit issues
Average Selling Price (ASP) for shipped and backlog
orders is not reflected accurately until end of the month
Everything is booked at Invoice price and during the end of
the month the ASP suddenly drops
Inability to course correct within an incentive program
duration
Manual claim settlement process results in inaccurate and
duplicate rebate payments along with delays in payments

People

Lack of communication between marketing, pricing and IT to


setup promotional pricing
Resource intensive manual accrual, revenue forecasting,
and claim processing reduces operational efficiency and
increases operating cost

Technology
Promotional plans maintained in Excel
Shipment and Billing information was exported out of
reporting system in Excel and complex macros were written
to compute accruals and Journal entries
15

Solution

Impact

Process
Automated accrual calculation and settlement process
Established one global process for offer setups, accrual
tracking, revenue forecasting and claim settlement
process
Established a central command center to review the offers
and claims being created in the system and catch
inconsistencies

People
Followed crawl-walk-run approach to train users on the
new tool and engaged them starting from the
CRP1through CAT
Adopted train the trainer approach to train others and
new hires

Technology
Automated Trade Promotion process using Channel
revenue management which has standard integration with
Pricing, OM, AR, AP, SLA, GL and other modules
The solution is deployed with pure Oracle vanilla out-ofbox functionality in R12.1.3
Reports in OBIEE were developed to provides users real
time visibility into rebates and liabilities for both shipped
and backlog orders

This presentation should not be interpreted as a representation about or endorsement of any third party products, including Oracle software.

Automated accrual calculation eliminated


inaccuracies rebate calculation
Increased operating efficiency as users
can focus on more value added activities
Provides visibility into net ASP for what is
sold and what's in the backlog in the
subledger for the first time
Finance teams have real-time visibility into
liabilities and expenses resulting in
accurate revenue forecasting
Sales operations teams can respond to any
ASP issues in timely manner and make
adjustment to offers midway
Users can drill down to the original
transaction from the subledger
Sales team can perform promotion health
check s frequently and alter strategy or
approach in a timely manner
Timely and accurate claim settlement
processing
Users were able to pull reports directly
from the GL during month end for
reconciliation purposes

2012 Deloitte Global Services Limited

Issue-to-Impact (Trade Promotion Governance)


Issue
Process
Each region had established its own execution plan in
terms of how they allocate budgets, structure
promotions, computer accruals, settle claims, and
account for
Budget and Promotions offer approvals were via emails
Offers were maintained in excel with no governance
around changes being done to the offers
Manual Journal entries during month end to record
liabilities and expenses for trade promotions
Each region was using a separate balance sheet and
expense account, making reconciliation and
consolidation of promotion expenses a challenge
At year end Go-To-Market finance users would perform
write backs of liabilities booked against discretionary
funds
Manual Credit memos were created for settling claims
and were not associated against eligible offers

Solution

Impact

Process
Established standard template for all offers which also took into
account regional variances
Performed GL account consolidation for multiple liability and expense
accounts into on global account
Account reconcilers were also consolidated
Execute
Corporate guidelines were
established and communicated to ensure
Plan
no direct journal entry into GL
Responsibility to process claims was also shifted from Accounts
receivables to Go-To-Market finance
Established a monthly cadence call with sales and finance operations
team to review actuals vs. plan and whether any adjustments are
required prior to month end

Governance

People

Standardized processes
Integrated solution provides
comprehensive visibility which is
imperative for successful channel
revenue management.
Complete traceability and auditability
Users were able to proactively find
exceptions and react on-time
Subledger is always in sync with your
GL making reconciliation easier
Reduced month-end close by 2 days

Constructed a core group within Go-To-Market finance who would


approve all new offers and claims to ensure adherence to guidelines
Monitor
ThisAdjust
group would be a single point of contact
for managing all
activities associated with execution

Technology
Monitor Utilization and Earnings for promotions offers in Trade
Management
Established two key OBIEE reports that would provide insight into
current liabilities and expenses incurred for both shipped and backlog
order
Mandated use of Offer adjustment feature to make any mid-term
adjustments

16

This presentation should not be interpreted as a representation about or endorsement of any third party products, including Oracle software.

2012 Deloitte Global Services Limited

Handling adjustments to in-flight trade promotions


Business Events
Sales and Marketing
strategy changes
Promotional
Performance based
Adjust offers to
distributors or resellers
who are performing
better to give better
benefits

Product Feature
1

2
Complete traceability on
promotion adjustments
from subledger to GL

Reverse Liabilities and


expenses for
unused/unallocated
marketing development
or CO-OPS

17

Benefits

This presentation should not be interpreted as a representation about or endorsement of any third party products, including Oracle software.

Accurate revenue
forecasting and ASP
(Average Selling Price)
at any given time
Complete audit trail
No manual GL
adjustments required

2012 Deloitte Global Services Limited

Oracle Applications: Current Release and


Roadmap
Release 12.2.4

Whats Next

Future Directions

August 2014

0-12 month planning cycle

Post 12 month planning cycle

Continued OA Framework updates


Offers create and update OAF UI
Offer adjustment OAF UI
Channel Rebates & POS Management
Volume Offer Enhancements including
backdating flows
Ongoing Endeca Integrations
Enhanced offer and budget checkbook
Miscellaneous Offer Enhancements including
TCA Hierarchy Support
Line Level Advanced Option
AR Deductions Settlement
Autopay Settlement by OU

Continued OA Framework updates


Claims, Budgets, Offers
Channel Rebates & POS Management
Mobile Support for Offer & Approvals
Ongoing Endeca Integrations
AR Deductions Settlement
Deferred Accruals
Revenue Recognition
Autopay Settlement by OU
Mobile Support for Claims & Approvals
Oracle Supplier Ship & Debit
Manual Approve/Reject for Ship & Debit
Batches

AME Integration for all ChRM products


AR Deductions Settlement
Ongoing Endeca Integrations
Provisional Accruals and Reconciliation Support
Channel Rebates & POS Management
Completion of Offers in OA
Cascading Offers/Promotions
Flow through Offers/Promotions
Sellers Workbench with OM
Indirect Sales Error Processing
Oracle Supplier Ship & Debit
Vertical Industry Support
Oracle Price Protection
Sell side support

Copyright 2014, Oracle and/or its affiliates. All rights reserved. | Restricted to event use only.

18

Questions and
Answers

Copyright 2014, Oracle and/or its affiliates. All rights reserved. |

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