Optimizing Contract Renewals with oracle Service Contracts

1. Powering the Future Enterprise Repair Automation Planning Integration Spares Management Service Contract Renewals Reverse Logistics & Repair BI White Paper Optimizing Contract Renewals with Oracle Service Contracts Girish Bakshi

2. Table of contents Abstract………………………………………………………………………………...3 Renewal Process...………………………………………………………..…...……..4 Renewal Communication……………...…………………………………...………...5 Online Acceptance Portal………………………...................................................6 Admin Workbench…………………….................................................................7 Additional features useful for renewals….………………...……….…………...….8 Summary……………………………...…............................................................11 2 www.jadeglobal.com Jade Global © 2013

3. Abstract: Managing contract renewals can proactively minimize revenue leakage while improving overall customer satisfaction. Renewal of service contracts represents a high margin and recurring revenue opportunity for service providers. Oracle service contract renewal process is designed to improve process efficiencies and customer experience. For example, renewal of large volumes of lower value contracts can be highly automated to reduce administrative costs, while higher value contracts may require special attention from sales/operations people. Renewal representatives are now able to initiate renewals easily based on pre-defined business rules. Once the renewal process is initiated, sales reps can easily track progress and initiate follow-up actions. Renewal process, at a high level, can be represented as below. Customer notification Customer Acceptance Contract Administration Renewal Process 3 www.jadeglobal.com Jade Global © 2013

4. 1. Renewal Process 1.1 Renewal Rule Renewal rule can be set up at Contract, Party, Org and Global levels for Default renewal process. Default values set up at these levels take the precedence in the order they have been mentioned. For Online and evergreen renewals, these rules can be set based on the threshold limits at party, organization and global level. Based on the setup of the contract and the Global Contracts Defaults, the renewal process determines the effective renewal rule. This rule includes three values: • Default Renewal Process: follows the contract, party, organization, global hierarchy • Evergreen Threshold Amount: follows the party, organization, global hierarchy • Online Threshold Amount: follows the party, organization, global hierarchy Once a renewal rule/process is identified then the next step is to automatically create the contract based on the rule. 1.2 Renewal Automation For automating the renewal process, following setups are required to be completed: • Process definition: A process may be either an Oracle Workflow process or procedure, either packaged or standalone. This Process Definition can be invoked by either: an outcome, a function, a quality assurance checklist, auto numbering, a change request process, or to approve or renew. Oracle has already provided few seeded Process Definitions like “Service Contracts Renewal Outcome”. • Independent Condition for Renewal: Independent condition is the Business required condition that must be met before an outcome, i.e. contract renewal is processed. Oracle has defined seeded Independent condition like “Contracts Auto Renewal Condition” which is linked to process definition “Contract Renewal”. This is the place where Business required criteria for selection of contracts for renewals (90 days or 120 days) is captured. • Schedule the following programs a. Workflow Background Process “Contract Alert”. 4 www.jadeglobal.com Jade Global © 2013

5. 2. Renewal Communication 2.1 Manage Renewals Proactively by Notifying Customer Renewal quotes and reminder notifications can be generated automatically at user- defined intervals prior to contract expiration. Sales representatives are notified of upcoming expirations, so that they can proactively start the negotiation process. In addition, quotes and reminder notifications can be delivered directly to customers. For electronic renewals, customers provide payment information and accept their quote online, simplifying the contract administration process. Renewals can be performed manually or electronically. Service Contracts integrate with XML Publisher to support user-defined layout templates for customer communication documents. 2.2 Renewal Negotiation Management Once a customer is notified of an upcoming service renewal, contract goes through several stages. The negotiation workflow manages each of the stages of the negotiation cycle to better manage and track the renewal negotiations. 2.3 Contract Renewal and Branching The application can create a renewal from a renewal event or you can create a renewal manually from the Service Contracts Authoring form. After the renewal contract is created, the application initiates a workflow for that contract and the negotiation status is set to Draft. Workflow determines the routing of the renewal contract based on two parameters: Renewal Process Type and threshold amounts. 2.4 Notify Customer Customer receives notifications that a renewal contract has been created and is awaiting approval. For manual renewals the renewal specialist who is managing contracts has three options for notifying the customer. Renewal rep can:  Print a quote letter to fax or mail.  Send the quote letter in an e-mail.  Publish the quote online. The application stamps the negotiation status accordingly. 2.5 Online Renewals Contracts that qualify for online renewals are published to the customer and do not require manual intervention. Every time a quote is sent by e-mail or published online, the workflow process runs a quality assurance (QA) check to validate the contract. If the contract fails this QA check, the action is abandoned and the application stamps the negotiation status. 5 www.jadeglobal.com Jade Global © 2013

6. 3. Online Acceptance Portal Certain low value, high volume contracts can be automatically presented to customers for reviewing and accepting via an online portal. New and manual contracts can be published online for customer acceptance. Renewal reps now have the ability to manually publish in-process contracts to customers for online revision and acceptance. The biggest benefit is that this procedure reduces manual processes and paperwork, and increases salesmen efficiency by automating customer acceptance. The salesman does not have to send quote letters via fax or email. Similarly, the customer does not have to send paper copies of their acceptance. • Customers can review / accept their renewal contracts from a self-service web page. • Electronic Renewal process places renewed contracts in “Entered” status. • Notification to the sales representative and customer. • E-mail notification with a username and password to the customer. Customer acceptance can be both implicit and explicit when the quote is published online. If the customer accepts the contract from the online portal, workflow updates the negotiation status and routes the contract back to the renewal specialist. If the renewal specialist submits a contract in “Quote Published” status for approval, this assumes implicit customer acceptance. For manual contracts, the renewal specialist submits contract for internal approval after securing written or verbal customer acceptance. www.jadeglobal.com Jade Global © 2013 6

7. 4. Admin workbench 4.1 Contract Authoring, Administration and Approving In addition to contracts created automatically via the selling process, contracts can be authored within Service Contracts. These types of contracts may incorporate more complex billing scenarios, or sell usage of products or services in addition to covering them. Templates can be defined to default coverage terms and other contractual attributes onto a new contract. All or part of a contract can be copied, referenced, changed or defaulted, further reducing administration overhead. • Identify follow-up actions on contracts. • Publish contract online to customers. • Submit contract for internal review. • Manage reminders and notifications. • Run quality check to validate contract information. • Open the contract in the Service Contracts authoring window for editing. • Initiate communication with customers through e-mail. 4.2 Contract Approval After a contract is submitted for approval, workflow uses Approvals Management Engine (AME) to derive the contract approver and routes the contract to that approver. 4.3 Contract Activation After a contract is approved, the application activates the contract. After that the contract status changes to Active or Signed and the negotiation status changes to Complete. 7 www.jadeglobal.com Jade Global © 2013

8. 5. Additional features useful for renewals 5.1 Integration with Oracle Advanced Pricing Oracle Contracts integrate with Oracle Advanced Pricing to retrieve the prices of services or usage supplied on the contract. Price breaks can be set up to vary the price applied depending on volume used. Usage of products or services can be based on an estimated (fixed) quantity, or on actual counter readings. Default values can be used in place of the actual reading if reading is not received in time. A minimum ‘threshold’ quantity can be applied to the contract if necessary. Price adjustments can be automatically applied to the contract or by simply adjusting the price manually. Any adjustment applied, whether automatic or manual, is tracked and is available to be viewed from the contract. 5.2 Workflow integration Standard contract approval workflow integrates with Oracle Approval Management Engine (AME). Standard AME features support rules based approval routing and definition of approval groups. 5.3 Coverage and Entitlements The coverage definition outlines the entitlements available to the customer, e.g. days and times of coverage, reaction times, and preferred resources. Preventive maintenance may be linked to the coverage definition, which would include the schedule to perform activities associated to the preventive maintenance required on the products covered by the service. Entitlement information such as coverage hours, contracted reaction times and bill rates are made available to other applications. This end to end support for the business flow facilitates the proactive management of contractual terms and provides enhanced customer service. 8 www.jadeglobal.com Jade Global © 2013

9. 5.4 Publishing Quote online Contracts that are marked for online renewal get published online upon renewal. This action can be used to publish additional contracts online to the customer for acceptance. Once a quote is published online the negotiation status changes to “Quote Published”. 5.5 Renewal Quote creation & Electronic delivery For Electronic renewals, Negotiation workflow sends e-mail notifications to customers at various points during the negotiation cycle. For Manual Renewals, E-Mail Attachments are sent by Renewal reps to Customers. Following seeded document types are available in oracle service contracts  Quote Document  Cover Letter  Reminder Letter  Acceptance Confirmation  Activation Confirmation  Cancellation Letter 5.6 Change Service Level Oracle “Update Service” functionality to upgrade or downgrade support for covered products. Customers wanting to upgrade services at renewal can upgrade them to Gold from Silver. 5.7 Bill Services In case of customer disputes/issues, billing can be suspended and resumed at renewal using Bill services “At Renewal” option. All eligible records are interfaced to AR. 5.8 Renewal consolidation This feature is useful for renewals when a customer has numerous contracts expiring at different times over the course of a year. This requires the customer to be contacted multiple times per year for renewal confirmation and perhaps renegotiation, which increases the workload for renewal. Renewal Consolidation addresses the problem of multiple contracts expiring during a year (or other given period) causing multiple renewals. With Renewal Consolidation, all the contracts to be renewed over a given period are consolidated into a single renewal contract. 9 www.jadeglobal.com Jade Global © 2013

10. 5.9 Co-termination To simplify renewals and accounting, customers sometime request all contracts to terminate on the same date, such as the end of the calendar or fiscal year. This date is called the co-termination date. This can be set up at a Bill to customer account level. 5.10 Forecasting Oracle Service Contracts provides up-to-date information on current bookings and renewals performance. Managers can easily compare actual bookings with forecast for a given period; track renewal rates and average age of past due renewal; determine the uplift or reduction in contract value at the time of renewal and take corrective actions to minimize service revenue leakage. 5.11 Partial Periods Computation Businesses require flexibility for defining how pricing, billing and termination amounts are calculated for partial periods. Some businesses base partial period calculations on fixed 30-day months, 90-day quarters and 360-day years. Others prefer to calculate partial periods based on the actual number of days within a period. Partial period settings influence the duration of calculation for pricing, billing and terminating service. 5.12 Partial Period Revenue Recognition Oracle Receivables provide support for partial period revenue recognition. The partial period revenue recognition feature enables prorated revenue recognition based on the number of days in each accounting period. Accounting rules can also be defined to recognize revenue evenly across all full periods in a schedule while only prorating recognition for partial periods that fall at the beginning or end of a schedule. Service Contracts integrate with Oracle Receivables to enable partial period revenue recognition for services billed from service contracts. 10 www.jadeglobal.com Jade Global © 2013

11. Summary Oracle Service Contracts provide an automated renewal process for improving recurring revenue by guiding customers and sales representatives through upcoming renewals, ensuring un- interrupted service for customers while minimizing service revenue leakage for service providers. Enhanced and pro-active customer communications, more flexibility to the partners by using online acceptance features coupled with accurate pricing and flexible billing encompass the complete renewal features that drive revenue upwards for companies. 11 www.jadeglobal.com Jade Global © 2013

12. About the Author Girish Bakshi is the lead consultant of Jade Global. He has 14 years of experience across Communication and High-tech domain. He is an Oracle professional with experience in ERP and CRM applications. 11 www.jadeglobal.com Jade Global © 2013

13. Jade Global is an Oracle Platinum Partner and a leading enterprise systems integration and IT services firm. We leverage the best practices and process expertise across industries and facilitate increased productivity, more efficient operations; and quicker and more successful project implementations. For more information, please visit www.jadeglobal.com or drop us an email at marketing@jadeglobal.com Talk to our experts and find out how they can change the way you do business. Corporate Headquarter 1731 Technology Drive Suite 350 San Jose, CA 95110 Phone: +1 (408) 899-7200 Southern California Oceanside, California Phone: +1 (408) 899-7215 Central United States Dallas, Texas Phone: +1 (940) 594-2752 Jade Global, Inc. East Coast 33 Wood Ave South, Suite 600, Iselin NJ 08817 Phone: +1 (646) 334-7165 India Office Pune, India Phone:+91-20-66081500 Noida, India Phone:+91-20-66081500 12 www.jadeglobal.com Jade Global © 2013