Overview of the Deployment Options for IFRS 15 / ASC 606 Projects for SAP Customers
In our recent blogs on revenue accounting, we covered an update to SAP Revenue Accounting and Reporting (RAR) v1.3, and provided our best practice recommendations
for approaching an IFRS 15 / ASC 606 project even if at the last minute.
In this blog, I want to highlight some of the deployment options & considerations that SAP customers have raised with us to help them with their efforts to become compliant with IFRS 15 / ASC 606.
The main solution for customers with average to complex revenue recognition requirements to consider is SAP Revenue Accounting and Reporting (RAR). SAP RAR has been designed to automate and simplify revenue accounting and revenue recognition. SAP RAR can run on SAP ERP Financials or SAP S/4HANA Finance. SAP RAR is offered as either a cloud or on-premise solution. And in the longer term, SAP RAR will replace SAP Sales and Distribution – Revenue Recognition under SAP S/4HANA Finance. The best practices listed are still valid for handling IFRS 15 / ASC 606 either in the cloud or on-premise.
When implementing RAR for revenue recognition, a fit-gap analysis conducted via a pilot / Proof-Of-Concept (POC) is always recommended (due to the complexity of revenue recognition regulations) as discussed previously. For S/4HANA customers with simpler revenue recognition requirements, the fit-gap analysis may reveal that SAP RAR is not required and that a small project based solution may be sufficient.
One other consideration is that customers in manufacturing or aerospace and defense may well continue to use SAP Results Analysis in conjunction with SAP RAR to best handle project based revenue recognition scenarios including Work-In-Process (WIP), Percentage-Of-Completion (POC), or Cost-Of-Goods-Sold (COGS) for both SAP ERP Financials or SAP S/4HANA Finance environments.
For more information on SAP RAR, please contact your SAP sales representative or please visit:
Hi Graham,
Being a client what we need to do to implement RAR? do we need to conduct the Fit Gap analysis first?
Hi Uzair,
By thoroughly documenting your revenue accounting requirements down to the T Account level, you can then conduct a fit-gap analysis to RAR. The fit-gap analysis is usually conducted by an experienced RAR consultant. A good practice to consider is to adopt RAR in phases. By running a RAR pilot program with small-scale proof of concepts, you can gradually expand and build upon these initial successes to even greater RAR phases.
BTW - SAP Education offers classes that cover RAR configuration. See this link for more information on content, goals of the course, and signing up.
-Best, Pete