Part 2 – Technical Overview of Advanced Contract Management in Dynamics AX with AXIO Professional Services

In our earlier post, Robbie Morrison explained how the Advanced Contract Management Module of AXIO for ProServ can help hi-tech consulting and services firms to manage their complex and ever changing business contracts effectively and help minimize revenue leakage with its enhancements for the contracts and projects management functionality of standard AX, while meeting all the requirements of the new IFRS 15 standards. Robbie also provided a sneak peek into the various enhancements that are available for Dynamics AX in the AXIO Professional Services Solution.

In this post, we will deep dive more into some of the specific features and functionalities of the Advanced Contract Management Module that were highlighted in the earlier post. We will specifically take a look at the following 2 functionalities and understand how these can help the hi-tech consulting and services firms to streamline revenue recognition and also automate the contractual changes and associated financials postings.

  • Advanced Revenue Recognition
  • Automated Contract Realignments
So, let us take a scenario where Contoso Consulting USA, a hi-tech services provider of Cloud Services, Hardware Services and IT Maintenance Services has several business contracts of different types such as Subscription based Fixed price, engagement/Milestone based fixed price and more with its customers.
Let us see how AXIO’s Advanced Contract Management module can help Contoso to streamline and automate the revenue recognition for the subscription based fixed price contracts for the Cloud Services they provide to their customer “Shrike Retails”.

 

For this demonstration, the Contract is already setup in the Contract Management Module and is already in effect. This is a subscription based contract and it is in effect from 01/01/2016 with yearly contract value of $ 120,000. The contract is also setup to be billed quarterly and for automated renewal with a price increase of 5% every year. The revenue recognition is setup to occur Monthly.

 

AXIO Advanced Contract Setup for Dynamics AX

Screenshots below shows the contract setup details and various parameters for the contract.

 

Contract Setup in AX with AXIO Professional Services for AX

Fig 1: Contract Setup in AXIO for Dynamics AX

 

Billing and Revenue Recognition Setup with AXIO for Dynamics AX

Fig 2: Billing and Revenue Recognition Setup with AXIO for Dynamics AX

 

Contract Renewal Setup in AXIO for Microsoft Dynamics AX

Fig 3: Contract Renewal Setup with AXIO for Dynamics AX

 

Let us now go ahead and see how Teresa, the Contracts Billing analyst can easily process the revenue recognition for this contract for first month of the contract, i.e. January 2016.
AXIO’s Advanced Contract Management module provides a dedicated workspace for the Contracts and Revenue Management activities for making the team members more productive and achieve more, all at one central workspace. So when Teresa logs into AXIO and goes to the Contract and Revenue Management workspace, she gets to see the critical contract management related data, visual dashboards for quick insights and also the details of the contract such as “who the customer is”, “the total contract value”, “how much has been billed till date and how much remaining”, how much revenue has been recognized till date and how much remaining” and more.

 

Contract Management Module Main Menu with AXIO for Dynamics AX

Fig 4: Contract Management Module Main Menu

 

Contract and Revenue Management Workspace with AXIO for Dynamics AX

Fig 5: Contract and Revenue Management Workspace

 

Run Revenue Recognition

Staying within the same workspace, Teresa finds the Contract for Shrike retail for which she needs to process revenue recognition for the month of January 2016. She selects the contract record and clicks “Run Revenue recognition” and then selects the Revenue recognition date.
Run Revenue Recognition with AXIO for Dynamics AX

Fig 6: Run Revenue Recognition

 

She then selects the Revenue recognition date and clicks OK to proceed to the next screens which will show the summary of the revenue recognition for this this month.
Run Revenue Recognition Process with AXIO for Dynamics AX

Fig 7: Run Revenue Recognition Process

 

Revenue Recognition Details for Dynamics AX with AXIO

Fig 8: Revenue Recognition Details

 

Teresa finally reviews the details and posts the revenue recognition and she is able to do this with just a few clicks.
AXIO Revenue Recognition Processing Details for AX

Fig 9: Revenue Recognition Processing Details

When Teresa navigates back to the Contracts workspace, she can see the Revenue recognized till date and remaining to be recognized. The screenshot below shows the Revenue recognition data after Teresa processed the revenue recognition.

Revenue Recognition Data for Dynamics AX with Axio

Fig 9a: Revenue Recognition Data

 

Important Note: In AXIO, you can setup the revenue recognition to run automatically in a batch based on a predefined schedule, so that your team members does not need to run the process manually every month. Screenshot below shows the automatic batch option for running revenue recognition. For the demonstration in this post, we are running the process manually.

 

Run AX Revenue Recognition Automatically in Batch with AXIO Professional Services

Fig 10: Run Revenue Recognition Automatically in Batch

 

Now that we saw how Teresa was able to easily able to process the revenue recognition for the contract, let us go ahead and see how AXIO helps her to manage contractual changes. In the cloud era of simplified and flexible computing, frequent changes to contracts and service options are very common. Customers have the option of scaling up and scaling down the level of service they subscribe for at any time. So in this case, let us assume Shrike Retails want to cut down on one of the package of the Service subscription they signed up for originally. Due to this, the total contract value now needs to be reduced to $ 96,000 from the original value of $120,000. This means the total amount billed and total revenue recognized so far on the contract also needs to be adjusted accordingly to update the financials.

Realign Contract Value in Dynamics AX with AXIO

The Realignment functionality of AXIO’s Advanced Contract Management Module makes the experience seamless by automating the end to end adjustments, so that your contract team members can focus more on improving customer service and worry less about the manual financial adjustments.
To process the Realignment of the contract, Teresa, goes back to the Contract and Revenue Management workspace and selects the contract for Shrike Retail and clicks Realign Contract button.

 

Realign Contracts and Revenue Management with AXIO for AX

Fig 11: Realignment of a Contract

Since the contract price needs to be adjusted in this case, she selects the Price option on the Realignment form and processes the Realignment.

Run Realignment of Contract Price in Dynamics AX with AXIO

Fig 12: Run Realignment of Contract Price

She then enters the new Contract value, which is $96,000, verifies the details and finally submits the realignment for review and acceptance.

Teresa runs realignment with AXIO for Dynamics AX

Fig 13: Teresa Runs Contract Realignment

 

At this point, the Contracts Responsible person for approvals, reviews the details of the contract value adjustment. AXIO also shows them the complete preview of the financial adjustments that will be automatically processed for revenue recognized and amount billed after they accept and post the realignment.
The screenshot below shows that the revenue recognized on this contract needs to be adjusted automatically since the contract price is changing. With the original contract price of $ 120,000, the revenue recognized for month of Jan 2016 was $ 10000, and due to the reduced contract price, the system is automatically going to post the revenue adjustments. Had there been any amount billed on this contract, this functionality will also create the billing adjustments automatically.
Realignment Review and Posting in AXIO for Dynamics AX

Fig 14: Realignment Review and Posting

Teresa now goes back to the Contracts Management workspace to review the revenue recognition adjustment details. She sees that the revenue has been adjusted from $10000 to $8000, due to the contract price reduction.
Real-time Contract Management Scenarios

Fig 15: Real-time Contract Management Scenarios

Other Advanced Contract Management Features for Dynamics AX

So, the above post was just a glimpse for some simple real time contract management scenarios and also we specifically discussed 2 of the specific features. The Advanced Contract management module also automates several other aspects of contracts such as Advanced billing policies, Advanced invoice distribution, automated contract renewals and more.

Live Demonstration Video

Click here to see live videos AXIO Professional Services and Contract Management in action!

Stay tuned for our future discussions on AXIO’s Advanced Contract Management solutions.

 

Sandeep Chaudhury
Solutions Architect, Dynamics AX
SBS Group

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: