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Author: Amit Kumar Shaw
Home Articles Posted by Amit Kumar Shaw
10 OctSAP

IFRS-15 Compliance: SAP Revenue Accounting and Reporting Integration with SAP BRIM

SAP Revenue Accounting and Reporting supports compliance with IFRS-15 (Revenue from Contracts with Customers) standards for multiple component contracts or contracts for revenue recognition fulfilled on a time and/or event basis. Revenue Accounting and Reporting (RAR) enables you to manage revenue recognition in a process that involves the following high-level steps:

SAP BRIM Integration with R&R
  • Identify contracts: In this step, you create revenue accounting contracts corresponding to operational documents that are created on a back-end operational system.
  • Identify performance obligations: In this step, you identify the performance obligations included in each contract. You create performance obligations for items in the operational document and manage their relationships with one another.
  • Determine transaction price: In this step, you determine the total price by aggregating the pricing conditions passed from the back-end operational system.
  • Allocate the transaction price: In this step, you allocate the total price (determined in the previous step) among the performance obligations based on the allocation method, such as standalone selling price-weighted, standalone selling price tolerances, residual price allocation, etc.
  • Recognize Revenue: In this step, you recognize revenue for fulfilled performance obligations and make appropriate postings to the general ledger regularly to reflect revenue-related transactions.

Revenue Accounting and Reporting (RAR) can easily integrate with other SAP components (such as Sales & Distribution; Billing and Revenue Innovation Management; SAP Customer Relationship Management; SAP S/4 HANA Service) and/or non-SAP components (such as Oracle, etc.).

In this blog, I want to focus on the SAP Revenue Accounting and Reporting (RAR) integration with SAP Billing and Revenue Innovation Management (BRIM) installed and activated in the same system. With SAP Billing and Revenue Innovation Management, SAP provides an integrated solution for the entire order-to-cash process that comprises Subscription Order Management, Convergent Mediation by DigitalRoute, Convergent Charging, Convergent Invoicing, Contract accounting, and Customer Financial Management. It covers the entire process chain, starting with product and subscription modeling that enables the customer to manage subscription and usage-based data as well as pricing and charging processes. It also integrates with high-volume billing and financial customer care powered by SAP S/4 HANA.

IFRS compliance is ensured by using integration with Revenue Accounting and the Offer-to-Cash end-to-end process as part of Billing and Revenue Innovation Management (BRIM). The prerequisites for this integration are:

  • You are using Contract Accounts Receivable and Payable (FI-CA), Convergent Invoicing, and provider contracts.
  • You have activated the business function FICA_EHP7_RA (Integration with Revenue Accounting) in SAP S/4 HANA.

Within the end-to-end process, integration with Revenue Accounting (FI-RA) exclusively uses Convergent Invoicing in the S/4HANA system. Convergent Invoicing sends all required data to Revenue Accounting. This ensures IFRS 15 compliance.

In the Offer-to-Cash process, Convergent Invoicing records transfer records for Revenue Accounting. Based on these transfer records, Convergent Invoicing creates revenue accounting items in the inbound processing of Revenue Accounting. Order items, fulfilment items, and invoice items are created.

Data changes made by functions and processes outside Convergent Invoicing do not result in an update to Revenue Accounting. This includes, for example, all processes in Contract Accounts Receivable and Payable, such as the following:

  • Manual posting of documents
  • Write-Offs
  • Document reversal
  • Transfer of items
  • Value adjustments

The following graphical presentation illustrates the process flow of transactional data depicting a bundle product consisting of hardware, subscription software, and installation charges.

SAP R&R integration with SAP BRIM

In S/4HANA Subscription Order Management (SOM), you create a subscription order for the sale of product bundles (subscription packages) consisting of cloud selection service, Office 365, installation charges, and hardware. Based on the subscription order, the system automatically creates subscription contract documents in SOM and provider contracts in Convergent Invoicing for the subscription products such as cloud selection service and Office 365, as shown above in the figure. For the installation charges (shown above in the figure), the system automatically creates billable items. Hardware (a tangible product) is transferred to S/4HANA Sales and Distribution directly from SOM Order to execute the delivery of the product to the client site for installation, as shown in the figure above.

In SAP BRIM, provider contracts represent customer contracts. The contract management system transfers the required provider contract data to SAP Convergent Charging (CC) and Convergent Invoicing (CI). Convergent Invoicing passes on to Revenue Accounting the information relevant for creating order items. In the above figure, you can see the provider contracts (#77492 and #77493) are passed on to Revenue Accounting with all the relevant information for creating revenue accounting contracts and performance obligations. Installation charges (One-Off charges) for which the customer is invoiced once are transferred as billable items from SOM to CI and finally to revenue accounting. The following graphical presentation illustrates the data flow from Convergent Invoicing to Revenue Accounting for a bundle product consisting of subscription software and installation charges.

SAP R&R integration with SAP BRIM

In Revenue Accounting, data is updated using revenue accounting items (RAI). In general, revenue accounting supports the following types of revenue accounting items: order items, fulfilment items, and invoice items. The graphic above shows how convergent invoicing creates transfer records in different processes (depending on the service type assignment to a provider contract item, billable item, or invoicing document), from which transaction FP_RAI_TRANSF creates the following revenue accounting items:

  • Order items from provider contracts (#77492 and #77493) and from installation charges that are transferred to the system as billable items.
  • Fulfillment items during the transfer of billable items to rated consumption.
  • Invoicing items from Invoicing.

Hardware items are transferred to S/4HANA Sales and Distribution for delivery and billing using the exchange in service feature in SAP S/4HANA. The sales order (having the same order ID and position) creates and transfers order RAI to the revenue accounting system as shown in the figure below.

SAP R&R integration with SAP BRIM

Upon the successful delivery of the hardware to the client site for installation, the system automatically creates and transfers fulfilment RAI to the revenue accounting system, as shown above in the figure.

In Revenue Accounting and Reporting (RAR), the system automatically creates revenue contracts and performance obligations based on the configuration (i.e., POB type). Standalone selling prices are assigned to performance obligations using BRF+ settings. The transaction price of the revenue accounting contract is assigned to the performance obligations in accordance with the relative selling prices. Costs are likewise allocated to performance obligations. The revenues and costs from fulfilled performance obligations are recognized and posted in the general ledger.

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11 MaySAP

Streamlining Credit Management with SAP BRIM Integration

Credit management enables companies to operate centralised credit management. The credit worthiness and payment behaviour of your business partners has an immediate impact on the business results of your company. Efficient receivables and credit management reduce the risk of financial losses and help you optimise business relationships with your business partners. SAP Credit Management (FIN-FSCM-CR) supports your company in determining the risk of losses on receivables from your business partners early and in making credit decisions efficiently and, in some cases, automatically. It also supports you in a heterogeneous and distributed system landscape: by using system-independent XML interfaces, you can also connect external non-SAP systems.

SAP Billing and Revenue Innovation Management (BRIM) can integrate with SAP Credit Management using XML. The applications connected (such as Subscription Order Management, Sales and Distribution, and Contract Accounts Receivable and Payable) report the commitment of a business partner to SAP Credit Management. These reports are then consolidated into the credit exposure in SAP Credit Management and checked against the current credit limit for the business partner. In addition to the credit limit check, you can also carry out other checks, such as the oldest open item, maximum dunning level, or last payment.

The following graphic illustrates the process of transactional data flow for credit checks and exposure updates between S/4 HANA BRIM and Credit Management.

SAP BRIM Credit Management Diagram

When a customer signs a subscription with a service provider, the service provider must ensure the creditworthiness of this customer. To do so, a credit check is executed during the order (or quotation) capture process. In a subscription order or solution quotation, subscription items are enabled to run credit management functionalities, such as credit check, credit exposure, or documented credit decision. If an item is relevant for integration, by default, the item’s gross value is used to execute the credit check and create the credit exposure. The gross value is calculated using the contract end date or the end of the contract term (if the contract end date is unavailable).

In the business scenario, the initial check is executed in a subscription order or solution quotation, either if the item is released manually and the order or quotation is saved or released or when the order or quotation is submitted or accepted. After a credit check is executed the first time, it will always be triggered when the order or quote is saved or released. The credit check is always executed at the payer level. If there are different payers in a document, the amount per payer is calculated across all relevant items and sent as a single amount to SAP Credit Management.

If the credit check is successful, the credit exposure is created in the order or quote with exposure category 120 (Subscription Order & Solution Quotation). On contract activation, it is copied over to the contract with exposure category 130 (subscription contract). During billing of billable items, the exposure is transferred to one of the billing categories, 220 (unbilled BIT), 210 (billed BIT), or 200 (open item), depending on the BIT status when data is uploaded to SAP Credit Management. When the open item is paid, the credit exposure is finally cleared.

SAP BRIM Credit ManagementThe subscription-specific credit exposure is created on an item or contract level with the following object keys in credit management:

If the credit check fails, a Documented Credit Decision (DCD) is created in SAP Credit Management for the corresponding payer, and the order or quote is blocked for further processing. The order or quote can be submitted or accepted only if all items pass the credit check successfully, and only then will the subscription contract be created. A credit manager can check such a DCD and either release it manually or do a recheck. Items that are sent to a credit check are updated with the system status Credit Check Ok or Credit Check Not Ok, depending on the result of the credit check. A cumulative status across all items is displayed at the header level. Completed items are not considered in this header status. Order or quote cannot be submitted or accepted if even a single item has a failed credit check.

If a BIT that is relevant for integration with SAP Credit Management is created (a one-off BIT, a BIT from a billing plan, or a recurring BIT from SAP CC), the field CM_OBJECT_KEY is filled with an indicator so that the corresponding contract exposure can be reduced when billable items are loaded to SAP Credit Management. It is assumed that a credit check is executed for all relevant BITs if a credit exposure exists for the corresponding BIT. For example, if you have a billing plan for the contract main and sub-items, it is assumed that both items are sent for a credit check. If this is not the case and for some reason only the main item was credit checked, you must implement a corresponding check in the BADI BADI_FKK_SOM_CM_BIT so that BITs from the sub-item are not considered relevant when reducing contract exposure.

If a BIT is reversed or excepted, this is also reflected in the contract exposure. If a BIT that already reduced the contract exposure is reversed or excepted, the contract exposure is increased again.

Once the BITs are billed and invoiced, the open items are created in FI-CA. To ensure credit decisions are based on a current dataset, you must therefore transfer the credit exposure (the total of open items) to SAP Credit Management at regular intervals. In the credit exposure update from Contract Accounts Receivable and Payable, the total of all current open items for the business partner is always transferred to SAP Credit Management.

In FI-CA, there are mass activities for the following functions:

  • Sending the credit exposure of a business partner to SAP Credit Management
  • Sending the payment behaviour summary to SAP Credit Management
  • Replicating the rating values between Contract Accounts Receivable and Payable and SAP Credit Management

Further, FI-CA supports the following features, such as

  • Commitment Query: In SAP Credit Management, you can specify whether the current credit exposure is queried in the connected components for a credit check.
  • Partner Messages: Partner messages enable the credit exposure to be updated in SAP Credit Management for a business transaction across module and system boundaries, with no chronological gaps.
  • Credit Information Display: You can display the credit information from SAP Credit Management, for example, in the Interaction Center.
  • Credit Check: In Contract Accounts Receivable and Payable, you can also carry out a credit check for a business partner in SAP Credit Management.

Limitations

  • SAP Credit Management must run in the same SAP S/4HANA system as Subscription Order Management. A distributed landscape is not supported.
  • Only subscription items are enabled. Service and sales items are not supported in a solution quote or subscription order.
  • Integration with billing is only supported for Convergent Invoicing/FI-CA on a BIT level.
  • You can release or trigger a recheck on a documented credit decision only from the Manage Documented Credit Decisions Fiori app.
  • You can change neither the document currency nor the payer once a credit exposure is triggered for an item.
  • Phased contracts are not supported.
  • The pricing procedure must be in sync between the solution quote/subscription order and subscription contract. That is, the price calculation must always return the same value for all objects, otherwise, there will be inconsistencies in credit exposure and during delta calculation in a change order.
  • The credit check cannot be triggered manually from the subscription order/solution quote.
  • FI-CA does not support DCD case creation as an out-of-the-box functionality. No DCD case will be created when a credit check is performed from FI-CA using the function module.
  • There are also certain limitations when using APIs:
  • No credit check is executed on a change quote. It is executed during change processing in the change order.
  • If a solution quotation is created and accepted in a batch process and the credit check fails, only an error is returned. No DCD can be created because no quote is created in this case.

Why choose Acuiti Labs?

Acuiti Labs is an SAP Partner and a Business Consulting company that specializes in providing services and solutions for SAP Billing and Revenue Innovation Management (BRIM). BRIM is an end-to-end solution that helps businesses manage their billing, revenue, and customer engagement processes. Acuiti Labs can help streamline credit management processes and enhance the customer experience by integrating BRIM with other SAP modules.

Here are some potential benefits of working with us for SAP BRIM integration:

  1. Expertise: Acuiti Labs has a team of experienced consultants who are knowledgeable in SAP BRIM and related technologies. We can help you identify the best solutions for your business needs and implement them effectively.
  2. Customization: Acuiti Labs can customize SAP BRIM to meet your specific business requirements, such as credit management, invoicing, subscription billing, and more.
  3. Integration: We have the capability to integrate SAP BRIM with other SAP modules and third-party applications, such as CRM, ERP, and payment gateways. This can help streamline your business processes and enhance the customer experience.
  4. Support: We provide ongoing support and maintenance for SAP BRIM to ensure your systems run smoothly and efficiently.

If you are looking to streamline your credit management processes and enhance your customer experience, contact us today! Acuiti Labs – a specialised technology company in SAP BRIM could potentially provide significant benefits. For more details on SAP BRIM, visit – https://www.acuitilabs.com/sap-brim/

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31 JanSAP

SAP BRIM Integration with Vertex Tax Solution

Corporations are required to collect and remit tax on the sales and purchases of goods and services. These are known as “indirect taxes.” It is levied by various tax regimes around the world and called by different names like sales tax, value-added tax (VAT), goods and services tax (GST), etc. Order and invoicing transactions originating from SAP BRIM system(s) may require the computation of indirect taxes depending on the nature of the goods or services being sold or purchased by the enterprises, the place of destination, and/or the receiver enterprise(s). When it comes to indirect taxation on goods and services, SAP supports broadly two options to calculate tax on sales and purchases of goods and services.

These options are:

  • Internal Tax Calculation
  • External Tax Calculation

In this blog, I want to focus on the external tax calculation via a third-party tax solution such as Vertex. SAP provides a tax interface system that is capable of passing required data to an external tax system that determines tax jurisdictions, calculates taxes, and then returns these calculated results back to SAP. The tax interface system also updates the third party’s software files with the appropriate tax information for legal reporting purposes. External tax systems, such as Vertex, can integrate with subscription order management and contract accounts receivable and payable to calculate sales, use tax externally, and record the tax data for a later tax return.

What is Vertex Tax Solution?

Vertex Tax Solution is a third-party tax software that integrates with SAP to automatically calculate the indirect taxes on sales and purchases of goods and services. It is an exception-based system. By default, all the transactions are considered “taxable,” unless you identify an exception.

Vertex calculates tax based on jurisdiction and various data elements provided in the transaction, such as the order date, invoice date, company code, registration ID, etc., and automates compliance and reporting for your organization. It has the capability to provide over 100 different fields in a report that can be configured to meet organisation-specific needs.

Vertex’s product range includes various series, but the “Vertex Indirect Tax O Series” is the latest one. It can be deployed on the SAP cloud, on-premise, or as a hybrid. The below depicted diagram explains the general process flow of the Vertex O Series:

 

process flow of the Vertex O Series

How does taxability determine?

Indirect taxes are calculated on sales and purchases of goods and services. The taxability of a business transaction depends on “What, Where & Whom” as highlighted below:

WhatWhereWhom

What attributes determines the goods and/or services that are being sold or purchased by the enterprise.

This can be identified by configuring appropriate material group in SAP ERP at product level. For example –

  • Subscription
  • Support
  • License

Material groups are mapped to a Vertex category (Taxability deriver) that determines the taxability of the product.

Where the goods and/or services are delivered. The tax rate is determined based on the ‘Ship-To’ and/or ‘Sold-To’ address.

Addresses are maintained at Business Partner level in SAP ERP.

Vertex needs following location information to calculate correct tax.

  • Ship-To-Address
  • Ship-From Address
  • Bill-To-From Address

Whom you are selling goods and/or services. Basically, ‘Whom’ attributes provide additional exemptions (details) that would otherwise not be available based on only ‘What’ & ‘Where’ attributes. For example –

  • Customer Exemption Certificate
  • VAT/Tax Registration Number

Exemption Certificate is a customer specific record that provides exemption from sales and use tax for a specific company code in a specific jurisdiction. 

 

Data Flow between SAP S/4HANA-BRIM and Vertex Tax Solution

In SAP BRIM, tax on sales and purchases of goods and services is calculated during the order capture in Subscription Order Management (SOM) and during the invoicing in Contract Accounts Receivable and Payable (FI-CA). Tax calculated during order processing is considered “estimated tax,” and tax calculated during the invoicing process is considered “final tax.”

The following graphic illustrates the process of transactional data flow for tax calculation between S/4 HANA-BRIM and Vertex Tax Solution.

Data flow for tax calculation between SAP BRIM and Vertex Tax Solution

Subscription Order Management leverages SAP S/4 HANA central pricing to determine the prices for the products and/or services, which makes it easy to integrate with an external tax solution such as Vertex. Further, the Vertex accelerator installed within the SAP S/4HANA system gathers all the required information for the tax calculation during order processing via BAdI and passes it to the Vertex tax solution engine.

Contract Accounts Receivable and Payable is a type of subledger accounting that is tailored to the requirements of specific industry sectors and cross-industry sectors. It can integrate with SAP Finance modules (such as General Ledger, Special Ledger, etc.) and other solutions to accomplish additional business tasks. During the invoicing process in Contract Accounts Receivable and Payable, taxes on sales and purchases of goods and services are calculated in real time. The data related to invoicing, such as customer ID, registration number, product details, etc., is passed to the tax interface through Vertex Accelerator. In the standard system, contract accounts receivable and payable supply the interface to the external tax system only per line item. You can choose an alternative approach at event 1110. For documents from invoicing, at this event you can transfer the complete business partner items to the external tax system.

Why Choose Acuiti Labs?

Acuiti Labs offers businesses solutions to transform their OTC process using BRIM (Billing and Revenue Innovation Management). We have expertise in areas such as subscription billing, revenue recognition, and taxation.

We can help you configure the Vertex tax solution and integrate it with your SAP BRIM platform. This includes setting up tax jurisdictions, rates, and rules in Vertex, as well as configuring the SAP BRIM platform to handle tax calculations and reporting.

In addition, Acuiti Labs can help you with testing, and ongoing support to ensure a smooth and successful integration between your SAP BRIM and Vertex tax solution.

Overall, Acuiti Labs can provide the expertise and resources needed to streamline the integration of SAP BRIM with Vertex tax solution, improving your tax compliance and reducing the risk of errors or delays in your billing and revenue management processes.

Contact us now for more details!

Author,
Amit Kumar Shaw 
SAP Specialist, Acuiti Lab

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15 DecBusinessSAP

The economics behind digital business models and how they have evolved in recent times

The world as we know it today is continuously changing, and one of the fundamental drivers is digital transformation. Across industries, new digital business models have emerged—many in response to the pandemic as companies are forced to innovate their ways to meet customer demands. During the COVID-19 lockdowns, many digital-based subscription business models fared well due to their promise of convenience and strong business continuity. Organizations now more than ever feel the pressure to leverage digital investments to innovate with existing or add new monetization models.

According to Gartner’s predictions, digital business models (such as subscription-based business models) will continue to evolve for competitive advantage. Gartner also proclaims that organizations can turn continuous change into an asset if they sharpen their vision. Now, what does it mean? To put it plainly, digital business models are here to stay and have tremendous potential to grow in the years to come. These predictions bring us to our next BIG question.

How big is a digital transformation market?

A recent report from Grand View Research evaluated the global digital transformation market size at USD 608.72 billion in 2021 and is expected to expand at a compound annual growth rate (CAGR) of 23.1% from 2022 to 2030. Similar projections were made by Fortune Business Insights in their report. They predict that the global digital transformation market will grow at a compound annual growth rate (CAGR) of 22.1% from 2021 to 2028.

Looking at these figures, it is abundantly clear that digitally driven industries are growing faster than any other industry globally. Companies across industries are adopting different monetization models either to stay relevant in the market (survival) or to uncover new revenue streams (growth). One of the best examples is Kahoot!, the Norwegian educational gaming company founded in 2013 and now valued at roughly USD 2.2 billion. The company was born as a free platform for social learning, targeting particularly the education industry. It then changed its model and started to also target businesses with a commercial subscription offering that provides customers with premium features such as the number of participants.

According to IDC’s Digital Monetization Models report, 55% of organizations globally will focus on the digitalization of their products, services, and customer experiences. The key focus area for 2022 will be the revenue engine – in other words, how companies can leverage digital technologies to create new revenue streams and new monetization opportunities. This includes:

  • Enhancing the customer experience by leveraging new digital interfaces
  • Creating new ways to charge and monetize, such as subscription and usage-based models

Types of Digital Business Models

On a broad level, digital business models can be classified under four major heads. These are:

  • Free (ad-supported) or Freemium business models are business models where users get free access to a basic version of the product for free (ad-supported). If users want to use premium features, then they can upgrade to the premium version by paying service fees. A great example would be Spotify, LinkedIn, etc.
  • Subscription-based business models are business models in which a customer pays a recurring fee on a regular interval period for using products and/or services. Examples like Netflix, Office 365, Salesforce, etc. are moving from transacting with customers to building long-term relationships and recurring revenues.
  • Usage-based business models are the new business models in which customers pay according to the usage of resources. In contrast to the subscription-based pricing model, the consumption-based pricing model charges customers based on the per-unit usage of the resources rather than a fixed price. Examples like AWS, Abertis, AXA, Uber, etc.
  • E-Commerce or Marketplace business model is a business model where a seller and a buyer use a third-party platform to trade their goods and services. Examples include Zalando, Amazon, Facebook, etc.

These heads can be further classified into sub-heads such as On-Demand business models (examples like Uber), Access-over-ownership models (examples like Airbnb) etc., depending on the digital offerings.

 

Digital Business Models
Among all the different digital business models, the e-Commerce subscription business model is the largest in terms of annual revenue and is expected to expand at a compound annual growth rate (CAGR) of 25% from 2022 to 2025, as per the UBS Wealth Management report, followed by streaming services (18.74% CAGR) and cloud computing services (17.9% CAGR).

How do Acuiti Labs fit in this economy?

The boom in the digital business model economy over the past decade has also led to the growth of businesses supporting those models. Major players like SAP, Salesforce Cloud, Zoura, Stripe, Nami ML, etc. have seen tremendous growth in recent years. Further, digitally driven innovative consulting firms like Acuiti Labs, Deloitte Consulting, PwC Advisory, etc., are not far behind. Acuiti Labs, being a specialist consulting firm in the field of “Consume-to-Cash” or “Quote-to-Cash” business processes, is uniquely placed with expertise to deliver business technology and digital transformation by deploying subscription and billing management tools such as SAP BRIM on S/4HANA, SAP CPQ, SAP Subscription Billing and Entitlement Management. With a proven track record in delivering the most complex business use cases with 100% efficiency, it has helped organizations globally to transform their manual or semi-manual billing environments into the fully automated billing process. Considering the current growth trajectory of the digital transformation market, Acuiti Labs can be hugely benefited from its expertise and experience in providing technical support and digital transformation for B2B and B2C customers. Currently, the company caters to multiple industries, from shipping to media, from SaaS to postal services, etc., and has also developed different industry-specific accelerators (for example, AcuitiMobi for public transport; AcuitiPay for connected vehicles; Acuiti Subscription Manager for subscription management; AcuitiPort for seaports; AcuitiMedia for media and entertainment; and AcuitiAirport for automating aeronautical and non-aeronautical billing) to meet the industry’s needs.
Author, Amit Kumar Shaw SAP Specialist, Acuiti Lab
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22 NovTechnology

An introduction to Equipment Integration (Device-as-a-Service)

In the S/4HANA release of 2020, SAP introduced a new feature called as ‘Equipment Integration (Device-as-a-Service)’ in response to changing customer behaviour and evolution in the subscription business models.

Service providers offer their customers bundles of hardware devices (such as laptops, desktops, tablets, printers, or mobile phones), software, and services for a monthly subscription fee as part of a single contract (such offerings have come into the picture due to change in customer behaviour and technological advancement and commonly referred as Device-as-a-Service model). Solution quotations combine hardware and services.

To support such models where the subscription is for the hardware or the subscription(s) are dependent on the hardware, this feature of integration between the equipment master and the subscription contract has been provided. The ability to bundle different kinds of products (hardware, service, and subscription) already existed and hardware products resulted in the creation of SD Sales Orders from which downstream processes such as Delivery, Goods Issue etc. could be carried out. This has been taken further now, where if the hardware resulted in the creation of Equipment, then such Equipment can be linked back to the related Subscription Contract. With this integration, dependent processes such as those below can be built.

  • Activation of subscription and start of billing only after the hardware is delivered to the customer and installed
  • Cancellation of subscription if the related hardware is deactivated

The following graphic illustrates the process of transactional data flow for Equipment Integration between S/4 HANA SOM and S/4 HANA SD.

Transactional Data Flow - Equipment Integration

In a business scenario, where the equipment ID is not known before a hardware device is delivered to the customer, the activation of the subscription contract depends on the equipment delivery status. SAP provides the following example implementation where the physical device is a sales sub-item of the contract’s main item. The sales item is processed for delivery where the equipment ID, linked to the serial number of the sales product, is assigned in the delivery document. On the POST GOODS ISSUE of the delivery document, the equipment status is updated to ECUS.

The subscription contract will not be distributed and activated until the equipment ID’s are maintained and the relevant status (e.g. At Customer, Ready for Use) is set on the equipment.

This is achieved by using the ODI framework. A standard example schema EQUI has been provided with steps:

Step ID Description Use
EQUM Equipment data maintained This step will be executed only if the equipment ID’s are maintained on the subscription contract.
EQUA Are all Equipment active This step will be executed only if the linked equipment has a status of ECUS (At Customer).
PCEA Call FICA Message contract activation This step will trigger the creation of FICA and CC contracts which will be executed only once the above two steps are successful.

Features

The equipment integration provides the following features to support the Device-as-a-Service business model.

  • Maintenance of equipment IDs on subscription contract – Equipment IDs for a subscription item in subscription order or solution quotation can be maintained under the object List. The maintained equipment IDs are copied to the subscription contract item on submit/accept. Additionally, you can search for equipment based on their Equipment ID, Serial Number, Reference Product ID and so on.
  • Auto-update of equipment IDs based on serial number assignment – SAP has delivered an example implementation of how equipment ID’s can be automatically maintained on a subscription contract based on serial number assignment during the delivery of the sales item. If the equipment master is created and activated when serial numbers for a product are created, then during the delivery it is possible to identify the relevant equipment ID’s. By tracking back from the delivery, it should be possible to identify the relevant sales item in the subscription order or solution quotation. If the products are structured in such a way that the sales item is a sub-item of a subscription item or vice versa then that subscription item is the one on which maintenance of equipment ID’s is required. By leveraging the still open-for-change subscription order or the ‘Maintain Equipment IDs’ change process, equipment ID’s can be maintained on the relevant subscription contract. This system-based auto-update is achieved by using Event Type Linkages.

  • Trigger subscription contract activation on equipment activation – Like above, an example implementation of how subscription contract distribution and activation can be triggered based on the status of the equipment has been provided by SAP as an out-of-box functionality.

  • Billing start date based on equipment activation – Generally, with a subscription contract, the date from which the recurring charges are applicable is the same as the contract start date. When equipment is in the picture, we have scenarios where the recurring charges are applicable only once the relevant equipment is activated. Additionally, it could also be ‘once the equipment is activated’ or ‘X number of days after contract start’ whichever is earlier. To support such scenarios a Date Type CONTBILS (Start of Billing) has been provided.
  • Equipment ID as a technical resource – The ID associated with the hardware (Serial Number or Equipment ID) might be relevant in the calculation of usage-based charges in CC. To facilitate this, equipment IDs maintained in the object list are copied to technical resources and distributed to the CC Contract.
  • Early distribution when equipment activation is delayed – Typically, early distribution of subscription contracts is applicable only when the start date is in the future. With equipment, we have the scenario where the contract start date might be immediate, but the actual activation and distribution should happen only once the related equipment is activated which could be in the future. With Revenue Accounting and Reporting in the picture, an early view into such a contract might be required even though it is not yet active. To support this, a feature has been provided that allows for the execution of early distribution even when the start date is immediate, but the actual distribution is to be deferred.
  • Distribution and activation of the subscription contract
  • Changes process (BTMF) – Scale up/down equipment and Replace equipment
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