© 2005 Wind River

Daily Revenue Recognition Solution

Kuldeep TanwarManager Business Applications

Wind River Systems, Inc

January 17th 2007

2 © 2005 Wind River

Wind River: Device Software Optimization

Wind River enables companies to develop and run device software faster, better, at lower cost, and more reliably.

3 © 2005 Wind River

Wind River Leading the DSO Industry

DSO Leader

Technology Leader

MarketLeader

• Established in 1983• Public company (1.4B market cap)• #1 market share (40%)• #1 revenues ($266M FY06)

• 1st connected RTOS• 1st IDE• 1st device software develop-

and-run platforms• 1st industry-specific services

practices

• 40,000 users• 300M deployed devices• Global operations, services,

and support• #1 DSO solution

4 © 2005 Wind River

Wind River’s Customer’s

Our customers make differentiated devices by focusing on

intelligent, connected device software.

5 © 2005 Wind River

Wind River’s Applications Footprint

Finance & HRGeneral LedgerAccounts PayablesAccounts ReceivablesCash ManagementFixed AssetsCollectionsPurchasingCustomers OnlineHuman Resources

Learning Mgmt Systems

iLearning3rd party Bolt-ons

Marketing & SalesSiebel AccountsSiebel ContactsSiebel OpportunitiesSiebel QuotesSiebel CampaignCustomers Online

Security & Monitoring10G GridOID – Single Sign On

Order ManagementOrder ManagementAccounts ReceivablesAdvanced Pricing

Plan to FulfillMRPInventoryItem/BOMWIPServices

TeleServiceiSupportService ContractsInstall BaseProject MgmtProject Resource MgmtTime & LaboriExpenseProject AccountingProject Billing

Business Intelligence6i ReportsDrake – Rich EULsPortal – BI Dashboards

© 2005 Wind River

Daily Revenue Recognition Solution Overview

7 © 2005 Wind River

Business Issue

• Wind River has subscription and maintenance contracts of variable lengths

• Lack of flexibility in Oracle variable accounting led to incorrect system revenue recognition for most ratable contracts

• Large contracts adjusted by individual manual journal entry

• Smaller contracts adjusted by “convention journal”• Entire process subject to higher level of risk due to the

amount of manual processing• Added complexity to revenue close and to revenue and

deferred revenue reconciliations

8 © 2005 Wind River

Scope

• Enabling daily revenue recognition calculation for all operating units. Manual revenue calculations using spreadsheets and manual journal entries will be discontinued resulting in lower cost, productivity gains and risk reduction.

• Business Units: Wind River Worldwide Finance– Americas (US, Canada)– EMEA (UK, France, Germany, Italy, Sweden, Netherlands, Israel)– Asia Pacific (China, India, Korea, Singapore, Taiwan)– Japan

9 © 2005 Wind River

Legacy Manual Process

4.RevRec

5.GL

Interface

7.Import fromGL Interface

6.GL

Interface Table

8.1Cal

Rev Adj

8.3Enter

Adjustments inADI

8.4Import

Journals

8.5Post

Journals

BAU

8.2WR RevAdj

3.Auto

Invoice

2.Pre

Auto Invoice

1.AR

Interface Table

Red boxes indicate manual process

10 © 2005 Wind River

No re-work Required

New Process

4.RevRec

5.GL

Interface

7.Import fromGL Interface

6.GL

Interface Table

8.1Cal

Rev Adj

8.3Enter

Adjustments inADI

8.4Import

Journals

8.5Post

Journals

BAU

8.2WR RevAdj

3.Auto

Invoice

2.Pre

Auto Invoice

(Add module to insert new rules & Update RA Interface Table

1.AR

Interface Table

Red boxes indicate manual process

11 © 2005 Wind River

Approach

• Order is booked & shipped with accounting rule “WRS Variable”

• Before Auto Invoice runs, a bolt on module will update the “WRS Variable” with a new rule based on the beginning and end dates of the service agreement and the length of the agreement.

• These new accounting rules have been created in the system as part of the solution deployment.

• Next steps are Business As Usual (BAU), i.e. Run Auto Invoice, Revenue Recognition, GL Transfer …

Above approach is applicable for invoices created after go-live from OM and SC Modules. All old invoices (i.e. created before go live) will continue to use the “WRS Variable” accounting rule. Current biz process will be followed for old invoices.

12 © 2005 Wind River

What are the New Accounting Rules?

Start Date End Date Comments New Rule Name

10-Jan-2006 03-July-2006 There are Seven Month Periods•First month Prorated for 20 days•Last Month prorated for 3 days and •5 months in between prorated for 30 days each

D10-5-D3

18-Jan-2006 10-Nov-2006 There are Eleven Month Periods•First month Prorated for 12 days•Last Month prorated for 10 days and •9 months in between prorated for 30 days each

D18-9-D10

25-Jan-2006 25-July-2007 There are 19 Month Periods•First month Prorated for 5 days•Last Month prorated for 25 days and •17 months in between prorated for 30 days each

D25-17-D25

Accounting Rule Type: ’Accounting, Fixed Duration’

Accounting period type: Month

Average Month Days : 30

13 © 2005 Wind River

Realized Business Benefits

• Plug and play solution• Improved accuracy of revenue - achieved objective of daily

calculation convention• Reduced complexity in close process and resulting in a

faster close• Correct accounting distribution is visible in A/R• Did not increase the number accounting distribution lines in

A/R and G/L• No additional manual G/L entries were required• Improved the reconciliation process• Leveraged existing reporting structure without having to

make any changes to reports• Easy to test and audit – beauty in the solution’s simplicity• Approved by our auditors• No impact of upgrades on solution

© 2005 Wind River

WIN

Wind River, the global leader in device software optimization (DSO), enables companies to develop and run software faster, better, at lower cost, and more reliably.

15 © 2005 Wind River

Backup slide - Pros and Cons

PROS: – Will utilize the Standard Oracle functionality with minimal customization– Revenue distributions will be visible thru AR.– No journal or GL adjustments will be required.– Solution is upgradeable and supportable.– Solution will not increase the number of lines in AR or in GL.– Extension will be written as in a manner to easily facilitate decommissioning at

a later date.– Little to no user intervention in creating and maintaining the rules.– Minimizes re-work to replicate additional reporting.– Will run automatically prior to Auto Invoice, so there will be no timing

differences in AR.– “ Oracle” Team liked this approach over other approaches (because it was non-

invasive).

CONS:– Daily “rules” will be created and maintained behind the scenes so there will be

no visibility thru applications.                    – System will have to generate accounting rules and populate the accounting

rules tables (non standard) , 60K rules will be created