optimizing contract renewals with oracle service contracts

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Optimizing ContractRenewals with OracleService Contracts

©2022 Jade Global Inc. All rights reserved

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Introduction

Abstract

Renewal Process

Renewal Communication

Online Acceptance Portal

Admin Workbench

Additional features useful for renewals

Summary

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Table of Contents

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Introduction


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.

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Optimizing Contract Renewals with

Oracle Service Contracts

White Paper

Abstract

©2022 Jade Global Inc. All rights reserved2

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.



Renewal

Process

Customer

notification

Customer

Acceptance

Contract

Administration

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Renewal Process


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.

Once a renewal rule/process is identified then the next step is to automatically create the contract based on the rule.

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



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For automating the renewal process, following setups are required to be completed:

Renewal Automation

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”.

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Renewal Communication


Renewal quotes and reminder notifications can be generated automatically at userdefined 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.

Manage Renewals Proactively by Notifying Customer

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.

Renewal Negotiation Management

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.

Contract Renewal and Branching



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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.

Notify Customer

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.

Online Renewals

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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

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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.

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Admin workbench


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

Contract Authoring, Administration and Approving

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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.

Contract Approval

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.

Contract Activation

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Additional featuresuseful for renewals


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. Anyadjustment applied, whether automatic or manual, is tracked and is available to be

viewed from the contract.



Integration with Oracle Advanced Pricing

Standard contract approval workflow integrates with Oracle Approval Management Engine (AME). Standard AME features support rules based approval routing and

definition of approval groups.

Workflow integration

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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.

Coverage and Entitlements

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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”.

Publishing Quote online

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.

Change Service Level

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.

Bill Services

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.

Renewal consolidation

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

Renewal Quote creation & Electronic delivery

Quote Document

Cover Letter

Reminder Letter

Quote Document

Cover Letter

Reminder Letter

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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.

Co-termination

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.

Partial Periods Computation

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.

Partial Period Revenue Recognition

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.

Forecasting

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Summary


Oracle Service Contracts provide an automated renewal process for improving recurring revenue by guiding customers and sales representatives through upcoming

renewals, ensuring uninterrupted 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.



About Jade Global


Jade Global is a Cloud-focused IT services partner specialized in enterprise business application implementations, integrations, software product engineering,

consulting, technology advisory, testing, and managed services. Jade is an Oracle Platinum Cloud Select Partner, Salesforce Silver Partner, Dell Boomi Select

Implementation Partner, and Service Now Silver Partner. Our additional global alliances with NetSuite, Microsoft and Zuora allow us to design robust solutions for

a variety of industries and needs. We are headquartered in San Jose, California with East Coast headquarters in Philadelphia. Jade has been recognized as one

of the fastest-growing companies in North America by Inc. 5000 for 9 consecutive years.

www.jadeglobal.com [email protected]

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optimizing contract renewals with oracle service contracts

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