Create a Performance Obligation Identification Rule

This example shows you how to create a performance obligation identification rule, which you use to decide how to group order lines into distinct performance obligations within a revenue contract.

In this example, your company is a telecommunications company that sells mobile phones and talk and text plans. The smartphone and plan services are listed as separate item numbers but are priced and sold as a combined service with its own item number.

A performance obligation rule is assigned a satisfaction method for the obligations, which means you need to determine a grouping attribute that lets you distinguish between goods and services that have a pattern of delivery at a point in time or over time. This is important because it drives when the application recognizes revenue for the obligation, and only goods and services with the same pattern of delivery are combined into the same performance obligation.

On further analysis of your inventory item structure and sales order data, you determine that using your inventory item category as a grouping attribute will result in the appropriate performance obligation representation. However, the item category isn't a named attribute in the Customer Contract Source Document lines. You work with your data team and agree that you can provide the item category in an extensible attribute. The Revenue Basis Data Import template passes the item category to Revenue Management using Extensible Line Attribute Character 43.

Using the telecommunication example, create a performance obligation identification rule that identifies your sales order lines to be included as performance obligations based on an item category, which is provided in the Extensible Line Attribute Character 43. However, you don't want to include fees within your performance obligations (fees are treated separately and you will create a separate rule for fees). As a result, the rule will contain an exclusion condition.

Fees aren't to be included in the allocation of revenue, however, you want the fees to appear on the accounting contract as exempt performance obligations. You excluded the fee order lines from your previous rule, so you need to create a second rule so that the application uses fee order lines to create performance obligations that are exempted from allocation.

Create Rule for Devices, Text, and Data Plans

Navigate to the Manage Performance Obligation Identification Rules page.
Click the Add Row icon to create a new performance obligation identification rule.

Enter the listed values in these header fields:

Field	Value	Description
Name	Device, Text and Data Plans	Describes the type of performance obligation the rule is being created for.
Priority	30	The lower the value, the higher the priority. That is, rules with lower values are applied first.
Enabled	Yes	Indicates that the rule is available for use.
Exempt from Allocation	No	Indicates if the performance obligation is to be included in the allocation process.
Satisfaction Method	Allow Partial	Indicates when revenue is to be recognized.
Devolve Performance Obligation	No	If you enable this value the application automatically devolves a performance obligation into a series of performance obligations.

On the Grouping Attributes section click the Add Row icon to enter the listed values for matching group 1:

Field	Value	Description
Source Document Type	Third Party	The source document type the grouping attribute is being defined for. You can have multiple source document types defined in one rule.
Source Document Attribute Name	Bill-to Customer Party Identifier	The name of the attribute to be used as the grouping attribute.
Matching group	1	You can use multiple matching criteria for source lines to be grouped into a single contract.
Copy to Reference	Disable	When you enable this option for a grouping attribute in the rule, the value of the grouping attribute is populated in the Reference field in the Manage Customer Contracts page. When using the Copy to Reference feature, you can: Enable only one source document attribute name per matching group. Enable the Copy to Reference option only when you create the rule. No longer update the Copy to Reference and Reference Prefix fields once the rule is in use.

On the Grouping Attributes section, click the Add Row icon again to enter the listed values for matching group 2:

Field	Value	Description
Source Document Type	Third Party	The source document type the grouping attribute is being defined for. You can have multiple source document types defined in one rule.
Source Document Attribute Name	Extensible line character attribute 43	The name of the attribute to be used as the grouping attribute.
Matching group	2	You can use multiple matching criteria for source lines to be grouped into a single contract.
Copy to Reference	Enable	When you enable this option for a grouping attribute in the rule, the value of the grouping attribute is populated in the Reference field in the Manage Customer Contracts page. When using the Copy to Reference feature, you can: Enable only one source document attribute name per matching group. Enable the Copy to Reference option only when you create the rule. No longer update the Copy to Reference and Reference Prefix fields once the rule is in use.

In the Excluded Conditions section, click Add Condition.

Enter the value in this table:

Field	Value	Description
Conditions	Extensible line character attribute 43 Equals Fees	Your company offers several different types of product offerings and services, including phones, services, data plans, and fees. Fees should not be included as performance obligations. The excluded condition prevents fees from being included.

Click Save and Close to create the performance obligation identification rule.

Create Rule for Fees

Navigate to the Manage Performance Obligation Identification Rules page.
Click the Add Row icon to create a second performance obligation identification rule.

Enter the listed values in these header fields:

Field	Value	Description
Name	Telecommunications Fees	Describes the type of performance obligation the rule is being created for.
Priority	65	The lower the value, the higher the priority. In other words, rules with lower values are applied first.
Enabled	Yes	Indicates that the rule is complete and is ready for use.
Exempt from Allocation	Yes	Indicates if the performance obligation is to be included in the allocation process.
Satisfaction Method	Allow Partial	Indicates when revenue is to be recognized.
Devolve Performance Obligation	No	If you enable this value the application automatically devolves a performance obligation into a series of performance obligations.

On the Grouping Attributes section click the Add Row icon to enter the listed values for matching group 1:

Field	Value	Description
Source Document Type	Third Party	The source document type the grouping attribute is being defined for. You can have multiple source document types defined in one rule.
Source Document Attribute Name	Bill-to Customer Party Identifier	The name of the attribute to be used as the grouping attribute.
Matching group	1	You can use multiple matching criteria for source lines to be grouped into a single contract.
Copy to Reference	Disable	When you enable this option for a grouping attribute in the rule, the value of the grouping attribute is populated in the Reference field in the Manage Customer Contracts page. When using the Copy to Reference feature, you can: Enable only one source document attribute name per matching group. Enable the Copy to Reference option only when you create the rule. No longer update the Copy to Reference and Reference Prefix fields once the rule is in use.

On the Grouping Attributes section, click the Add Row icon again to enter the listed values for matching group 2:

Field	Value	Description
Source Document Type	Third Party	The source document type the grouping attribute is being defined for. You can have multiple source document types defined in one rule.
Source Document Attribute Name	Extensible line character attribute 43	The name of the attribute to be used as the grouping attribute.
Matching group	2	You can use multiple matching criteria for source lines to be grouped into a single contract.
Copy to Reference	Enable	When you enable this option for a grouping attribute in the rule, the value of the grouping attribute is populated in the Reference field in the Manage Customer Contracts page. When using the Copy to Reference feature, you can: Enable only one source document attribute name per matching group. Enable the Copy to Reference option only when you create the rule. No longer update the Copy to Reference and Reference Prefix fields once the rule is in use.

In the Excluded Conditions section, click Add Condition.

Enter the value in this table:

Field	Value	Description
Conditions	Extensible Line Character Attribute 43 Not Equals Fees	Indicates that in this rule, any item categories that aren't equal to fees are ignored. The application processes only lines with an item category of Fees. The application then identifies these lines as performance obligations that are exempted from allocation.

Click Save and Close to create the performance obligation identification rule.