Professional service Projects

[sanne_larsen]

Hi,

Our customer is running S4 public cloud and is a professional service company with a lot of professional services projects serving a lot of customers. Those projects has during the implementation project been created as periodic services, however now when we've been understanding more of their business we start to discuss if they should for the future create projects with fixed price instead. However when searching for this we can't really find any clear explanation of which should be used when. Does any body have any real example of how those two types should be used typically? 

We know that based of the contract type we've got a revenue recognition key and that the different contract types consists of different ways of calculating the revenue. 

Kind regards, Sanne

[Chris1973]

Hello @sanne_larsen 

Thank you for your question.

You can consult the following references for further details.

Blogs: 4E9-New Project Billing Configuration and Process, Project Billing for Customer Projects in SAP S/4HANA Cloud Public Edition, Professional Services in the SAP S/4HANA Cloud, Public Edition 2302

Links: Event-Based Revenue Recognition for Fixed Price Service Orders

Customer Projects with Event-Based Revenue Recognition

To summarise, in public cloud, the choice between Periodic Service and Fixed Price Service projects defines how and when your revenue is recognised.

• If you have ongoing subscription-type engagements (e.g., managed services), where your revenue is recognised periodically based on elapsed time or incurred costs, then Periodic Service will be the ideal solution for you.
• However, if you are focused on project-based engagements, where the revenue is recognised based on every achieved milestone or upon fulfilment of specific deliverables, then Fixed Price Service is the better fit.

If your customer’s business is shifting toward deliverable-based billing, you should define new projects where you use the Fixed Price Service setup. However, both models can also coexist if you segment your project billing items appropriately.

Manage Project Billing (helps you check contract type) and Run Revenue Recognition (helps you simulate accounting results) can help you review and simulate revenue timing

Let me know if you have further questions.

Best regards

Chris