Oracle Service Contracts provides a complete contract authoring execution solution to manage warranties, extended warranties, usage, and subscription services, as well as complex service agreements. With Oracle Service Contracts you can:
You can create a contract manually. In addition, a contract can be created automatically through Oracle Order Management or by creating a product that has a warranty in Oracle Installed Base.
A contract in Oracle Service Contracts comprises of a header, one or more lines and
one or more sublines. The header is where you enter a brief description and specify the contract duration. You can default values from the header of a contract down to the lines and, if applicable, to sublines as well.Lines list the individual service, usage, and subscription items that are included in the contract. A single contract can have multiple lines.Sublines specify what the service covers or the counters where the usage is tracked.
You can access this information from the Pricing/Products subtab of the Lines tab.
Header
The header level is composed of the fields at the top of the Service Contracts Authoring form as well as the Summary tab. The Summary tab also includes several secondary tabs. The following list briefly describes these pages:
• Parties: Enter information about the customer, including the bill to and ship to information for the contract.
• Pricing/Billing: Assign a price list and various accounting rules for pricing and billing contracts. In most cases, Oracle Service Contracts retrieves the contractual prices of services or usage from Oracle Advanced Pricing, however, pricing is done manually in some situations.
• Renewals: Define the renewal rules that are applied during manual or automatic renewal of the contract.
• Administration: Define administrative components that are used to process the contract, such as the QA checklist, contract groups, and workflow.
• Security/Text: Grant contract access by the resource group or user level.
Lines
Each line inherits certain information from the contract header such as effectivity dates, bill to and ship to information, and billing rules and schedules. These can be changed as appropriate to allow the contract to conform to the customer requirements. A contract line may be related to one or more sublines.
Three line types are available:
Note: Subscription lines do not have sublines.
The Lines tab includes several secondary tabs, which include:
• Accounts
• Effectivities
• Pricing/Products
• Exemption/Payment Options
• Counters
• Events
Note: The fields within each secondary tab are unique to the line type that you select.
For details on entering lines, refer to the specific line type topics.
• Entering a Service Line (General Procedure)
• Entering a Usage Line in a Contract
• Entering a Subscription Line
Sublines
Sublines specify what the service covers or the counters where the usage is tracked. You can access this information from the Pricing/Products subtab of the Lines tab.
The following list describes how each line type uses sublines:
Oracle Service Contracts enables you to manage the entire contract life cycle, including contract creation, renewal, and termination. The major activites of a service contract life cycle consists of
Creating a Contract
You can create a contract manually. In addition, a contract can be created automatically through Oracle Order Management or by creating a product that has a warranty in Oracle Installed Base.
In R12, You can author service contracts in multiple operating units without changing responsibility. You must select an operating unit for each contract.
Approving Contracts
Oracle Service Contracts leverages Oracle Workflow to automate the contract approval process. After you author a contract you must:
• Submit the contract for approval.
• Secure approval on the contract.
• Obtain a signature on the contract.
The Submit for Approval function starts the quality assurance (QA) check. If the QA check is successful you can continue the approval process, which submits the contract to the approval workflow.
Note: The standard contract approval workflow integrates with Oracle Approval Management Engine (AME). Oracle Service Contracts supports standard AME features such as rules based approval routing and definition of approval groups.
Contract Extensions
Oracle Service Contracts allows you to extend the duration of a contract or a contract line without having to submit the contract to the approval workflow.
A contract must be in a status of Active, Signed, or Expired to be extended. Contracts in a status of Entered, Canceled, or Terminated are examples of contracts that cannot be extended.
When you extend the duration of a contract, the contract lines are automatically extended, as long as the end date of the line is the same as the end date of the contract. If the end date for the line is different from the end date for the contract, the line will not change if the contract is extended. This functionality ensures that a service with a duration that, is deliberately different from the contract duration, retains its intended duration.
Contract Renewals
The process of renewing a contract involves making a copy of an existing, active contract at a point in time. The dates are changed to reflect a period similar to that of the existing contract, beginning on the first day after the existing contract expires. Other attributes of the new contract may also be changed, such as pricing.
Contracts can be renewed either manually or automatically. You can manually renew a contract from the Contract Navigator, or your administrator can set up the application to automatically submit a contract for renewal.
Terminating Contracts
You can terminate a contract, a contract line, or a contract subline. The termination date must fall between the start date and end date of the service or services being terminated. You cannot terminate a service or contract that has already been terminated. For example, if you have a future date terminated, you cannot change it to an earlier date.
You can terminate multiple contracts and contract lines at one time.
During the termination process the application calculates a credit amount. You can:
• Override the credit
• Provide a full credit
• Suppress the credit
Managing the Contract Life Cycle
This group of topics explains how you can manage the contract life cycle.
After the contract authoring process is complete, you must manage your contracts on an ongoing basis. You may need to change coverages, durations, versions, and other aspects your contracts.
You can streamline and control administrative processes, by leveraging functionality that manages updates and changes.
1. Log in under the Service Contracts Manager or Service Contracts User responsibility.
Navigate to Contract Administration, and then select Launchpad.
Select New from the Tools menu. The Create a New Contract window appears
2. Select a category using the list of values (LOV):
• If you are creating a contract with service agreements for individual items (covered products) in the customer's installed base, then select Warranty and Extended Warranty or Service Agreement. Warranty and Extended Warranty category does not permit you to add usage lines or to sell service to other levels of coverage (a party, site, or system).
• If you are creating a usage contract or a service agreement for levels other than items in the customer's install base (Products), then Service Agreement.
• If your contract includes subscriptions, then select Subscription Agreement. Subscription agreements permit you to enter subscriptions, service, and usage lines.
3.1 The application supplies a contract number for you automatically after you firstsave the contract, but you can instead enter a number of your own. The contract number can be a combination of any characters, but it must be unique.
3.2 Optionally, enter another short identifier in the Known As field to help you identify the contract later.
3.3 Specify the dates that the contract is effective by entering.
The dates that you enter here are automatically passes to each new line in the contract. The dates that individual lines are effective cannot fall outside this range; they cannot have a start date earlier than the contract start date or an end date later than the contract end date. If you enter dates that are outside this range in a contract line, then you must extend the contract dates accordingly for
your contract to pass Quality Assurance (QA).
4.1 You must enter an operating unit. From the Party region of the Parties subtab:
• Select Vendor Operating Unit from the Role LOV.
• Select an operating unit from the Name LOV.
4.2 Save the record.
You are now ready to enter the rest of the contract information that is required for your contract to become active:
• General contract information, including the vendor and customer, what quality check the contract must pass to become active, and how the contract will be renewed.
4.3 You can create different versions of the contract for your customer and at different price points and send them out for review.
5. Check to see whether you have entered all the required information in the contract or whether some external reason exists why the contract cannot be implemented, by
running the QA check.
Following are examples of issues that are tracked in the QA check:
• Failure to create a billing schedule for the customer.
• Failure to include an e-mail address for the customer contact.
• Absence of sales credits for contract lines.
• Customer credit on hold.
Your contract becomes active only after it passes the QA check list and obtains the approvals that are required by the Oracle Workflow process.
You can copy information from an existing contract into a new contract, an existing contract, or to a new modifier of the existing contract. For existing contracts, you cannot copy the components of a contract across categories. For example, you cannot copy the components from a Warranty into a Service Agreement.
You can copy from Contract Navigator as well as the results table in the Search Templates and Contracts window. In this case, you select the Source Contract and then search for a target contract to which you can copy the information.
You can also initiate copy from within the contract itself. In this case, the selected contract is the target contract and you search for a source contract from which you intend to copy components. You will typically use this method to copy service lines and covered level into the contract you have open.
To search for a contract or template:
1. From the Navigator, navigate to Contract Administration, and then select Launchpad. The Oracle Contracts window appears.
2. From the View menu, select Find.
The Search Templates and Contracts window appears.
3. Enter your search criteria.
Narrow your search by:
• Searching for contracts within a particular operating unit by choosing a value from the LOV.
• Selecting either a contract number or template name from the Contract Number LOV
Creating a Template from a Contract
A template makes it possible for you to speed up the contract creation process by filling
in frequently used values.
1. From the Actions menu, select Save as Template. The Save As Template window appears.
2. Enter a template name.
3. Click OK.
The application responds with a note informing you that the template has been created.
Note: You can save any contract as a template. When you create a new contract from a template, the application creates a new contract in the Entered status. The header, lines, and sublines from the template are copied into the new contract.
If your organization has a Pricing Agreement set up with the party you are billing, then use the Agreement LOV to enter it. This automatically passes all of the other required fields including the price list, the accounting rule, the payment terms, and the invoicing rule.
Pricing Agreements, which specify prices, discounts, and billing practices for a particular customer, are created in Oracle Order Management.
Price List : You can specify the price list for the contract in the Pricing/Billing subtab. The price list that you enter automatically passes to each new contract line.
To apply the price list to existing contract lines, you must edit each line separately.
Payment Method
The payment method values that you enter on the header are used for the lines unless you manually enter a different value for a line.
• Specifying Payment by Credit Card or Commitment Number
Commitments, which are set up in Oracle Receivables, represent a customer's prepayment for goods or services (prepayments) or contractual agreements (guarantees).
The credit card numbers in the LOV appear masked if your administrator defined credit card masking rules in Oracle Payments. After you select a credit card, the application masks the card number in the Number field. Date of Expiry appears for the card number that you select.
If you do not find the card number that you need, you can cancel out of the LOV and enter the card number, expiration date, and security code manually. When you save, Oracle Payments validates the credit card details. If the card details are valid, Oracle Payments creates an account for the new credit card and the application masks the number that you entered on the Service Contracts Authoring form (first 12 digits only)
• Requiring a Purchase Order
When you require the entry of a purchase order, the contract cannot pass the QA check and become active unless a purchase order is entered for every line.
The requirement does not affect any existing contract lines. You must use the Cascade Attributes window and select the Payment Method check box to enforce the requirement to all lines.
• Specifying a Purchase Order Number for Invoices
You can specify a purchase order number, which is passed to Oracle Receivables and appears on customer invoices.
You must use the Cascade Attributes window and select the Payment Method check box to copy the number to lines.
Transaction types : Oracle Receivables uses transaction types to specify which accounts are credited for customer payment. A default transaction type of Invoice-OKS is applied to invoices that are created from Oracle Service Contracts if the Transaction Type is not entered on the contract.
Bill Services : Normally, all eligible billing records are automatically passed to Oracle Receivables for invoicing on the invoice date that you specify in the billing schedule. An example of when you may want to suspend billing for a contract is when the customer disputes the invoice.
To resume billing, update Bill Services to Yes. The application then bills the customer for all outstanding charges since the suspension started. To suspend billing for the remainder of the contract term and resume normal billing upon renewal, set Bill Services to At Renewal.
Summary Print : If your organization has implemented a custom invoices solution for billing contracts, then you can use that solution by selecting the Summary Print check box.
To itemize charges by subline, clear the Summary check box.
Note: The contract administrator must set the system profile OKS: Summary Transactions to No. If this profile is set to Yes, then the application sends the summarized billing details even when you leave this check box cleared.
Hold credits : You can place a hold on credit memos until the next billing cycle. This setting does not hold invoices.
By default the Hold Credits check box is cleared, so the credit memo immediately picks up the billing amount.
Tax Exemptions :
Oracle Service Contracts integrates with Oracle E-Business Tax to provide a preview of estimated tax on a contract. The estimated tax amount that is provided is based on applicable tax rates, exemptions, exceptions, and so on, as defined in Oracle E-Business Tax setup. You can specify exemption handling for a contract by selecting the Exemption Control attributes on a contract. These are Exemption Control, Exemption Number, and Exemption Reason. The entry that you make here applies to new contract lines only. To apply a change of status to existing lines you must use the Cascade Attributes window
Purchase Order for Service Charges :
You can specify a purchase order or require an agent to specify a purchase order number for charges that are not covered by the contract.
To determine which purchase order number appears in invoices, the application first checks the service request that is associated with the service that is being performed. It uses only the purchase order you enter here when no number is entered in the service request.
Requiring the entry of a purchase order, prevents the contract from passing the QA check and reaching Active status until the entry is made. It does not prevent the service from being scheduled or performed .
Your application administrator can set up automatic default values for contract renewals. If such defaults exist, then you may not be required to enter renewal information. Check with your application administrator.
To renew the contract, you must also specify how to renew each line.
1. Renewal process
A service can cover broad-category business processes such as field service, depot repair, call center, technical support, safety inspections, and any other user-defined business activities.
Each service is set up by the application administrator as an item in Oracle Inventory and is associated with a coverage template. The coverage template specifies the business processes that are covered, the times that the customer is entitled to the coverage, amounts that are covered and applicable discounts, as well as any resources that are to be used and their pricing.
If preventive maintenance is required as part of the service, the service is also associated with a program of maintenance activities. These activities are scheduled automatically when you enter the service line.
The administrator can also restrict which customers or products are permitted to use this service.
2. A service can cover different types of entities. A safety inspection service can cover individual customer sites or the entire enterprise. A depot repair service can cover individual products, a group of products, all products at a specific location, or all products that are grouped into a system.
For example, a service may cover field service for all of the computer equipment at site
A, or it may instead cover laptops L451, L359, and L863.
A service line can cover multiple entities, each of which you enter as a subline.
3. When you cover individual customer products (Oracle Installed Base item instances or Items in Oracle Inventory), you can have the application price the service automatically and take advantage of Oracle Advanced Pricing features including discounts. Your organization can price the same service differently by setting up multiple price lists, and it can offer different prices for the service based on service length. This means that your organization can offer discounts if a customer purchases service for a longer period of time.
Create the contract with the appropriate category:
• To cover products in a customer's installed base, you can use any of the available contract categories: Warranty and Extended Warranty, Service Agreement, and Subscription Agreement.
• If your contract includes usage lines, or the service covers other levels including parties, sites, accounts, and inventory items, then you must select Service Agreement or Subscription Agreement.
• To include subscription lines in the same contract, you must select Subscription Agreement.
• Enter the required fields on the header of the contract
Select one of the following from the Line Type list of values (LOV) depending on the contract category:
• For a service contract of category Service Agreement or Subscription Agreement, select Service.
• For a service contract of category Warranty and Extended Warranty, select Extended Warranty.
2. Select the service from the Name LOV, which comprises all services that your organization offers. You must select a service that is applicable to what you are covering. Because you select the service first and what it covers later, the application informs you of a wrong choice only after you enter the items that you are covering.
3. Enter billing and shipping contacts that are specific to this contract line by following the procedure
described in Entering Billing and Shipping Contacts for a Contract
Effectivities
1. You can review the status of the line. Lines on entered status contracts can be individually canceled if you elect not to purchase the service during contract negotiation. Leaving a line on the contract and canceling it rather than removing it from the contract provides more visibility to lost opportunity for new and renewal contracts. When a line is canceled, the application records the cancellation date and reason.
2. By default, the start and end dates of the service and duration are copied from the
contract header.
You can specify a different duration by:
• Clicking Coterminate to end the service line on a day that is preferred by the customer.
This button is enabled only in contracts with a status of Entered for customers to simplify renewals by terminating all contracts on the same day each year, for example at the end of the calendar or fiscal years. This date is called the cotermination date.
Entering either of the following:
• Start and end dates
• Duration and period
3. If the contract can be renewed (you have not selected Do Not Renew on the Summary tab and Renewals subtab), then specify how the line is to be renewed using the Renewal Type LOV.
Most of the information for a service line comes from the defaults that you enter in the Summary tab or by the application itself from the coverage template that is associated with the service. But you can manually modify the service line information as per the business requirement.
Specify what the service line covers. For each subline, specify one of the covered levels and then enter what is being covered.
A service can cover:
• A specific product that the customer owns (an Oracle Installed Base item instance)
• A party
• A customer account (party account)
• A party site
• An Oracle Installed Base system
• An Oracle Inventory item
For covered products, you can either enter each subline individually or click the LOV indicator to open a browsing window where you can select multiple sublines at once.
If you are covering an inventory item or a product (instance) that the customer
owns, then the application prices the service for you. You must, however, price the
other covered levels manually.
For product sublines, the product should be defined in inventory as a service request
The QA Check is an automated process that verifies the validity of a contract. A default QA checklist is seeded in the application. However, if required, the default QA checklist can be modified to include other checks. The default is set with the profile option OKS: Default QA Checklist. You can override the default checklist from the Summary Administration tab of the Service Contracts Authoring form.
A QA checklist consists of one or more processes that are defined in the Process Definitions form prior to their being selected for the QA checklist. A process within the QA checklist can be defined with two severity levels, error and warning. Errors must be corrected before the contract is submitted for approval.
You can start the QA checklist as follows:
• Actions menu: Starting the QA checklist from the Actions menu shows the results for an individual contract immediately in the Quality Assurance Results window.
• Actions menu - Approval : Submitting the contract for approval runs the QA check, shows the results immediately in the Quality Assurance Results window.
• Summary Administration subtab: Starting the QA checklist from the Summary Administration subtab shows the results for an individual contract immediately in the Quality Assurance Results window.
• Contracts QA Report concurrent program: Starting the QA checklist from the Contracts QA Report enables you to run a QA check on multiple contracts. The process produces a report listing the results of each contract. This process can optionally start the approval workflow after the QA is complete.
After you run the QA Check, you must review the Quality Assurance Results window. The results show any errors or warnings that are associated with the contract.
Oracle Service Contracts leverages Oracle Workflow to automate the contract approval process. The Submit for Approval function starts the quality assurance (QA) check. If the QA check is successful you can continue the approval process, which submits the contract to the approval workflow.
After you author a contract you must:
• Submit the contract for approval.
• Secure approval on the contract.
• Obtain a signature on the contract.
You can submit a contract for approval from the Service Contracts Authoring window,or from the Administrator Workbench.
To approve/reject a contact, Select Respond.
A worklist page appears within a new browser window. You can either approve, reject, reassign the approval to someone else, or request information. You may add a note to the Response region.
After a service contract is approved, it needs to be signed. The person who creates the contact gets a notification to sign the contact once all the approvals are completed. A service contact can be singed from the contact Launchpad and once signed the status of the contract changes to Active.
To sign a contact, navigate to Contract Administration, and then select Launchpad. The Launchpad appears.
1. In the Inbox region, click Find. The Inbox Find window appears.
2. From the Select Notification Type list, select Contract Requiring Signature
3. Select Find. The Inbox is refreshed with contracts that require a signature.
4. Highlight the contract you would like to sign.
5. Select Respond. A worklist page appears within a new browser window. You can either sign, not sign, reassign, or request additional information. You may add a note to the Response region.
6. Select Yes.
The Worklist summary appears. The message indicates, Contract has been Signed.
This program is owned by Oracle Service Contracts. It generates a log file of the total value processed, total value successful, and total value rejected for billing. For usage lines, the Service Contracts Main Billing program calculates billing amounts based upon the usage type.
The billing program sends the invoice amount to Oracle Receivables, which then generates the invoice. The process also populates some billing transaction history information in the History tab of the Billing Schedule. Because the invoice number is assigned and tax is calculated by Oracle Receivables, neither of these pieces of information can be populated until after the Service Contracts Fetch Receivables Info for Billing program is run. The tax amount will be omitted and the invoice number of –99 will be supplied.
AutoInvoice Import Program
This program is owned by Oracle Receivables. It imports the billing transactions from the Service Contracts Main Billing Program into Oracle Receivables and generates the invoice details.
After you run the Service Contracts Main Billing Program, you must run the Autoinvoice Import Program to import the billing transactions into Oracle Receivables for processing.
Once the auto invoice is completed successfully, you can query the invoice by entering the contract number in sales order field.
After creation of the invoice, run the program 'Service Contracts Fetch Receivables Info for Billing Program'. This program updates the customer's contract with the AR invoice information. The invoice number and tax appear in the billing details. Few basic invoice information (with out the invoice number) like amount and date appears in contract even before running this program. The basic payment information also appears in contact before running this program.
To run the program, navigate to Requests, and then select Run. The Submit a New Request window appears.
1. Select Single Request, and click OK. The Submit Request window appears.
2. In the Name field, select Service Contracts Fetch Receivables Info for Billing. Click OK.
3. In the Submit Request window, click Submit Request.
Whether a contract is authored in Oracle Service Contracts or created automatically from Oracle Order Management or Oracle Installed Base, a contract must include lines. The line types used in a contract are items that are created in Oracle Inventory. For example, a computer manufacturer could set up an service item WR23763, to cover the
Extended Notebook PC Service Plan.
Items are classified into four contract item types: service, subscription, usage, and warranty. How you classify these items restricts which contract categories can use them. Because an item must be defined as a serviceable item to be covered on a contract, you must also ensure that the Item Master contains serviceable items.
Creating Service Items
Services are items that you define in the item master. They include the coverage terms that are given or sold to a customer.
You must define service items in the item master
Main Tab
1.1. User Item Type, Service Pgm / Warranty.
1.2. Select a unit of measure (UOM), from the Primary LOV.You set up a service using a time UOM, such as Year, not a quantity UOM, such as Each.
OM Tab
2.1. Select the Customer Ordered check box. The Customer Orders Enabled check box is automatically selected.
2.2. Select the OE Transactable check box.
2.3. Select the Internal Ordered check box. The Internal Ordered Enabled check box is selected automatically.
Invoice Tab
3.1. Select the Invoiceable Item and Invoice Enabled check boxes.
Service Tab
4.1. In the Contract Item Type, select Service from the LOV.
4.2. Select a Duration and Duration Period.
The duration and duration period are used for passing the service duration for the service item, when it is selected in the Oracle Quoting application.
4.3. From the Template LOV, select a coverage template.