Cypress Semiconductor Corporation Improves Distribution Network Visibility and Cuts Weekly Revenue Process Time by 50% with Integrated Channel Management
 
 

Cypress Semiconductor Corporation Improves Distribution Network Visibility and Cuts Weekly Revenue Process Time by 50% with Integrated Channel Management

Printer View Printer View

Cypress Semiconductor Corporation makes high-performance, programmable integrated circuits that provide its customers with fast time to market and exceptional system value. Cypress offerings include its flagship PSoC® programmable system-on-chip families and derivatives, such as its CapSense® touch sensing and TrueTouch® solutions for touchscreens. Cypress is a leader in USB controllers, including the high-performance West Bridge® solution that enhances connectivity and performance in multimedia handsets. Cypress is also a leader in high-performance memories and programmable timing devices. The company serves numerous markets, including consumer, mobile handsets, computation, data communications, automotive, industrial, and military.

In recent years, Cypress experienced rapid growth in its channel business, which by 2012 accounted for 70% of the company’s revenue. Cypress had been relying on a legacy environment characterized by disparate applications, customized integrations, and many manual processes. The system was reaching its scalability limits.

Cypress launched a multiphased initiative to create a comprehensive and integrated channel revenue management system that would support a complex distribution model and expanding channel business, enable the company to reduce profit leaks, and facilitate reporting and compliance initiatives. It selected Oracle E-Business Suite applications, including Oracle Channel Revenue Management, as the foundation for the new environment.

Since deploying the solution, Cypress has achieved several important milestones. It expanded end-to-end visibility of channel-generated revenue, reduced profit leaks, and improved operational performance with its partners. As important, it condensed the weekly claims payment cycle by 71%, improving working capital of the company’s distribution partners and strengthening relationships with them. It also improved weekly revenue point-of-sale (POS) processing cycle time by 50%.

 
 

 
 

Challenges

A word from Cypress Semiconductor Corporation

  • “With our new trade management environment, built on Oracle Channel Revenue Management, we have achieved unprecedented visibility into our distribution partner network, enabling us to more rapidly record revenue. As important, we have been able to efficiently manage a 200% increase in claims payments to our distribution partners without expanding staff―an accomplishment that would not have been possible with our legacy environment.” – Thad Trent, Vice President, Finance, Cypress Semiconductor Corporation

  • Create and deploy an automated and integrated channel revenue management (trade management) environment to support a highly complex distribution model and expanding channel business, which now accounts for approximately 70% of the company’s revenue
  • Improve ability to rapidly and accurately account for, validate, and report on sales made through the company’s distribution partners, a daunting prospect for the organization that deals in extremely high volumes―shipping millions of its memory chips, logic devices, timing chips, and USB microcontrollers annually
  • Improve financial control, reporting, and auditability of distribution partners to minimize profit leaks through the channel, reduce the time and costs associated with audits, and facilitate Sarbanes-Oxley compliance
  • Accelerate time to record revenue, which, in the integrated circuit industry, is recognized once point-of-sale data is received from the distributor under a ship-and-debit model
  • Speed credits to distributors to maintain strong relationships with these vital partners and support a growing global network
  • Streamline IT management burden and costs, and reduce the need for specialized IT resources to maintain the enterprise environment
  • Ensure cost-effective disaster recovery capabilities

Solutions

Oracle Product and Services

  • Launched a multiphased channel revenue management initiative―built on Oracle E-Business Suite applications, including Oracle Channel Revenue Management, and Oracle Hyperion solutions―to improve the speed of recognizing revenue from the company’s growing network of integrated circuit distributors
  • Replaced a disparate legacy environment with an integrated solution that automates and supports sustainable business processes, expands end-to-end visibility of channel-generated revenue, and can scale to meet the growing company’s needs
  • Reduced profit leaks with the integrated system that ensures that transactions are not lost between systems
  • Accelerated the claims-to-credit process and improved its accuracy
  • Condensed the weekly claims payment cycle by 71%, improving working capital of the company’s distribution partners and strengthening relationships with them
  • Improved weekly revenue point-of-sale processing cycle time by 50%
  • Enabled the company to manage a 200% increase in claims payments to its distribution partners without expanding staff, which would not have been possible under the legacy environment
  • Ramped up distributors for emerging markets without adding headcount
  • Automated inventory reconciliation, reducing by 20% the time spent on inventory tracking each week―the equivalent of one person's work day―and enabled Cypress to rapidly share data with distributors
  • Reduced external audit hours in the revenue cycle by more than 30%, due to automated and improved controls and processes
  • Gained the ability to capture data in real time and drill down to granular transactional information
  • Eliminated the need to spend significant amounts of time at quarter end validating financial data, freeing up time for value-added analysis
  • Linked inventory with price changes and gained the ability to quickly evaluate exposure and value if the company decided to change prices
  • Achieved more accurate data for the payment of commissions to internal and external sales team members
  • Deployed Selectiva Select*UI on the solution to gain a business usability layer that has simplified use of the various enterprise applications for employees
  • Deployed Oracle E-Business Suite On Demand and Oracle CRM On Demand to reduce internal IT management costs and burden and satisfy disaster recovery (DR) requirements without significant capital investment or on boarding of additional experts to manage the DR environment

Why Oracle

Cypress had a strong Oracle E-Business Suite foundation, as well as existing Hyperion applications. It looked to extend the value of its investment in Oracle by expanding its footprint and wanted to leverage Oracle’s out-of-the-box integrations to reduce IT complexity.

Implementation Process

Cypress Semiconductor’s trade management initiative has included several phases, beginning with an initiative to standardize order entry and inventory processes using out of the box functionality. It then turned its attention to creating a foundation for standardizing pricing on the order entry platform to enable end-customer pricing.

The company moved forward with Oracle Channel Revenue Management as the core of its trade management environment, and then undertook an initiative to link front-end and back-end processes with Oracle CRM On Demand.

Cypress completed the revenue management initiative on budget, on time, and to a level that exceeded the company’s business requirements.