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84 • Part II Operational and Analytical Dimensions

Table 6.1
Definitions of “Revenue”

Gross revenue Total sales before software discounts, customer bonuses,
and lead incentives for partners
Net revenue Total sales after software discounts, customer bonuses,
and lead incentives for partners
Net own revenue Net revenue, minus royalties to third parties
Recognized revenue Accepted bookings in the finance system
Revenue U.S. GAAP Revenue according to U.S. accounting rules
Revenue local GAAP Revenue according to country-specific accounting rules
Management revenue Total revenue for a region including revenue coming from
other regions or countries for local customers, and
excluding local revenue for customers belonging to other
regions or countries
Commission revenue Total revenue matched against a salesperson’s targets
Invoiced amount The amount that is invoiced in the current period. This
amount may not all be revenue for the current period. For
instance, multiple years of maintenance revenue can be
invoiced up front
Statutory revenue Revenue as reported to the outside world
Fiscal revenue Revenue as reported to the tax office
Cash inflow Technically not revenue, but the last metric in the process

the steps taken before a quote is on the table are very well managed.
Most software companies have a strong focus on building a “pipeline”
of prospective deals to be closed that particular quarter, that provide
“coverage” to make the “forecast” and the “budget.” The realized rev-
enue is the result. Or is realized revenue the end result?
Table 6.1 has a few examples of the many versions of the truth. In
this somewhat simplified listing, there are 12 variants of revenue. Man-
agement reports will refer to “revenue” for many of the variants and
which revenue actually is meant often depends on the context of the
report and largely for which manager and which business domain it is
created. The performance of that particular manager in that particular
business domain is reviewed by top management. Horizontal alignment
occurs when managers and their superiors see not only what they
achieve within their own business domain, but also what they enable
for their peers in other business domains, as displayed in Table 6.2.