Eaton automated its financial close with the help of Oracle Cloud EPM. How can you achieve similar results if you have less budget?

Oracle shared the success story of how Eaton was able to successfully upgrade its aging on-premise systems and automate its manual processes to improve the financial close. As a result, Eaton is now benefiting from Oracle’s automation across the financial close and account reconciliation.

Case studies are marketing assets produced by the software vendor to demonstrate the value of its products. Oracle is a leading provider of FP&A software to the world’s largest organizations. With this in mind, their case studies provide insight into the finance and accounting challenges faced by the world’s biggest companies.

Eaton is a $20B revenue operation with 92,000 global employees operating in 175 countries.

The Case Study described Eatons pain points before adopting Oracle’s Cloud EPM:

“The company also required an account reconciliation solution instead of using manual account reconciliation done using SharePoint and Excel. Eaton had an environment that executives described as a “spaghetti architecture” of disparate systems and applications that were not working well together from a data standpoint.”

What’s remarkable to see is that many of these challenges faced by companies like Eaton ranked 163 on the Fortune 500 ranking, are also experienced by CFOs at many companies a fraction of this size.

How many CFOs at much smaller companies also struggle with ‘manual account reconciliation done using SharePoint and Excel’?

How much would a company like Eaton pay as their total cost of ownership to purchase, deploy and maintain a solution like Oracle Cloud EPM? That individual purchase order is a private contract between Oracle and Eaton, so we would not have access to really know. Also, since Oracle is a massive portfolio vendor with 1,000s of other products besides Oracle EPM Cloud, they do not break out the revenue and per client spent on a specific product like EPM. In other words, Oracle has many products, and they are not a pure play FP&A vendor like OneStream or Anaplan. Here is a list of Oracle’s many products as an example.

We know that Oracle EPM Cloud is targeting the world's largest companies, and their solution is built to compete at the same enterprise level of FP&A (EPM) software. Two similar competitors targeting the largest companies worldwide are Anaplan and OneStream. OneStream is a privately held company, and we don’t have access to their financials. Anaplan has been a publicly traded company since 2018. They have been recently acquired by Thoma Bravo and will become a privately held company soon, but we still have access to their latest financials. Unlike Oracle, Anaplan only sells this one product (Financial Planning Platform).

If you read Anaplan’s latest 10-K released on March 23rd, 2022, there is no secret that its goal is to drive massive recurring revenue contracts with the world’s largest enterprises.

They released impressive industry-leading financial results as highlighted in this 10-K:

• Their top 25 clients spend a staggering average of $5M annually 
• 29% of their entire client base spends over $250,000 annually‍

We can assume products that are direct competitors to Anaplan, like Oracle EPM and OneStream, are similarly priced and could easily match or exceed Anaplan’s average customer spend.

While we don’t have the same figures for Oracle, we do have their price list, which they make publicly available. You can Google “Oracle Price List” and find it. They list pricing on a module basis as per the table below:

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An accounting team that needs access to the Consolidation / Close module plus the Account Reconciliation Module would pay a list price of $370/month per user for that access based on this price table. Let’s assume an operation like Eaton would need at least 100 users. This is probably a severe undercount. LinkedIn lists well over 1,500 people belonging to the Accounting function at Eaton. This is not a perfect science; we assume they would not need licensing for 100% of their staff. If we assume 100 users, the list annual subscription pricing would be $444,000. With a reasonable discount, we can see how this pricing is similar to Anaplan’s $250,000/year (where 29% of their clients pay at this level).

There is a caveat here. Anaplan is a financial planning software provider, while Oracle EPM does both the financial planning and accounting side (Reconciliation/consolidation/close). Nearly always, the financial planning use case will drive many more users (e.g., planning participants) than a pure accounting use case. This Oracle Case Study is focused on the accounting process. Still, we can already see that the annual list pricing could easily be over $1M a year if they were also to use Oracle EPM for all their financial planning.

We can’t speak to discounts a vendor like Oracle will provide on any individual contract. Even if the discount is high, Eaton would have other costs besides the annual subscription to maintain an enterprise platform like Oracle EPM. The initial implementation for a project with an enterprise like Eaton can easily be 1x to 3x the annual software cost. Based on this range, this implementation could have easily been north of $500,000. These are educated estimates as we really don’t know the exact amount Eaton invested in implementing Oracle EPM.

The third investment pillar is the technical resources Eaton would need to maintain Oracle EPM on an ongoing basis. Professional consultants or full-time employees that are technically certified to support Oracle EPM are not cheap.  As one example, this job posting for an Oracle consultant provides a pay range between $104,000 to $151,000 per year. An operation the size of Eaton may need more than one full-time specialist to support this platform.

On average large enterprises with billions in revenue allocate around 3% of their revenue to their IT Budget. Here is one study that backs that figure. If this holds true for Eaton, it would mean they have a $600M annual budget for IT. No wonder they can afford to purchase one of the market's most elite and expensive financial planning and accounting automation platforms. For an enterprise like Eaton with an estimated IT budget of over half a billion, one to a few million dollars to achieve these results make perfect sense. The ROI for this investment is there, as we can see from the successful results presented in this Case Study.

What if you’re not a $20 Billion revenue operation like Eaton?

Are you stuck with staying on spreadsheets or SMB software products that are inflexible and don’t scale?

CFOs of most companies outside the Fortune club cannot afford these levels of investment. They are a nonstarter.

Luckily, FinLogic.io was designed specifically for CFOs who need enterprise scalability and performance and high modeling configuration to address their specific requirements without these enterprise costs.

FinLogic.io uses proven and modern third-party enterprise-level components, including Google Sheets and arguably the world’s most powerful cloud database for business applications, to deliver great results at a significantly reduced cost of ownership.

‍Learn how you can deploy FinLogic.io to support your Accounting Automation transformation to automate areas like Account Reconciliation, Consolidation, and Financial Close, as well as your Financial Planning.

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