Modernizing Eaton's financial reporting and pivoting to the cloud
Eaton Corporation, a provider of industrial power management solutions, traces its history back to 1911. The $21 billion company’s century of growth has led to a presence in 175 countries—with a complex IT environment. As of 2018, the company was running their business on multiple enterprise resource planning (ERP) systems due to significant growth through acquisitions.
In recent years, Eaton had made limited investment in its financial reporting and consolidation systems. One of the most pressing challenges was its reliance on a legacy Oracle consolidation system used to store historical data as far back as 1997. Although that system was no longer being supported or updated by Oracle, Eaton was still relying on it for tax and compliance reporting, and employees had no choice but to use dated hardware and software. This put the business at risk due to the decreasing availability of support and limited their ability to provide new functionality.
Eaton initially engaged PwC to help with a technical upgrade. Instead, we reframed the problem and how to solve it using our BXT way of working—combining business strategy, experience design and technology. Rather than simply upgrading a back-end system, together we built a more ambitious case for change: modernizing Eaton’s financial reporting systems and pivoting to the cloud.
Migrating from on-premise servers to the cloud was a bold move for Eaton. PwC’s BXT approach powered a new kind of thinking—one that examined the challenges Eaton was grappling with. We began with an assessment of Eaton’s infrastructure and then developed a new architectural roadmap. More importantly, we worked with the client to transcend its initial technical focus and open the door to a broader transformation that focused on long-term value.
Our goal was to bring together business experience, creative design experience and technology to equip Eaton with the tools it needed to envision a transformed, long-term future.
In order to grow, Eaton knew its controllership activities needed to become more efficient. To make that happen, we helped Eaton revamp the highly manual, time-consuming controllership activities related to reconciliations and reporting, and worked together to devise broader business strategies that would position the company for future growth. The project involved a cross-section of disciplines, from risk assurance to analyzing investments in new software capabilities and digital accelerators. As part of this effort, Eaton discovered that some accounts could be reconciled less frequently, while critical accounts could be kept on a monthly schedule. Eaton was also able to reduce manual oversight of the reconciliation process, saving the company money and limiting mistakes.
Eaton also benefited from a purpose-built financial consolidation solution that offered a streamlined number of consolidation entities, provided the ability to drill back to Oracle and SAP ledgers, reduced data reconciliation efforts due to consistent data feeds from the source systems and enabled a robust data archival process.
Eaton wasn’t just able to more quickly complete its monthly accounting tasks, it used automation and advanced business intelligence tools to reduce the number of reconciliations and standardize reports and processes. It used risk ratings to reduce manual oversight and get a clearer, real-time picture of its finances, freeing up employee time normally spent on repetitive, menial activities. Newly created dashboards now show if reconciliations are late, what trends look like month-to-month and if any red flags arise. And Eaton has taken steps to help ensure all of these are easy to use: Through its university program, the company rolled out training sessions for the new cloud-based system worldwide, enabling users to be as productive as possible from the start.
The cloud was the technological key to making these changes possible, but migrating Eaton’s financial consolidation and reconciliation processes to Oracle’s cloud-based systems initially felt daunting. No service “just works” out of the box, and Oracle Cloud is no different: Eaton identified a number of issues or gaps within the Oracle Cloud framework that needed to be addressed for its processes to work correctly. Our alliance with Oracle mitigated those gaps—both by developing new processes for Eaton and by working directly with Oracle to roll out new features.
Completed on time and under budget, Eaton modernized the in-scope financial processes and is already reporting positive results from consolidating its applications and data stores into a single repository. Eaton is saving time and money through automation and process efficiencies. Eaton is also able to negotiate lower rates with its financial auditors as the information they need to review is more readily available.
And Eaton is just getting started. While it has successfully revamped its financial close and compliance functions, opportunity awaits in additional finance functions, where a migration to the cloud stands to offer even greater benefits.
14 months from start of project to retirement of legacy systems
Over 40% automation of reconciliations
Significant anticipated savings in 2021 due to process and control improvements
SVP Finance, Eaton Corporation
Partner, Global and US Oracle Alliance Leader and US Oracle Practice Leader, PwC US
Principal, Advisory, PwC US