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OneStream is a case study on how to build a PCG—a multiproduct powerhouse where every additional SKU makes every other product better. By providing financial consolidation software that captures "GAAP-blessed financials," they put themselves in the epicenter of data, where they have a competitive advantage in selling additional products, like planning and analytics packages. Moreover, 3rd parties are building on their platform, creating a rich ecosystem. We call this strategy the "Single Source of Truth” (SST).
OneStream is a stellar example of an SST: they applied the theory to bootstrap the company to $100M+ ARR, and today have grown to the tune of over $350M+. What began as a modern consolidation replacement solution, built to be head-over-shoulders better than legacy providers, has since expanded into a multi-product platform serving more than 1K customers with several use cases. We’ll provide a brief history of OneStream and then dig deeper into the key expansion points in the journey from being a Single Source of Truth to a Platform of Compounding Greatness, leveraging the office of the CFO. We’re fortunate to have the opportunity to join the OneStream team on this journey and are excited to have them as one of our portfolio companies. This company rules—and we think you’ll see why we were excited enough about it to commit millions.
OneStream History and Overview
Tom Shea, Bob Powers, and Craig Colby were established industry leaders in the corporate performance management (CPM) space well before the idea of “one stream of data” was conceptualized. CPM software helps businesses grapple with hundreds, if not thousands, of disparate data sources by automatically aggregating this data flow into clearly defined KPIs that companies can use to make informed strategic decisions.
Craig and Tom co-founded UpStream, which was later sold to Oracle and became Oracle Hyperion Financial Data Quality Management. Bob was a chief inventor of Hyperion Financial Management. The three of them were key players in developing CPM 1.0, and when the time came to create OneStream and lead the world into CPM 2.0, the team possessed not only an intimate knowledge of their biggest competitor, Oracle Hyperion, but also years of accumulated in-depth wisdom on their customer’s biggest pain points.
One of the CFO’s biggest responsibilities is creating a set of consolidated financial statements. Financials are the scoreboard for a company’s performance, and they need to be aggregated in a centralized place. This requires data to be pulled across multiple business lines, departments, product lines, currencies, and geographies. Coming to an answer on something supposedly as simple as, “How much did we sell last month?” requires an obscene amount of coordination. Consolidation is difficult and mission-critical, especially for companies with many layers of complexity that need a solution like OneStream to complete the process and ensure accuracy (unless you enjoy being sued by the SEC).
OneStream’s consolidation solution also provides companies the ability to pull apart and view data through multiple lenses—from the 10,000-foot view of total revenue to individual-cost line details by product or business unit—in order to drive the numerous daily operational decisions that need to be made. This concept is known as extensible dimensionality. Organizations rely on OneStream not only to assemble all of their financial data into a single set of numbers but also to help them understand the meaning behind the numbers. The financial truth that OneStream creates informs critical decision-making processes and drives many other business workstreams.
“OneStream is in the business of helping large, complex, multinational businesses take the data that’s being recorded at their ERP system level and turn that into information. We think about the enrichment of recorded information that’s happening every day in major businesses. What process does that data have to go through to become information? [...] A lot of data that’s being collected from the ERP, from the operational processes that are happening, is making its way through the financial value chain, if you will, to become a number that’s relevant for external reporting, financial planning, functional planning, or operational planning. All those pieces are interrelated, and we sit at the heart of that, not only in the manufacturing of the information but the visualization of it as well.” - Cofounder & CEO Tom Shea (The Platform Journey)
As they picked up steam within consolidation, OneStream utilized its position as the SST to extend into parts within and outside of the CFO office. The following graphic shows the different products and processes that OneStream encapsulates today. For each product offering, OneStream methodically built upon its position as the financial nucleus and translated the credibility it built in consolidation to solve these additional problems.
“We really focused on being that differentiated financial intelligence analytic engine first and thought about that same sort of book-of-record approach. But we surrounded it with all kinds of technologies that would allow us to solve many use cases. We could really laser focus on that foothold in the market so that we could [...] have the credibility to ask to solve or be invited to solve problems. That is the evolution and process. You really need to start with a core thesis, but you need to develop and think beyond that core thesis – but not overplay your hand at first. Evolve to it.” - Cofounder & CEO, Tom Shea (The Platform Journey)
Expansion within the Book-of-Record Process
The most natural expansion points for OneStream were within the book-of-record process. These are the adjacent workflows involving the data inputs to the consolidation solution and the utilization of the data outputs from the consolidation solution.
Account Reconciliation / Financial Close Management
Account reconciliation and financial close management are complementary processes that support the data leveraged in OneStream’s solution. Account reconciliation involves providing supporting data for each of the general ledger accounts. Financial close management is the coordination of task ownership amongst the accounting team for the steps necessary to the financial close process. Both of these processes can be performed manually and without software (whereas consolidation is considered much more difficult to complete without software). These processes contribute to the creation of clean granular data from which the financial truth is created—but the final, crucial steps reside within the consolidation solution to turn this data into information that is valuable to internal and external stakeholders.
Reporting
Reporting processes directly leverage the financial data that OneStream’s consolidation solution creates—all the outputs are visualizations built off of that data. There is minimal data gravity for these solutions, as they simply reskin the financial truth passed to them. We view this as an ancillary workflow from a control standpoint despite the relative importance of reporting as a whole to external and internal stakeholders.
OneStream’s start in consolidation positioned it to be the SST. This is reflected in its relative position within the CFO priority stack when it comes to tech adoption (hint: it’s near the top). OneStream thus has a compelling initial land with customers as a need-to-have product. This serves as both the wedge to breaking in and the foundation to expanding into more workflows that either feed into or derive from consolidation.
Expansion out of the Book of Record
OneStream didn’t stop there. They also looked for other areas that similarly leveraged the data coming from the SST. This led them to expand into the planning offering.
Financial Planning
Companies base their forecasts on historical data or the historical source of truth that OneStream is responsible for creating. Robust consolidation functionality underpins FP&A since forecasts cannot be made without a view of past performance. This natural data requirement leads to strong customer interest in integrating the book-of-record process closely with planning—ideally within one software solution.
This was not only a natural extension from a product standpoint but also a natural TAM expansion avenue. Expansion into financial planning broadened the OneStream user base from the accounting team to the FP&A team.
While OneStream entered the FP&A market only recently, they have made significant strides into a leadership position within a few years. Evidenced by their shift in the following Gartner Magic Quadrants, OneStream entered the market in 2018 as a visionary within FP&A; as of 2022, OneStream holds a market leadership position within it. This is reflective of their strong right to win and their ability to execute new products.
Operational Planning
Consolidation, while a mission-critical process, results in numbers that are not only table stakes for CFOs but also only delivered externally on a quarterly or annual basis. The financial planning and budgeting offering allowed OneStream to get deeper and closer to the forward-looking decision-making process, but these processes have also traditionally been completed on a quarterly or annual basis. As the CFO moves into a more strategic role, OneStream looks to expand its product offering to grow along with its customers’ increasing set of responsibilities toward real-time continuous planning.
OneStream has built itself into the SST for financial KPIs, and these financial KPIs both are driven by and drive operational KPIs (i.e., sales rep productivity will drive top-line revenue performance, and budgeted operating expenses will drive sales rep hiring). The natural connection between these metrics—and the desire by customers to understand the relationship between the financial results and the actions that have happened or need to happen operationally—has driven OneStream’s expansion into operational planning. These operational metrics must also be monitored on a continual basis and are the KPIs that drive the day-to-day business decisions that CFOs have increasingly become involved in.
Expansion into operational planning has similarly expanded the OneStream TAM and opened the doors to more business units: people planning to HR, sales planning to sales and marketing teams, and so on. OneStream’s positioning as an SST for financial metrics allows them to expand into other processes, like operational planning, that both feed into and spring from that source of truth. This, in turn, has strengthened OneStream’s positioning as the SST for their customers as they become more and more embedded into their customers’ workflows. They’ve expanded their value proposition from a compliance-driven reporting use case to steering daily business decisions.
Sensible ML
Operational planning represents a step function increase in the scale of data volume that OneStream has access to. Financial metrics are (relatively) standard and calculated on a dedicated cadence, while operational metrics will vary widely by industry and require a real-time flow of data as customers look to recalibrate every day, if not several times a day.
This increase in data volume, as well as complexity and variability, open the doors for an AI opportunity that OneStream is looking to tackle with its Sensible Machine Learning (ML) offering. With access to the data points around key operational drivers, OneStream is able to leverage AI to quickly create accurate forecasts that customers can click deeper into to understand the “why” behind the AI-generated forecast—thus ensuring the transparency and explainability that are required in financial use cases of AI. OneStream is uniquely positioned to expand into scalable AI offerings—like AI-generated daily and weekly forecasts—that create immediate value for customers and empower their decision-making in ways that they can trust and understand.
Solution Exchange
Just as they’ve actively leveraged their position as the SST to become more involved with their customers, OneStream has also sought to foster the ecosystem that has grown around them. The OneStream Solution Exchange is a marketplace of solutions created by the company and its community of partners and customers.
OneStream is the SST and, therefore, a critical vendor in the software stack for other solutions to connect to, so third-party service providers and software vendors are highly incentivized to build on the OneStream stack—customers benefit and want all their solutions to be connected to the same source of truth. OneStream’s position as that source of truth that all solutions must either feed into or pipe data out of enables them to develop an IDE for software developers to innovate and create new solutions on top of their platform.
Through the Solution Exchange, OneStream is able to enhance its own customer experience with additional solutions, apps, and capabilities created for and vetted by OneStream and the community. This increases engagement across the ecosystem from important partners and allows the community to productize domain-specific knowledge, creating additional value for all involved.
Present Day
In today’s market, we are increasingly seeing customers look to consolidate their vendor spend. This is especially true within OneStream’s area of expertise, where customers have a strong desire to unify complex financial processes and create a Single Source of Truth across their book-of-record reporting, planning, and decision-making processes. OneStream has proven its right to expand and is increasingly the vendor that customers replace multiple other solutions with as they aim to achieve the consistency and transparency of data needed to inform critical decision-making and drive long-term success.
With its multi-product expansion, OneStream has solidified its position as a leader in corporate performance management solutions, bootstrapping its way to $100M ARR and recently surpassing $350M of ARR while serving 1K+ customers globally.
Advice for Companies
Our takeaways from the OneStream journey for companies also looking to build a Single Source of Truth:
- Start with data gravity: Data gravity means creating and storing the most critical information that is, therefore, the hardest to migrate. When you are the single source of this crucial data, everything goes through you, and you now have a competitive advantage in building other apps that leverage this data and serve other functions or constituents. A key part of OneStream’s strength comes from owning this control point.
- Create a critical, core thesis: Start from a point of critical demand with a central thesis around what your customers desperately need. OneStream started with their thesis around “one stream of data”—a critical requirement for CFOs. This led them to begin with a core of consolidation, which is a top priority purchase in the CFO tech stack.
- Go out and build: Once the strategy has been crystallized, businesses need to go out and build. Once OneStream saw strong customer success in consolidation, they didn’t wait to achieve #1 market positioning, nor did they strive to create all the bells and whistles of an FP&A solution prior to the initial launch of the FP&A product. The rapid iteration cycle they had with customers, as well as their steady release of new products, allowed OneStream to become a market leader in a new space within a few years. It also gave them the feedback to create a true compounding multi-product platform.
If you are building a platform of compounding greatness or exploring the SST strategy, we would love to chat. You can reach us at knowledge@tidemarkcap.com. To learn more about other PCG strategies, visit our opening essay as well as other deep dives here. If you’d like to keep up as we dig deeper, make sure to subscribe below.
