Technology

The (Tax Technology) Revolution is Here


by FEI Daily Staff

Tax departments have too much to lose when they operate in a pre-technology, pre-data analytics mindset.

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The Beatles once famously sang, “You say you want a revolution.” The tax function as a whole is in the midst of one and organizations are searching for ways to be on the winning side.

Technology is the not-so-secret weapon companies are using to make tax-related processes more efficient.  However, it is the effective use of innovative and next gen technology that enables data analysis and uncovers new insights demonstrating value to leaders outside tax.

Some progressive tax functions are finding opportunities to gain a seat at the leadership table by articulating their case well and demonstrating to senior management that the use of data analytics in tax is critical to the success of their entire business.

So exactly how and what are these tax functions doing?

They recognize that advancing the cause of tax technology with respect to data analytics is not an “all or nothing” proposition. They work with their tax advisors to map out different ways to approach the issue to draw out insights from their data.   It can be as varied as a moving away from existing tools such as spreadsheets to new technologies or to full automation of current processes.

They engage with their colleagues, particularly those in IT and Finance, and their advisors, first by starting a dialogue and then advocating for the critical nature of the collaboration to the entire enterprise.  They seek opportunities to create a “win-win” for both functions.

I’ve found there are several specific activities tax functions can initiate for an immediate, positive impact to the overall business. If your tax department is looking for some innovations that can jumpstart your efforts, consider these:

  1. Move away from spreadsheets.  Establish a current state benchmark of spreadsheet use and work every year to incrementally improve or replace spreadsheets with modern day technology tools.
  2. Employ self-service analytics tools.  Create visualizations to inform the dialogue with the C-suite in areas such as tax accounting, transfer pricing and risk exposures.
  3. Explore the use of artificial intelligence and robotic process automation to completely overhaul 1-2 repetitive processes such as book-tax adjustments, fixed assets or e-filing reconciliations.
While more companies are implementing these practical ideas, others continue to lag. Research my team at PwC recently conducted of 100 manufacturing companies revealed that three-fourths (74 percent) of organizations surveyed don’t have a tax technology strategy in place – nor plans to develop one -- and even fewer have thought about adding the use of data analytics to their tax function. Almost three-quarters (73 percent) said they don’t have a dedicated tax technology role in their organizations. From my experience, it’s safe to assume those statistics aren’t exclusive to manufacturing.

Tax departments have too much to lose when they operate in a pre-technology, pre-data analytics mindset.

It appears the Beatles were right at the conclusion of their song, “You say you got a real solution. Well, you know, we’d all love to see the plan.”  The world is changing around us - and fast. If your tax function doesn’t have a plan yet, you are missing out on the ability to unlock valuable insights to your organization’s future -- and you’re sleeping through the revolution.

 

Michael Shehab is a Technology Process and Business Leader at PwC.