Posted: 09 Dec. 2020 05 min. read

Three steps to starting your tax transformation journey

The words “transformation” and “journey” tend to make people’s eyes roll, but if there was ever a cause that warranted their use, the data-enabled tax department is it.

For years, digital transformation has steadily encircled tax departments. Other enterprise functions are well along the digital maturity curve, many using cloud computing, mobile applications and devices, automation, analytics, artificial intelligence, and other digital innovations.

They are rapidly and systematically changing business models and the conduct of business globally and remotely through digitisation.

Tax departments have participated up to a point. Many now use tax-specific applications either built into, or bolted onto, enterprise resource planning (ERP) systems. Others use standalone applications for specific tax purposes such as tax provisions, indirect tax compliance, or state and local taxes, just to name a few.

Yet the digital transformation of tax on par with those other areas of the enterprise can be challenging. Why? Because it’s often hindered by continued reliance on spreadsheet programs and the disjointed, isolated tax data they typically contain. Spreadsheets are often the go-to tool for tax compliance, planning and reporting, central to everything tax professionals do—and they have been for a long time. But it’s time to change.

Just as most businesses choose different business models and take their products and services to market in unique ways, your tax department is likely to chart its own path toward data-enablement.

The framework for a data-enabled tax department has many elements or building blocks, how your tax department puts them together should be unique depending on its current “digital maturity” and many other factors, including the completeness and strength of the organisation’s foundational data source layer. Nevertheless, as you piece together these building blocks, your ability to automate processes, generate insights, and create value can grow and accelerate.

One challenge almost every organisation faces with an initiative of this scope and importance is the decision of where to begin.

These steps can help point you in the right direction:

  1. Think big. Start by identifying the landscape and sizing up your opportunities. Talk to people in your tax department to identify recurring instances when significant time is spent today on inefficient manual processes. Include your finance colleagues in the brainstorming, as they often face similar challenges. Video conferences and virtual whiteboarding tools can help accelerate these efforts.
  2. Start small. Next, prioritise opportunities based on potential value, risk, and ease of implementation. Start with things that are critical to supporting remote work (given the likelihood of continued disruption from COVID-19), or that have a wide impact—think beyond financial benefits.

    For instance, the value might be increased efficiency, mitigate risk, or new benefits from prior technology investments. Once you’ve identified one or two top priorities, prove it works. Develop a proof of concept that clarifies the approach and demonstrates the value.
  3. Act fast. Then socialise the benefits to help others understand. It’s critical at this stage to let end users react to what you’re planning, so you can gauge your change management challenges and tailor the end product to users’ needs.

    You don’t want to push your idea to the finish line only to learn it’s not being adopted because you didn’t get enough input from the people who are expected to use it. Once that initial buy-in is established, sequence your opportunities based on impact and continue to deploy them in short sprints that build on each other and create momentum for change.

What’s stopping you?

Letting go of, or at least significantly reducing the dependence on, spreadsheet-based tax processes is a tall order for many tax departments. Yet it doesn’t have to be done in a day, nor does it need to put the department at risk.

Start by understanding big-picture the capabilities of a data-enabled tax department. Work with stakeholders to envision and gain buy-in for what that data-enabled state could look like. Identify small, achievable “wins” that can become the foundation for bigger, long-term success. And then involve your stakeholders in the process of making the vision become a reality.

There’s no reason for tax departments to sit back and watch other areas of the enterprise enjoy the benefits of digital transformation alone. Now is the time to stake your claim—and make it a reality.

Start a conversation about your data-enabled tax transformation with Deloitte’s Digital Tax team. 

More about our author

Rory Pike

Rory Pike

Partner, Tax

Rory is a Partner in the Digital Tax Team. He is responsible for the development of innovative digital tax solutions. Having previously owned his own tax technology business, Rory was a Partner in Deloitte Canada leading the Indirect Tax team. He brings an entrepreneurial approach to the tax business and has more than 30 years of experience in tax technology and client centric solutions.