Revolutionising tax using SAP S/4HANA® – getting it right first time, in real-time

An ERP modernization is a catalyst for the transformation of the tax function and an opportunity for organizations to bring Tax into the dialog as business processes are enhanced. This is a unique opportunity to get tax truly integrated within the business. By doing so, the tax team will become a strategic business partner for the organization, which is much better than operating in a silo. It results in enhanced control and allows the Tax function to define future-proofing and value-adding business models as they need to be adapted faster than ever.

By bringing tax in the ERP to a next level, the tax function can move the needle from being a operator to become a strategist. You can achieve a reduction in tax risks, increase job satisfaction of the workforce, and the means to create tax transparency, which adds trust to the working relationship between companies, the tax authorities and the community.

Considerations for tax transformation
Delivering a convincing business case for something few people truly understand, can be daunting, even when it’s in the best interests of the business. However, this need not be the case. A new ERP system is usually a key component of a company’s response to the changing tax landscape, as well as the latest software underpinning the business’ transformation journey. However, it’s fair to say the latter likely makes front-page news in the boardroom, while the former may find its way into a sub-story in the appendices.

Many organisations are already planning their core ERP transformations, some have already started to implement the upgrade, and others are about to commence their ERP needs-analysis. We have written about how Deloitte and SAP are transforming tax together, and how tax transformation with Cloud ERP is imperative for future-ready businesses. But, whatever stage of the thought process, tax has an important part to play in the journey. So how to plan where and when Tax needs to be involved? The key questions to consider can be summarised as follows:

1. Be clear about the desired outcomes. Businesses need to be completely comfortable with the end-state and must be able to articulate why they are aiming for it. Compliance can be achieved with many combinations of digital solutions; automation tools and manual work and the trade-off is important to articulate before embarking on the journey.
2. Know your scope – requirements for Tax to respond to the changing environment could be big; however, they are often not well captured or understood. Scope out what will bev involved; which systems will be migrated; which countries or entities are involved; which business activities will need to be considered; which taxes will be considered?
3. Understand the preferred approach to delivering the implementation – as we have outlined within our article here, there are three main ways to achieve business transformation enabled by SAP S/4HANA®, and Tax functions need to understand which route their organisation is taking and the implications of these for realising their benefits. The optimal approach for Tax can usually be achieved when undertaking a greenfield implementation or selective transformation approach, as these routes provide the greatest opportunity to reimagine data, processes and tax technology architecture. However, whichever route the organisation takes, there will be a need to balance the business change impacts and therefore prioritise Tax’s asks into the program.
4. Develop your roadmap. Timings are highly important. What do they look like from a Tax perspective and what do they then look like when overlaid with the transformation roadmap? Is it a 2-, 3- or 4-year deployment for example, perhaps longer? Could there be an interim state and timeframe that is needed to get tax up and running more quickly? What are the wider interdependencies you will need to consider?

And finally, bring it all together. By understanding the above, Tax leaders will be able to evaluate their business case. This should enable them to articulate; the benefit outcomes and how they’ll be measured; the investment asks to achieve those outcomes; and the return on the investment when you look at both these elements – all with the purpose of finding the right operational and tax technology capabilities to support both evolving business needs, as well as evolving tax regulations.