Beyond Technology Modernization: Tax Data Management Also Needs Upgrades
Could technology modernization give way to data modernization in 2026? It’s an interesting question – actually, it’s more of a thought experiment.
Tax leaders who think through the concept of data modernization and take tangible steps to strengthen this capability will be better positioned to optimize their tax technology stacks in the coming year.
To be sure, the need for technology modernization remains pressing within many organizations: legacy systems need to be replaced; cloud migration needs to advance; and system integrations need to become more seamless. Yet, as these and other forms of technology modernization progress, it makes sense for organizational leaders to turn their attention to data modernization. A KPMG report describes this modernization activity as leveraging reports, dashboards, analytics, and algorithms (“data products”) to “unlock data’s value” by “turning it into practical information that can be the source of valuable insights to support better decision making.”
The need for data modernization is pervasive, as the report’s linchpin point asserts: “Despite investing millions of dollars, companies nevertheless are failing to get the expected results and returns from these data products. In fact, 92 percent of executives say well-constructed data products are critical to their organization’s success. But only 35 percent say they have achieved extensive value from their data product initiatives.”
KPMG’s five-step data modernization framework calls for creating a clear data, AI, and analytics (DAAI) strategy with business accountability, measuring ROI across the data value chain, and breaking down data silos while aligning data infrastructure initiatives to support business objectives. It also emphasizes building AI-ready infrastructure and modernizing governance models.
Yes, this is high-level business/IT strategy, but it’s also relevant to tax data management. The report poses four questions that easily can be retrofitted to apply to tax data governance and management activities:
- Can you consistently deliver value from (tax) data and track realized benefits?
- Does your (tax) operating model call for the right accountability for data quality, compliance, and usage?
- Do you have a scalable (tax) data quality, governance, and certification program in place?
- Can you trust your (tax) data to fuel AI to solve “needle mover” (tax and) business problems?
If you answer “no” to one or more of those questions, it makes sense to consider corrective actions, such as:
- Advocating for integration across customer, supplier, product, and transactional systems to enable comprehensive tax compliance and reporting
- Assuming accountability for tax data accuracy, completeness, and governance rather than treating it as an IT matter
- Ensuring that underlying master data meets the tax group’s standards for product classifications, taxability codes, customer data elements, and nexus determinations, among other attributes.
As tech modernization efforts advance in 2026, tax, IT, and finance leaders should put on their thinking caps and figure out how to simultaneously upgrade their data strategies.
