As digital innovation sweeps through business processes, including those within the tax function, it’s increasingly important for tax leaders to understand how the transformation looks from the board’s point of view. More and more frequently, chief tax officers and vice presidents of tax are fielding questions from the board on the impact of digitalisation on tax strategy and that trend is only going to accelerate.
A new Deloitte e-paper, Winning with digital: What boards need to know about digital transformation, reinforces the understanding that technology is an enabler to success. Success happens by leveraging new ways of using technology and digital platforms with changed processes and the most valued asset any company has, the people who make use of the technology. Deloitte’s statement: “Digital transformation is not just about technology. It is about how a company can compete better using technology” summarises this nicely.
The paper explains how to achieve that competitive advantage in five steps:
- Understand what digital transformation is – and what it isn’t. Digital doesn’t have to involve massive upheaval; it can improve or expand what you’re already doing.
- Get your strategy straight. Deloitte describes three broad categories of digital strategy – improve the core, move into an adjacent market, create an entirely new business – and the six digital enablers that underpin them.
- Make sure your ambition is bold enough. Boards should understand, appreciate and embrace the full scope of the changes that are possible and which may already be impacting their industry. They also need to establish objectives that are aggressive enough to achieve sustainable competitive improvement.
- Envision your end goal. While every organisation’s approach to digital maturity will differ, the need to deliver exceptional customer experiences will require some non-digitally native businesses to change their corporate DNA to embrace a more digital culture.
- Don’t settle for random acts of digital. The board’s point of view is, by definition, the long-term and strategic perspective. It’s the board’s job to ensure management doesn’t waste its resources on a jumble of digital projects but instead lays the digital foundation for a winning business for the future.
Chief tax officers and vice presidents of tax should keep these approaches in mind as their boards grow more curious about the nature of digital transformation taking place in the tax function.
Please remember that the Tax Matters provides information for educational purposes, not specific tax or legal advice. Always consult a qualified tax or legal advisor before taking any action based on this information.