Survey Reveals Top Tax Technology Challenges

If you talk to enough knowledgeable people throughout the tax industry, a picture of the state of technology in corporate tax departments emerges. Of course, this snapshot is a bit blurry.

The Tax Executives Institute (TEI) recently sponsored research of its members’ use of tax technology to help clarify the picture, and TEI was kind enough to enlist my help in writing the report based on the survey findings.

Five hundred TEI members participated in the survey, and the results identify high-level technology challenges that tax departments confront. Some of these challenges include:

  • An application hodge-podge: Many tax departments rely on numerous different highly specialized software applications to support different tax activities, a situation that requires the manual transfer of data from one application to another as these tax activities are coordinated;
  • Spreadsheet risks: Although the use of spreadsheets to support provision activities appears to be declining (in part, due to data-control issues), an over-reliance on spreadsheets continues to pose a risk; and
  • ERP complexity: Nearly 70 percent of responding organizations use an enterprise resource planning (ERP) system. Many responding companies appear may be using too many ERP systems, giving rise to consolidation-reporting and data-consistency risks: 42 percent of survey respondents indicate that their organizations use multiple ERP systems (and 16 percent say their companies use four or more ERP systems).

The survey, which I’ll come back to in future posts, paints a comprehensive picture of the challenges and opportunities related to tax data management.

One of the survey’s most vivid findings is that the potential for process automation and electronic information management has not been fully realized. Many tax professionals continue to slog away at manual and, in some cases, risk-laden activities. While our own research supports this, the TEI survey continues to validate the path we’ve taken with Vertex Enterprise, providing an entirely new approach to tax technology that maximizes automation allowing the tax executive to reduce risk and focus on value generation.

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.

About this Contributor

Jon Sappey Headshot
Jon Sappey
Director of Industry Relations

Jon Sappey is Director of Industry Relations at Vertex, working with industry associations and other groups to maximize Vertex's support for and contribution to the advancement of the corporate tax profession. Jon came to Vertex in 1997 with a background in marketing, and he currently serves on a variety of strategy teams. He holds an MBA from Yale University and a BA from Harvard College.

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