Let’s say your tax function is ready to take its transformation journey to the next level. What automation options should you evaluate? What types of functionalities should a “next-generation” tax solution offer?
These are some of the more common questions that we hear, at industry events, during discussions with corporate tax and IT leaders, and with our customers. So, we decided to bring them altogether and discuss them with our guest, Kevin Permenter, IDC’s Research Director for Financial Applications, in the last episode of our Drivers of Tax Transformation podcast series.
When we asked Kevin, he responded with three answers: “cloud, cloud, and cloud.” Of course, he was exaggerating to underscore an important point. He advised that tax technology buyers for a business should start their selection process by considering software that’s purpose-built for the cloud and can quickly and easily adapt to their tax group’s changing needs through microservices, containerization, and related features.
As our discussion continued, we touched on some of the other considerations at the top of list when evaluating tax automation options: security, scalability, and flexibility. Security is crucial. Given the potential impact to their brand and reputation as well as current compliance and civil liability concerns, security is always top of mind. Organizations and their customers need to be able to trust that their data and any connections to it are secure.
Scalability and flexibility are closely related. As Kevin shared, “The idea is that the world around the tax department is constantly shifting, so they need software that allows for low-code, no-code configurations and changes that don’t put a ton of pressure -- either on the line-of-business person or on the IT team that allow them to keep up with the pace of business.”
Another consideration from a flexibility standpoint is the ease of integration. As organizations transform and their application and platform strategies evolve, having an indirect tax automation solution that can seamlessly integrate with all relevant transactional systems from both an AP and AR perspective is key. Kevin summed this up very well as he shared his thoughts, “The tax world is really connected to a long value chain of financial activities. Because of that, it’s got to be able to share data back and forth with the CRM [system], the FP&A teams, external sources of data, of course, the tax authorities. It’s got to be able to share data with all these places, so its ability to integrate and be integrated with is incredibly important.”
Tax data analytics and reporting are also key items to consider. It’s always been important to get transactional data into tax software; now, it’s equally important to be able to get data in the form of actionable insights out of the tax software. Tax leaders, CFOs, and other senior business leaders want to see tax analytics that show them how the organization’s taxability changed.
As Kevin commented, “What’s happening with our taxability footprint? What happened last year? What happened last week? What’s going to happen next week? These are the kinds of questions that businesses run off of, and they need software that can handle those questions while providing tools to help the line of business folks inside of the tax department answer those questions at speed and at scale.”
At the heart of our conversation was this basic truth: Tax leaders and their teams are moving at high speeds these days as they contend with a high volume of changes, challenges, and competing priorities. With the right platforms and tools, they can improve efficiency, free resources, and reduce risk. The key is to find the right platforms and solutions that can not only help them to address their current needs, but can also help to future proof their business, enabling them to more quickly and easily adapt to new and emerging needs in the future.
Tune in here to listen to the episode for additional insights from our conversation with Kevin. Check out other thought leader’s perspectives in our Drivers of Tax Transformation podcast series (including a discussion around predictions on how tax technology is likely to evolve in the near future).
Please remember that 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. The views and opinions expressed in Tax Matters are those of the authors and do not necessarily reflect the official policy, position, or opinion of Vertex Inc.