Vertex Tax Technology for Procurement

Industry Perspective: Integrating a Tax Engine for a Global Motor Manufacturer

Episode 5 of Tax Today: Procurement

Vertex Inc. Procurement Podcast for Businesses

Episode 5 Summary

In this episode, Kristin Schwabenbauer is joined by Vertex consultant Adam Runnals. Adam has a strong background with SAP Ariba and Coupa, as well as Vertex’s own O Series products. He was the go-to tax technology export at a global manufacturer for several years before joining Vertex. In under 15 minutes, Adam shares his experience working in O Series from the Vertex side vs. the Ariba side, how to navigate purchasing complexities, and covers some of the new applications coming out.

MS. SCHWABENBAUER:  Hi.  I'm Kristin Schwabenbauer.  Welcome to tax today, a Vertex podcast series.  
On today's episode, we will be having a conversation with Vertex consultant Adam Runnalls from our London office about his experience at global motor manufacturer, as he was once a client as well of Vertex before becoming an employee.  
Adam, welcome.  
MR. RUNNALLS:  Thanks, Kristin.  And thanks for inviting me onto the podcast.  
MS. SCHWABENBAUER:  It's great.  We're happy to have you.  
I know your background.  So you were at a very large global, you know, motor manufacturer, and now you've been with Vertex for two years.  So you really do bring a wealth of knowledge and I think this should really resonate, I should say with our clients and our audience here, whether they're procurement, they're tax, or they're IT.  
So if we can start off, I really just want to give you an opportunity to talk to us about what your role was at the company that you worked at previous to Vertex and what you did.  
MR. RUNNALLS:  Sure.  So my job at the motor manufacturer was their global Vertex SME, I think that's how it was toted when I first joined.  It morphed slightly towards the end.  
But my remit basically was to try to integrate Vertex O Series tax engine application with as many ERPs as we had.  Unfortunately, we were not in a position to a single ERP or maybe a landscape three or four.  We were talking hundreds.  
So my job was to piece by piece, go around and see when there was a transformation project coming up, try to get Vertex O Series into the conversation if there was a particular system that we had that was providing a tax risk to go to them and prioritize those as becoming a necessity to have a tax engine integrated with them.  
And I once though convinced them to actually go down that route.  My job was then to sit with them and to work out the requirements.  Document those.  That would involve me working with both the ERP or the legacy in-house system to ensure that they were configured correctly.  Master data systems, for example.  And then also ensuring that we could translate those requirements into Vertex O Series configuration.  
And then once I finished that, my job was to do the testing, the deployment, and then also the hyper cap post-launch.  
When I joined the motor manufacturer, they had already implemented O Series with one application.  By the time I left, we were live on 10 or 11 applications across four continents.  
MS. SCHWABENBAUER:  Wow.  That's amazing.  I think it is always amazing to hear, you know, you think of these large companies, but they have so many different systems they're running behind the scenes.  To have someone, you know, fully dedicated to make sure that, you know, they're adhering to what the company at an executive level decided to do and decided to say, hey, you know, everywhere, we need to calculate tax, it needs to be Vertex, it needs to be O Series.  And I think that lends a lot of credibility to Vertex.  But also says, I think that's a good way to help companies enforce things and kind of, you know, get automated and make sure they're compliant and have some streamline best practices there and everything else.  
So purchasing is really complex, and I would imagine is really complex at, you know, a large motor manufacturer.  How do you navigate through that?  Like, what exactly do you do?  And I know that the landscapes are changing right now.  So can we talk a little bit about that?  
MR. RUNNALLS:  Of course.  Yeah.  
I think that procurement in general is difficult.  The last transformation project I did before I joined Vertex was an indirect procurement process change.  And that was, again, even more difficult than, kind of, a direct spend.  
I think when you work in the direct spend a bit, like on the sales side of a project, you know what you sell, and you know roughly how it should be taxed.  You sell a finite number of things.  To make that, you buy like a finite number of components, which go into making it, and you know roughly how they should be taxed.  
Suddenly, when you open up indirect spend, you're opening up a lot of employees to buying literally anything they can think of from a catalog.  Good, services, tables, chairs, accounting services, lease cars, anything.  And to the tax people, that really scares them.  You've almost gone from saying, I'm buying component A, which I know is for standard rate of tax in a particular country, to I have now all people buying stuff globally that I don't even know what they're going to be buying.  I can't do testing upfront necessarily.  
In our environment, we actually had quite a robust testing situation where we knew in a direct spend world what we were going to be buying.  Every month we did regression testing to make sure that we were getting the expected results.  
When we came to the indirect world, it was impossible.  The permutations of country combinations, commodities and services meant that it would have been impossible to create a test script to give us comfort over everything.  
So we had to use our comfort and reliance on the Vertex tax engine.  That the content that they were providing.  And again, we had eight years of experience knowing that that was the case.  We could actually leverage that to say that when we went into testing cycles, we knew that we didn't have to test 100 percent of permutations.  We actually went in and we said, we can pick X percent and that's our testing cycle.  
MS. SCHWABENBAUER:  Oh, that's great.  That's pretty amazing.  
Yeah, because we're looking at now if we look at the tech it is almost like how can you not automate this; right?  
Now there's no way native functionality in either an ERP or a best of breed procurement vital, like an Ariba or a Coupa or something like that is going to be able to cover you for all these complexities.  Never mind the rates and the rules and everything else.  So I think that's pretty amazing.  
And I'm seeing and I'm interested in getting your take on this, I'm seeing, you know, as this is evolving it is moving out of ERP or entirely or, you know, adding we're adding more Aribas and Coupas to the technology landscape.  It's, you know, there's functionality there, but there's also some functionality that's not there.  You know, it's a growth area for both, you know, Ariba and Coupa and Tradeshift.  
I think everyone's finally from an industry perspective realizing, hey, we can't do it on our own.  We need help.  We need partners.  We need partner ecosystems and resources and things like that.  So those things are all growing, which is fabulous.  I'm seeing that in my day to day interactions with my partners.  
But what your experience is, is actually and with O Series as a client was that, hey, we can actually do a lot where there might be deficits; right?  Is that an accurate statement?  Can you talk to me a little bit about that?  
MR. RUNNALLS:  I think so.  Yeah.  I think just coming to your earlier point.  I think that a lot of the ERPs, be that the procurement or otherwise, I think lots of them realizing that tax is now a lot more complex than it used to be.  And they've almost not turned their back on, but shied away from trying to solve that problem and they're crying out for a tax engine or an add on to come in and do that piece for them.  
So they, through their APIs or through an add on tool, they're actually opening the door and saying, kind of, tax solutions, come and help us out here.  This isn't our core business.  We can't do this.  We don't want a research team of people trying to solve tax problems.  We're good at what we do.  We want someone else to come in and provide the tax element that companies also need.  So there's that piece.  
And I think leading on to your second point, in order to do that, those ERPs need to ensure that they give the right flexibility and parameters to a particular transaction.  So that they have to ensure that they give enough flexibility in their tool and provide enough of the data that tax needs.  So it is okay to say, we're not going to deal with tax.  But they have to do their very best to make sure that they give you all the information that you need to allow an add on or a tax engine such as Vertex O Series to operate.  
I think we were relatively new in the Ariba space in a VAT world.  I know that there were some companies that had gone live before us.  But when we came to our implementation, we found that there were lots of what we would expect to be core tax fields that just didn't exist in the Ariba world.  We were saying kind of was, X field.  And they were saying, oh, that's not in our that's not even in our content or that's not in our tables.  That's a customization.  
So we would get that customization and the field would come into Vertex O Series.  And then the great thing about Vertex O Series was that it had the flexibility to allow us to utilize those fields.  There were functionalities that weren't available in Ariba in our case.  But through the tax assist rules and tax rules that Vertex O Series offers you, we could actually either infer missing data based off of parameters that we could see.  So we would say to our tax partners, look, we know we're going to get parameter X in this particular field.  We know that in 99 percent of cases that means that the parameter in the field that's missing is going to be this.  Okay.  We'll go away and we'll build a tax assist rule that means that every time that transaction come into Vertex, we'll append that value.  Which to some people, sounds like a scary concept.  To most tax people to know that that's going to happen every time no matter what is a good thing.  It's not someone picking, do I want to pick A or B?  Every time that transaction comes in, you're going to pick A.  If your business changes, whereby you think B should have been the right answer, you go in and you flip your tax assist rule to go towards B rather than A based on an 80/20 rule or the majority rule.  
So Vertex O Series really was great at helping us get over the fact that the ERP didn't have the functionality, didn't always have all of the fields we needed.  And allowed us to make sure that we got the tax correct.  
And I think on the flip side of that, once we got the tax correct, we also found that lots of these ERPs are very strict on the data they expect to come back into their ERP once the tax calculation has happened.  
For us, in our organization, lots of those fields weren't things that we had ever been asked for before.  We were very much to all the other paid applications.  This is how O Series works.  You adapt to work with O Series, and they did.  
Ariba was the first one that came along and said, we can't.  You need to work in the way that we work.  So we kind of had Ariba saying this how we want to work.  We had O Series saying, this is how we want to work.  And you had to bridge the gap and that was done through both the connecter and through the tax assist rules to ensure that we could get both of those two disparate systems talking in the same language, getting the APIs populated correctly, so that we didn't have failed transactions flowing to and from.  
MS. SCHWABENBAUER:  Oh, that's amazing.  It's amazing how complex everything is.  But at least you have the tools and you as a power super user of O Series then was able    were able to bridge a lot of the gaps.  So I think that's good and I think if    the message is, you know, you tax folks, you    if you're going to automate, you don't    there's a lot we can help you out with.  You don't need to worry.  You know, that you can work through some of these issues to get the most efficiency and all of that.  
As you now have transitioned over to Vertex after being a client and you now talk to clients, I would imagine you're able to give them a lot of this experience and reassurance and say, hey, this is okay.  In my experience, we've done that.  
Can you speak to that a little bit for me?  
MR. RUNNALLS:  Yeah.  
I think the first thing having kind of maybe moving from Vertex to cloud    maybe a different app.  Moving from client to Vertex, you can empathize with all the questions they ask because over the eight years I was with Ford, I can guarantee, I had that same question more than once.  Why does this not work?  Why does Ariba not pass that field?  Why does so and so work in a particular way?  
So to start off with, you understand their issue and you can realistically say, I sat in your chair.  I know that how feels.  
And then what it has meant actually internally is that we've been able to have some working group as well that have said, these are the kind of things the industry is encountering and these integrations, let's try and work at how we make them better.  And that's working with our partners or the Aribas to say, we really need to make sure that this field becomes mandatory for everyone.  Or a certain process needs to change slightly to allow for X to happen.  It means that when we build our own connectors, we understand again that the problems people are having, the issues they're having, and allowing to build in    allowing us to build in functionality in our connecters that allow us to solve problems.  
And similarly as well, even on the O Series side, a lot of clients are coming to work for Vertex now and we're all feeding in.  O Series needs to do this slightly better.  O Series needs to this.  O Series is missing something over here.  We had a pain point with this.  Three out of four of us had a tax assist rule to do this.  Why isn't it doing it?  And we're gradually building up requirements and feeding back into the product owners that either the connector needs to change, or the core application needs to change or Ariba might need to change and we're working out kind of where is the best fit.
MS. SCHWABENBAUER:  That's great.  That's great.  I'm sure our clients are really getting a lot out of working with you and I have to say, I really appreciate you taking the time to speak to us about your experience. 
I'm happy that our audience gets a change to listen to this and I think they're going to definitely learn a lot from it.
So Adam, thank you so much for taking the time today.
MR. RUNNALLS:  Thank you, Kristin.
MS. SCHWABENBAUER:  That will do it for today's show.  I'd like to again thank Adam for joining us and thanks to our listeners.  Make sure you tune in for our next episode when we'll be discussing aligning the business and indirect tax.  How does that equate to a smooth procurement journey?

About the Series

Still haven’t cracked the code on indirect tax and procurement? Let us help. On Tax Today, a Vertex podcast series, host Kristin Schwabenbauer holds enlightening discussions with tax, IT, and procurement specialists focused on shaping tax in the procure-to-pay process. Tune in every week for words of wisdom to help you transform tax.

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