Modern ERP’s Killer App: Tax Flexibility

Modern, cloud-based enterprise resource planning (ERP) systems sit at the core of an ever-expanding ecosystem of cloud-based business software while facilitating the exchange of data among specialized applications (e.g., sales and marketing, CRM, HR, analytics, and tax automation) used throughout the organization.

There are several signals — shortcomings that hinder growth and agility — that it’s time to move on from a legacy ERP system by migrating to the cloud.

When those responsible for the ERP migration decision assess how their current ERP environment can be improved, they should keep several factors in mind, including:

• Scalability: The best ERP solutions include features that can help support a company’s future growth objectives. Cloud-based platforms typically offer the optimal ability to scale in a secure way.
• Interoperability: ERP vendors that develop and nurture an ecosystem of certified partners whose solutions quickly integrate with the ERP system provide the opportunity to achieve higher-than-expected returns on the investment.
• Tax flexibility: Tax figures prominently among the many areas of an organization that can expect to confront heightened external volatility during the next several years. So, it’s imperative that the tax technology within the ERP ecosystem remain agile enough to quickly adapt to sudden changes to tax compliance requirements and flexible enough to support the organization’s current technology model (cloud-based, on-premise or hybrid).

ERP-integrated tax solutions that possess sufficient tax flexibility contain a number of important capabilities, including:

• The flexibility to be deployed in a variety of platform models (public cloud, private cloud, etc.);
• Automatically updating all relevant tax rule and rate changes without manual intervention;
• Determinations of what is taxable or exempt;
• Validating customer addresses across the ERP platform to ensure accurate tax calculation and shipping processes; and
• The ability to perform tax calculations in sales order processing documents.

Modern, cloud-based ERP systems are a foundational component of many digital transformation efforts because they help companies operate with more agility and efficiency. Ensuring that an ERP cloud ecosystem is optimized requires close attention to related applications, including tax technology. For a deeper look into the way that tax challenges are spurring efforts to modernize ERP systems, check out the new Vertex white paper, Digital Transformation Demands a New Approach to ERP.

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. 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.