The Next Great Tax Business Ally – the Chief Transformation Officer

Four people in business-casual attire are an office space, which has big sunny windows. The woman seated closest to the camera is referencing and reaching for a computer in front of her. She is smiling with the three people, slightly out of focus behind her, who are all taking a look at the work in front of her.

Companies in the consumer-packaged goods (CPG) and retail sectors are taking a fresh look at their digital transformation efforts following pressures caused by tight margins, persistent inflation and the ongoing shift to digital and omnichannel business models. They’re looking for foundational, enterprise-wide, long-term strategies that avoid the need for “yet another change program” every two years. And they’re creating a new C-suite role – the Chief Transformation Officer – to make it happen.

That’s the development described in this McKinsey article. Although the consulting firm’s data is from the CPG and retail sectors, my impression is that the trend will spread to other industries and companies. Among top CPG and retail companies in North America, 35% have a transformation officer at the VP level or higher. According to the article, 86% of those transformation executives stepped into their role in 2020 or more recently.

What exactly does a chief transformation officer do? It varies. Some are tasked with specific financial mandates, such as reducing supply chain costs by a specified amount. Others might be asked to contribute to growth goals or help shift the business model. Some are charged with achieving broader organizational or cultural goals, such as advancing digital adoption or breaking down silos between corporate functions.

The article explores the challenges that chief transformation officers face and how companies can help them succeed. A discussion on the personal characteristics critical to making the role a success will interest tax leaders. Chief transformation officers naturally think across business functions and groups, according to McKinsey. “Those we surveyed told us that when initiatives were led out of a particular function, they would fall prey to the biases and preferences of that function, making true transformation more difficult.” 

This could be great news for tax departments. Many tax leaders have been pressing for their tax team’s early inclusion in larger transformation efforts involving the systems that lie at the heart of companies’ digital ambitions. The current round of upgrades to enterprise resource planning systems is a good example. And, of course, nearly all companies would benefit from increased input from tax in discussions of the wider business and strategic landscape. Your new chief transformation officer could be a powerful ally in making that happen.

Tax leaders can get started advancing their digital transformation goals by first laying out what tax transformation should entail.

Blog Author

Larry Mellon, Tax Directory, Vertex Inc

Larry Mellon

Tax Director, Chief Tax Office

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Larry Mellon is a Tax Director in the Chief Tax Office, where he is responsible for providing insights, thought leadership and customer-centric direction to Vertex functional groups, supporting the continued expansion of Vertex indirect tax solutions and overall enterprise strategy. He has over 30 years of experience in sales and use tax compliance, risk assessment, jurisdictional audits, administration and management, as well as VAT compliance. Larry joined Vertex in 2005 as a Sales and Income Tax Supervisor and has served as Tax Manager since 2012, where he has played a pivotal role in elevating and advancing the company’s tax management offerings.

Prior to joining Vertex, Larry served as a Senior Tax Accountant and Property Tax Manager at Foamex International, Inc., a polyurethane and advanced polymer foam product manufacturer and marketer. Mellon also held multiple roles at The Franklin Mint and is a member of the Institute of Professionals in Taxation (IPT) and Tax Executives Institute (TEI).

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