A Priority List for Migrating Tax to the Cloud

The European Central Bank Building and the skyline of Frankfurt am Main.

For companies that host both financial and operational functions in the cloud, the bar has been raised regarding flexibility, scalability, and financial simplicity in provisioning IT. It’s now mainstream for businesses to house at least part – and often a large chunk – of their IT environment in the cloud. While the returns on these investments vary, companies that excel at cloud transformation see hefty gains across several dimensions, including improved decision-making, heightened productivity, and increased agility, according to PwC’s 2023 Cloud Business Survey.  

At the same time, many companies remain hesitant to migrate some systems to the cloud, especially those supporting workloads that include sensitive financial and customer-related data. If your organization is unsure about migrating tax solutions to the cloud, you might want to check out the resource, Cloud for Everyone – Including the Tax Function.  

Most tax departments have not been early adopters of Software-as-a-Service (SaaS), but they are well-positioned to be smart adopters of cloud-based tax technology, benefiting from the practical insights and experiences gained from earlier cloud projects.

The report examines several considerations that will likely be top-of-mind for tax leaders. These priorities include:

  • Data security. Cyberattacks and data breaches have pushed security to the top of senior executives’ and board members’ priority lists. But offsetting these concerns is the ongoing progress in professional and industry standards (including standards related to vendors’ data security capabilities), regulatory requirements, and internal capabilities such as encryption. While security should be a priority for any technology investment, security concerns “should not prevent organizations from considering a cloud-based solution, as strong security features have become table stakes for cloud and SaaS solutions.” 
  • Application integration. Data must move smoothly between applications to realize the full benefits of the cloud. Integration of SaaS solutions with large platforms such as enterprise resource planning systems does require an investment of time, attention and expertise. However, integration needs arise with the deployment of almost any form of software, regardless of whether it’s cloud-based or on-premises. “While most forms of integration… are fairly straightforward to handle from an IT perspective, tax executives and other non-IT leaders requesting cloud solutions should be aware of this need.” 
  • Governance. The actions you take to codify, measure and manage the relationship with the SaaS provider are crucial for the success of your cloud initiative. Don’t overlook them simply because your IT assets are being managed offsite. 

Tax leaders who haven’t yet investigated the cloud should do so, working closely with their IT partners to “make and manage these potentially transformational investments,” the report concludes. Tax leaders should also have a tax-technology roadmap in place – a plan that’s examined in more detail here.

Blog Author

Michael J. Bernard, Chief Tax Officer – Transaction Tax at Vertex Inc. Vertex's Chief Tax Office (CTO) provides insight regarding the impact of tax regulations, policy, enforcement, and emerging technology trends on global tax department operations.

Michael J. Bernard

Vice President of Tax Content and Chief Tax Officer

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Michael Bernard is the Chief Tax Officer of Transaction Tax. In his role, he provides insight and thought leadership around tax department operations, U.S. indirect tax, tax risk management, and tax policy, as well as emerging tax trends. He is an executive-level tax attorney with a diverse portfolio of experience in corporate tax, administration, and finance, including a substantive knowledge of U.S. and international tax laws.

Prior to joining Vertex, Michael was in various tax leadership roles at Microsoft Corporation for 28 years, the most recent being Senior Director – Tax Counsel. Michael led teams in the following functional areas: direct and indirect tax controversy, sales and use, business license, property, tax IT, SOX, and telecommunications. He also co-led a corporate taxpayer advocacy group with the Washington Department of Revenue and was a Director on the Board of the Washington Research Council. Michael has also testified before administrative and lawmakers at both the federal and state level.

Michael earned both a J.D. and a Bachelor of Science in Business Administration from Creighton University. He is a part-time lecturer of Law in the LLM program at the University of Washington School of Law. Michael also served on the board of directors, executive committee, and chaired committees for The Tax Executives Institute (TEI) for nearly 25 years.

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Digital world map demonstrating global cloud tax tax.