Understanding the Tax Technology Requirements for Your SAP S/4HANA Migration

As more companies migrate from SAP ECC to SAP S/4HANA, it’s critical for the tax and finance functions to anticipate and understand any impacts on their current or planned tax technology implementation. Tax leaders typically want answers to some important questions, including:

• Will the S/4HANA implementation require an investment in new tax technology?
• How long and significant is the tax technology effort amid the larger S/4HANA implementation?
• What will the tax solution implementation cost?

Although the answers vary, Vertex has developed a comprehensive process based on over 25 years of implementation experience to help customers assesses which factors have the largest impact on the project’s scope and cost. By working together in a defined discovery phase before starting a project, we can easily guide our customers’ tax, IT and finance teams through the necessary requirements, criteria and steps to support a successful implementation.

Top Three Influencers of Successful Tax Technology Implementations

What we’ve discovered during this discovery process and validated from our work on hundreds of tax technology projects is that three primary factors have the greatest influence on the ease, length and cost of implementations in most organizations; these include:

1. Geographic footprint: The number of regions globally in which a company operates usually has the largest impact on the scope of an implementation. For example, the duration of an implementation for North America-only may be in the three- to six-month range and a multi-region, global implementation might require a duration of in the six- to 12-month range. The nature and requirements of some global operations may also influence the implementation effort. For example, certain trade flows (i.e., the means by which an organization distributes products globally) can add significant amounts of complexity to an implementation.

2. Experienced supporting resources: The team managing an implementation typically consists of a blend of internal and external resources. In addition to a project manager, the internal members of the team normally include SAP experts knowledgeable of specific functionality (e.g., materials master records, sales and distribution, purchasing, SAP Basis and more), tax professionals and IT professionals. If those internal experts are unavailable, they may need to be sourced externally, which increases implementation costs.

3. The master plan: A Vertex Indirect Tax solutions integration represents a crucial, yet smaller, component of the much larger SAP S/4HANA implementation. As such, the S/4HANA project timeline normally determines when and how the Vertex implementation occurs. While the total Vertex implementation time may be four months in a given situation, that four months of work may be accomplished in discrete stages throughout the duration of a longer, much more comprehensive S/4HANA implementation.

While these are the most influential factors that shape an implementation’s scope and cost, there is a set of secondary factors that can also affect the project. To address the full breadth of factors, there are several actions that tax leaders and other stakeholders involved in ECC-to-S/4HANA migrations can consider to improve the speed and efficacy of their Vertex implementations. We’ll discuss those further in Part 2.

To learn more about successful migrations to SAP S/4HANA, check out our 'go-to guide': All the Right Moves: How Vertex Eases the Tax Risks of SAP S/4HANA Migrations.

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.