Chief information officers (CIOs) and their information technology (IT) functions are feeling overwhelmed these days. Understanding the source of this frustration can equip chief tax officers (CTOs) and their tax functions with some practical and valuable guidance.
A recent survey by IT research firm Gartner indicates that “many CIOs feel overwhelmed by the prospect of building digital leadership, while renovating the core of IT infrastructure and capability for the digital future.”
IT’s exasperation stems from trying to do two very different pressures bearing down at once:
- A need for more the tactical, “keeping the lights on” work of maintaining the technical infrastructure their companies need to operate – reliably – on a daily basis; and
- A need for the more strategic work of leading their companies into the era of digitalization, which requires making fundamental changes that the business wants in order to operate – innovatively – in a fast-approaching digital future.
A very similar dynamic holds true for many tax departments. This dual pressure – to execute a growing amount of tactical, “keep the lights on” tax priorities while expanding the tax function’s more strategic contributions to the business – often feels overwhelming to understaffed, overworked tax functions. They’re not alone.
Gartner’s global survey of 2,339 CIOs, representing more than $300 billion in CIO IT budgets in 77 countries finds that 51 percent of IT executives “are concerned that the digital torrent is coming faster than they can cope;” what’s more, 42 percent of CIOs indicate that they do not believe that they have the talent needed to face this future. Oh, and one more finding: CIOs expect their IT budgets to remain flat.
Many tax functions confront similar concerns and similar budget and talent challenges. And many tax functions also find themselves entering a new era in which they are expected to partner more effectively – and more nimbly – with their operational colleagues as the pace of business accelerates.
As companies bring new products and services to market more rapidly and plunge into new geographies with greater speed, tax needs to keep pace. In the best-case scenario, tax professionals take part in the strategic planning process to help spot opportunities and threats well in advance of the final decision to, say, enter India. Of course, tax functions cannot do this if their completely bogged down with returns; and if they are bogged down with their own “lights-on“ issues, it ultimately can delay these types of strategic moves.
The way IT functions can accomplish both, according to Gartner Vice President, Dave Aron and his colleagues, is by investing in more agile forms of technology (like cloud-based offerings), as well as by automating and/or outsourcing more of what they describe as “safe and steady” work on systems of record so that more, highly talented IT folks can be assigned to higher-value, more agile activities on systems of differentiation. This is referred to as a "dual mode" capacity.
Gartner is not the only source sketching out this type of IT roadmap; in my next post, I’ll look other recent IT research that can help show tax functions the way toward a more digital and strategic future.