The Industrial Cloud: How Manufacturers and Distributors are Transforming Tax and Technology Solutions

Why M&D companies are rethinking tax technology now

Manufacturers and distributors are navigating a perfect storm: global supply chain disruption, rapid digital transformation, and a tax landscape that keeps getting more complex. IDC research shows that companies in this industry are turning to cloud-based, automated tax solutions to cut costs, reduce errors, and stay compliant across borders. This white paper shares what they found, and what it means for your organization.

Tax complexity is growing faster than manual processes can handle

Governments worldwide are ramping up indirect tax enforcement. Value-added tax is now enforced in 170 countries. In EU countries alone, taxes on production and imports made up nearly 14% of GDP in 2021. Vertex's own data counted 542 sales tax rate changes in a single year. With 19,000 jurisdictions worldwide, the volume of rules, rates, and compliance requirements has simply outpaced what legacy systems and manual workflows can manage.

Four challenges companies keep running into

Survey respondents identified their top pain points with current indirect tax processes: high cost, poor integration with line-of-business software, under-utilization of data, and too many manual errors. These aren't just IT headaches. They slow down finance teams, create customer invoice problems, and expose the business to compliance risk.

Cloud migration opens a window for tax transformation

Nearly three-quarters of manufacturers have already upgraded their ERP or plan to within the next 12 months. Most are moving toward SAP S/4HANA and cloud-first environments. That shift creates a natural opportunity to modernize tax processes at the same time. Companies that involve tax managers early in ERP migration projects end up with more accurate, more efficient tax operations, and a stronger return on the overall investment.

What cloud-based tax automation actually delivers

A cloud tax engine reduces hardware costs, lowers the burden on IT to maintain tax data, and helps finance teams generate faster, more accurate results for suppliers and customers. Nearly 60% of M&D companies surveyed are upgrading to or planning a cloud-based tax solution. Automation, cost savings, and the ability to scale globally are the top reasons why.

How Vertex and SAP work together for M&D

Vertex integrates with SAP S/4HANA, SAP Ariba, SAP Public Cloud, and other SAP systems to deliver reliable, automated indirect tax determination on sales and procurement transactions. The integration keeps the SAP core clean while supporting end-to-end tax management, compliance, and global scalability. Vertex and SAP have worked together for over 25 years and continue to solve the tax challenges that matter most to manufacturers and distributors.