Enhancing the Business Case for Tax Automation
From our position at the center of a network of tax department leaders, we see a wide variety of solutions to tax filing, provisioning, and associated processes. Many tax directors express a frustration with an ever-increasing workload and fewer resources for planning. A progressive member from a major food company addressed our group during a teleconference. Here is what we found:
How Important Is Tax Automation?
In a Tax Director Roundtable survey of 45 companies, we observed that many companies have yet to adopt any specialized tax software. Surprisingly, many large companies are using Microsoft Excel as their primary technology tool.
The data breaks down as follows:
- 51% of companies polled use Excel as their primary technology tool. This means a high use of labor and data manipulation time.
- 27% of companies use OneSource (Tax Stream). This is an integrated solution that is popular with many members.
- 22% of companies use Corptax—as an alternative to Tax Stream—for federal, state, property, and much more.
Other systems, such as Longview and Vertex, were selections in the polling, but they were not chosen by any participants. The panelist mentioned using Vertex to simplify his sales tax process.
In some cases, the technology upgrade was motivated by an ulterior motive. For example, our panelist reported that his company’s investment in OneSource (Tax Stream) was motivated by Sarbanes-Oxley compliance. The software has paid other dividends beyond what they anticipated in terms of department productivity and compliance.
The tax director on the teleconference mentioned that his firm was even looking to replace shared drives and work manuals with Microsoft SharePoint. SharePoint is a popular, labor-saving tool that enables greater workforce productivity. With more and more staff looking to telecommute, the technology to work from any location becomes a critical element of a team’s success. SharePoint is one software application that can help a tax department satisfy demands for telecommuting and collaboration.
During the discussion, an audience member asked if anyone had developed home-grown tax software (e.g., an enhanced version of Excel that could simulate the functionality of a vendor-supplied system). No one on the call mentioned trying this approach.
Tips for a Better Implementation:
The panelist described his company’s implementation experience. He talked about “what went right” and shared improvement opportunities that he observed during their OneSource (Tax Stream) implementation. Two tactics for a more successful implementation are:
- Dedicated Implementation Staff: The tax department dedicated two of their 20 staff members to become implementation experts. They worked with the vendor for one year to install the system and encourage users to adopt it. To ensure the system worked well, they ran the new one in parallel to their old process for one year before they switched over 100%.
- Built-in Flexibility: One regret: their implementation was too rigid. The panelist said that they needed to be more flexible for changes, especially when dealing with state tax and international tax capabilities. One interesting example was that when launching international capabilities to end users overseas, the professionals were slow to adopt the new software. They would use their old Excel spreadsheets for calculations and viewed the software simply as a reporting tool. The department leadership had to make a special outreach to overseas tax professionals to help them understand the functionality and avoid lost labor from double entry of data.
As system implementations proliferate, tax directors are becoming increasingly responsible for smart technology investment decisions and successful implementations. The good news is that any tax department can learn insights from other companies that have already completed technology projects.
What We Are Doing for Our Membership
Improve your tax automation business case; visit these Tax Director Roundtable (TDR) resources and services:
- Make improvements to your tax technology roadmap by visiting our Process Improvement and Tax Technology web topic center.
- Listen to a replay of our teleconference, Tax Technology: Integration with Efficiency Projects.
- Use TDR’s Anatomy of a World-Class Tax Department to compare your capabilities to other large corporations.
- Click here to view cases from companies such as Aon, Cargill, and Praxair.
To find out more about how TDR can help you enhance your business case and reduce labor expenses, please contact your account manager.
- Additional research by Cody Villella