Eight Tips to Implement and Integrate Tax Technology

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Jeff O'Hagan
Jeff O’Hagan

For corporate tax departments, implementing technology is a high-stakes, high-profile, can’t-afford-to-fail undertaking. We have seen cases when poorly executed projects have adversely affected senior tax executives’ compensation and job security.

So, here are eight tips for getting it right.

  1. Align with corporate objectives. Solicit input from key stakeholders and craft a tax technology vision that advances your company’s overarching strategy. Make sure it is scalable and flexible, because technology, tax requirements, and business conditions evolve rapidly.
  2. Acknowledge COVID-19, but don’t be derailed. Managing through the global pandemic is the top priority for companies today. As a result, you may relegate less-than-mission-critical projects, like implementing tax technology, to the back burner. At the same time, tax teams are working remotely, and department leadership is supporting the business continuity of the company.

So, be patient. As you focus on today’s critical work, continue to lay the groundwork for your tech upgrade. Be ready to move forward when business conditions allow.

  1. Bianca Kuijper
    Bianca Kuijper

    Know where you need to go. Do your homework to ensure your technology initiative targets the right problems. Assess the gap between your current and desired states of operation. Identify specific pain points and needs. What is your team’s biggest recurring waste of time or its most laborious error-prone process? Do you spend significant time gathering data for compliance, tax planning, audit defense, and tax accounting? Which high-volume, repeatable tasks can you automate? Which tax processes do you manage in nonstandard, nonintegrated ways? Does your department struggle to manage and manipulate large volumes of data? What has changed in the business since you last implemented technology?

  2. Secure the foundation. Before implementing new software, honestly assess whether your existing technological and operational environment is getting results. Are you leveraging your platforms fully? Is your team adequately trained to use them? Do team members consistently follow the proper processes, or have they reverted to comfortable and inefficient old methods? Does the team have the right mix of tax and tech skills?

It will be easier to secure funding and support for new technology if you can show an irrefutable return on investment from tools you already have.

  1. Map the connections. Work with your information technology (IT) colleagues to map the system and data connections that will be required to implement your technology vision. Tax provision software, for example, requires automated access to trial balance information from the general ledger. IT may need to budget time to build the new file format required for the software system to accept the data.

More generally, IT can ensure that the tax tech platform aligns with the company’s overall technology and automation vision and is built to sync with existing systems and accommodate future upgrades.

  1. Engage with, educate, and listen to stakeholders. Early on, engage all stakeholders—IT, finance, the executive team, your tax team, and everyone in the organization who will be affected by the project or will have influence over its authorization and funding. This might include your advisory firm, external auditors, IT staff responsible for access controls, and the internal audit team responsible for Sarbanes-Oxley compliance and documentation requirements.

Bring them to the table early in the process, share your vision, explain the pain points the project addresses, describe how success will be measured, address their questions and concerns, discuss potential obstacles and challenges, heed their advice, calibrate expectations, and provide regular communications and updates.

  1. Prepare the team. Technology implementation is most successful when tax team members have previous experience with automated tools, strong Excel skills, and the ability to adapt to new software and workflow processes.

The team also needs the capacity to manage its day-to-day work while transitioning to the new platform. We have seen customers who brought in a service provider to support compliance work during this onboarding phase.

And don’t skimp on training. Success depends on team members’ comfort, confidence, and competence when the new system goes live.

  1. Stay informed and think ahead. As we mentioned above, tax technology, regulatory requirements, and business conditions are ceaselessly evolving. Be aware of what’s coming down the pipeline and assess its relevance to your operation. Have a five-year plan, but be flexible, agile, and adaptable.

This framework applies wherever your organization sits on the path to becoming a best-in-class corporate tax department. A lot of our customers follow a journey that looks like this:

  • Reactive. At this stage, tax processes are not standardized or integrated. Team members spend an inordinate amount of time chasing down data, information is managed in Excel spreadsheets, and work is manual and duplicative.
  • Proactive. At this stage, tax compliance and reporting processes are standardized, less time is wasted on data gathering and calculations, and inefficiency and errors are reduced. The integration of compliance and reporting processes often presents an opportunity to look at the existing process after the first technology implementation and to optimize it while implementing and integrating a new solution.
  • Progressive. Data is captured in a consistent structure, access is centralized and flexible, and information is available to support corporate decision-making. Tax compliance and tax planning processes are integrated, so tax professionals can shift from focusing on historical performance to delivering strategic value.
  • Best-in-class. At its best, tax technology integrates data, documentation, controls, and interfaces to create a customizable and collaborative platform.

A best-in-class tax department uses platform technology that serves as a single source of truth for tax applications and processes. The platform provides one place to maintain master data elements like legal entities and user administration and to manage business data enriched for different tax processes. Such a platform eliminates duplication of data and information entry for various processes, limiting time spent, inconsistencies, and risk. The platform can also enable automated tax process management to connect the steps in provision and compliance applications using task completion dashboards and other analytics. In case of a tax audit, the platform is the central place where all source data, positions, and supporting documents are stored.

The platform is web-based and can be accessed from anywhere to enable workflows across diverse functional teams, locations, and time zones. It brings speed, simplicity, and accuracy to daily tactical tasks and creates insights that inform long-term business decisions. Flexibility, agility, and speed of response are optimal. With these capabilities, tax compliance can fully integrate with business operations and third parties to maximize value and to plan for the future.

No one reaches best-in-class performance overnight, but the destination is achievable with a clear game plan and a collaborative approach.


Jeff O’Hagan is a director of professional services at Thomson Reuters, managing a group of seven consultants who implement the suite of ONESOURCE Direct Tax solutions. He is responsible for more than 300 tax technology implementations. Bianca Kuijper is customer proposition director at Thomson Reuters, where she works with customers to deliver the best propositions for the Direct Tax and Transfer Pricing suites.

 

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