Brad Brown, Partner in charge of the Tax Transformation and Technology and Scott Weisbecker, Partner and the national service line leader for the Tax Transformation and Technology, KPMG LLP
Today’s increasingly versatile technology platforms are helping IT departments deploy new solutions at a much faster pace, and companies no longer have to wait years to see the return on their investments.
Yet we hear from tax professionals that IT often overlooks their needs. In fact, in our most recent tax benchmarking survey, 72 percent of tax executives said there is a need for improved understanding of their technology needs.
Because taxes are among the largest items on most company’s income statements, any improvement to the tax line generally goes right to company’s bottom line. But our sense is that there are missed opportunities to get the most from technology initiatives when there is little engagement between IT and the tax department.
While IT’s focus often rests on evaluating opportunities to consolidate technology systems with widespread impact, tax departments have traditionally invested in tax-specific tools that may provide little opportunity for use by other departments.
IT can help tax departments both integrate the enterprise’s technology investments into their operations and configure existing solutions to generate the information needed for tax reporting and planning.
The result? Eliminate the growing reality of shadow IT activity in the tax function while enhancing process improvement and cost savings opportunities that benefit the entire organization, ranging from potential credits and incentives for technology investments to previously unidentified tax refund opportunities.
In our experience working with clients, we’ve found that many organizations don’t have a tax data warehouse, but we’ve seen the ample benefits that can flow from creating one. If a financial data warehouse already exists, it’s likely that many of the key items the tax function wants to analyze are already being collected. For instance, we have seen existing SAP BW environments being opened up to the tax function to help drive the tax compliance and accounting processes.
Tax departments could consider leveraging the same platform and technology to build out a tax data warehouse and working with IT, configure the ERP system to filter the data needed to improve tax process execution and risk management.
As for making sense of the data, companies are going on the data and analytics journey and tax needs to have a seat on that ride. Using business intelligence and analytics can transform the data from the ERP or other financial systems to streamline the information-gathering process and make it easier to identify potential operating and cost-savings opportunities in tax.
Consider the property tax obligations certain organizations have that operate in multiple locations. For instance, a large hospitality chain may operate thousands of hotels giving rise to a large volume of property tax filings and significant real estate tax costs. Through the use of data and analytic tools companies such as these may be able to identify instances where their property valuations could be overstated, resulting in opportunities to significantly reduce their overall real estate tax burden. Without the use of data and analytics spotting these opportunities would be very difficult.
The right data can allow the tax department to add real value by shifting their mindset from collecting information from disparate systems to thinking about what else can be asked and answered across the entire tax organization.
The cloud offers a host of benefits to organizations of all sizes. IT departments are deploying it and leveraging it as an enabling platform. In doing so, enterprise software and third-party tax tools are deployed where needed by a flip of a switch, often without dealing with procurement and licensing hurdles.
We know efforts to improve process and document management are often a huge challenge for those working in tax operations. We’re seeing these issues resolved by enabling already licensed tools, like Microsoft SharePoint, and customizing them to give tax professionals more visibility into their progress.
Moving away from one-off technology investments and adopting enterprise-wide solutions not only helps save more money in the long run, it will help drive performance in the face of internal and external demands affecting changes in the business landscape by enhancing data governance and closing the information gap within the tax department.
“Moving away from one-off technology investments and adopting enterprise-wide solutions not only helps save more money in the long run, it will help drive performance”
As the tax department adopts more enterprise-wide technology, IT will have more insight into what data is being collected, how it’s being used and be able to make better recommendations to help further integrate the tax department into the overall technology footprint.
So swing by your tax department this week. Bring their leaders up-to-date on what technology the enterprise has invested in and ask how you can help unlock value for their critical operations.
Three questions to ask your chief tax officer
1. Would our BPM and document management tools be of use to you? Often your existing investments in process and document management platforms can be used by the tax function with very little additional effort on IT’s part.
2. What benefit could you drive if you had seamless access to all your required data?
Probe to see if tax could better leverage your investments in ERP, financial consolidation and data warehousing.
3. How could you leverage our growing D&A capability?
Share with the tax department your big data, analytics and visualization capabilities – these conversations have typically led to identifying opportunities to leverage the D&A stack for tax.