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Tax and accounting

10 steps for creating a corporate tax technology roadmap

What are the best ways to integrate new technology into your present corporate tax group's process and workflow? We created 10 steps your organization can take to create a tax technology roadmap.

More than 1,000 corporate tax professionals attended the recent webinar Scoring Your Company’s Tax Technology Evolution, sponsored by Thomson Reuters and the Tax Executives Institute. Based on material presented in the webinar (available here in its entirety) by corporate tax experts from PwC and RSM US, we created 10 steps corporate tax groups can take to create a tax technology roadmap.

1. Map your starting position on the road to tax technology adoption

How automated are your tax department’s processes for downloading reports, managing data, and calculating, reviewing, and posting results? On a continuum from completely manual to fully automated, the progression often looks like this:

  • Solely reliant on the manual use of spreadsheets;
  • Heavy use of spreadsheets supplemented by a calculation engine that would, for example, automate tax accounting or provision compliance;
  • Addition of ETL tools to automate data management;
  • Use of analytics or visualization tools;
  • Integration of workflow and collaboration software;
  • Robotic process automation for data extraction; and
  • Exploring the potential use of cognitive technologies that leverage artificial intelligence, machine learning, and natural language applications.

Once you are certain where your company stands on the digital adoption continuum, you can map your path forward.

2. Identify manual processes that can be effectively automated

Evaluate whether your manual processes are predictable, routine, and structured in order to determine whether they are candidates for automation. After determining whether they can be automated, assess whether they should be by calculating the expected return-on-investment (ROI).

Then, assess whether your company has the systems and people skills needed to implement the solution. And gauge whether your corporate culture will embrace this type of innovation. After this round of investigation, you’ll know specifically what to tackle in your technology adoption plan.

3. Create a list of technologies your company already uses

It’s easier to build your tax technology plan on an existing foundation, so compile a list of technology your organization already uses. Ask IT, finance, treasury, human resources, and other departments — and all groups within your tax department — what technology they license.

“When I work with clients, they are consistently amazed at how much tech already exists” within their companies, said Margie Dhunjishah, a partner in the Tax Reporting & Strategy practice at PwC, adding that you may “find out there are some pretty miraculous things being done in the organization, and it’s not as big a lift-and-shift as you might have thought.”

4. Create a viable vision

As you start, keep your company’s strategy in mind and ensure your tax technology vision advances it. As you progress, solicit input from stakeholders, define goals and metrics, prioritize tactics, identify potential software and technology vendors, and design a realistic execution plan.

Hadley Leach, a partner in the U.S. Tax Reporting & Strategy practice at PwC, shared two keys to success: i) don’t indiscriminately apply technology to random tasks in a way that’s not scalable; and ii) avoid excessive analyses and planning.

Tax compliance requirements, emerging technologies, and your company’s enterprise technology initiatives will inevitably change, requiring flexibility and agility. Leave yourself room to maneuver. “Treat your strategy and roadmap like a living document,” Leach said. “That’s even more important now, because technology is moving so fast and tax requirements are a moving target.”

5. Align your plan with your organization’s technology and automation vision

Aligning the tax technology plan with the company’s approach to technology adoption will make it easier to get buy-in and support. “Where has your company taken digital transformation?” asked Danielle Gonzalez, senior tax manager at RSM. “It’s important to understand how hungry your company is for new technology and then measure their willingness to take on this investment. You’ll get (stronger) support if you’re aligned with their technology plan.”

6. Engage and educate stakeholders

It’s also important to ensure stakeholders understand the pain points your tax technology plan addresses, get answers to their questions, and are clear on potential obstacles and challenges upfront. Open, honest communications from the start will calibrate expectations, build support for necessary expenditures, and engender understanding down the road when obstacles arise and plans need to be modified.

7. Secure funding

Understand the process and calendar for the IT and finance departments to assess, prioritize, and fund projects — so you engage effectively. In addition to technology costs, be sure to anticipate personnel and training costs. “That training component is so important,” PwC’s Dhunjishah noted. “Your team needs enough training to get all the… value out of the automation you just paid for.”

8. Seek quick wins to build credibility and momentum

Early on, identify attainable short-term objectives with high ROI to take on first. “Everyone will get excited and want to jump in and tackle it all — and that is a recipe for failure,” said Brad Collins, national tax partner at RSM. “You want to ensure you’re getting some quick wins so you’re showing momentum and showing that this can be done.”

9. Prepare for obstacles

The work required to overcome obstacles begins long before those obstacles arise. Establish solid working relationships with key stakeholders whose help you will need, including IT and audit teams. Manage expectations and describe potential implementation and operational challenges upfront, so there are no surprises. Run pilots and proof of concept demonstrations to uncover and solve problems before launch.

10. Evaluate effectiveness

Build consensus regarding your desired outcomes and have explicit key performance indicators (KPIs) to assess your results. “It’s really important to decide what KPIs are important to your organization so you can measure yourself against those,” Dhunjishah said. For tax departments, these might include improved remediation of control deficiencies, earlier book journal entries, a higher percentage of tax returns filed on time, or improved accuracy in statutory reporting.

“For you to celebrate success, prove the validity of the project, or keep the organization engaged and appreciative of all the things you’re accomplishing, you have got to have crisp KPIs established,” she said.

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