Ohio Tax. Workshop PP. Advanced: The Future Tax Department is Here! Wednesday, January 25, :00 p.m. to 3:00 p.m.

Transcription

1 26th Annual Tuesday & Wednesday, January 24 25, 2017 Hya Regency Columbus, Columbus, Ohio Ohio Tax Workshop PP Advanced: The Future Tax Department is Here! Wednesday, January 25, :00 p.m. to 3:00 p.m.

2 Biographical Information Andrew D. Gold, CPA, MPA, Partner, Multistate Tax Practice, Deloitte Tax LLP 1111 Bagby Street, Ste. 4500, Houston TX Andy is a Multistate Tax Partner with over 28 years of experience working with clients to address their state tax needs in areas such as income tax compliance, controversy, sales/use tax, credits & incentives, M&A and state tax planning. He has broad industry experience including technology, retail/distribution, energy, manufacturing, and entertainment industries. Andy leads technology and innovation for Deloitte Tax s Multistate Tax Services practice, responsible for steering Multistate tax technology & data analytics strategy and transforming the ways in which Deloitte Tax and its clients address state and local tax needs through data, technology, and analytics. Andy is also a member of Deloitte s Corporate Development team, focused on growth through alliances and transactions. Most recently, Andy led the West region s Multistate Tax Services practice, as well as Deloitte s Multistate Tax Services Compliance practice nationally. Andy received his Bachelor of Business Administration and Masters in Public Accounting, Tax from the University of Texas. He is a Certified Public Accountant and a member of the American Institute of CPAs. He serves as a speaker at various tax conferences and seminars, including those sponsored by Tax Executives Institute, COST, American Society of CPAs, and various local California and Texas Societies of CPAs. Brandi Langhans, Tax Technical Director, Nationwide 1 W. Nationwide Blvd., Columbus, OH brandi.langhans@nationwide.com Brandi started her career in public accounting at Arthur Andersen and Deloitte before joining the Nationwide tax department in Brandi has had a variety of roles on the Nationwide tax team and is currently leading the tax technology, continuous improvement & special projects group. This team is responsible for the tax applications including tax data governance, managing IT projects and continuous improvement projects within and outside of the department. Brandi has 10 years of tax software implementation and process automation experience including federal, state, income and indirect tax solutions. Brandi is a graduate of Ohio University with a Bachelors of Business Administration, holds a Masters of Taxation from Capital University Law School and is a Certified Lean Six Sigma Black Belt.

3 The Future State Tax Department is Here Leveraging the power of data and technology 26 th Annual Ohio Tax Conference January 25, 2016 Andy Gold Partner, Deloitte Tax Brandi Langhans Director, Nationwide

4 Agenda Transforming the Tax Function through Data and Technology The State of the State Tax Department The Art of the Possible Analytics in Action Practical Applications Getting Started Questions? Copyright 2017 Deloitte Development LLC. All rights reserved. 2

5 CFOs have new expectations for Tax Executives Three traditional roles Planning Optimizing the tax function Reporting The company s tax and finance profile Emerging additional expectations Process, technology and data management People Sustainability and efficiency Strategic partnering across the organization Managing Business partnering Clear communication Leading strategic initiatives Transform for greater impact Derived from Deloitte stakeholder interviews, including over 80 CFOs, in preparation for Deloitte Tax Executive Transition Labs. Copyright 2017 Deloitte Development LLC. All rights reserved. 3

6 What s causing the need for tax transformation? Why tax? Why now? Increased Use of Technology The proliferation of new technology solutions and a past decade of effective finance and HR transformation create the opportunity to re-engineer the tax function Increased Competition Intense competition is driving business innovation and strategy activity that presents opportunities for tax to participate in, and inform, choices that reshape business portfolios to impact the next decade of shareholder value. Stricter, More Aligned Regulations Global capital market and government transparency expectations, global tax policy collaboration led by OECD and global regulatory information sharing have reset the global regulatory environment. Greater global footprint Businesses continue to globalize. Tax Executives are increasingly demonstrating the desire to implement a global approach to tax planning, tax reporting and managing tax risk. Derived from Deloitte stakeholder interviews, including over 80 CFOs, in preparation for Deloitte Tax Executive Transition Labs. Copyright 2017 Deloitte Development LLC. All rights reserved. 4

7 Technology & Transformation Tax is a late adopter Despite being a quantitative field, tax has been slow to embrace analytics Transactional, compliance focus of software Not enough data to analyze Tax structures and data are complex Demand from executives just beginning to emerge Some regulatory agency practices are ahead of companies Despite late adoption, there are many opportunities for analytical tax planning Copyright 2017 Deloitte Development LLC. All rights reserved.

8 Stages of Tax Transformation Know your company s aspirations Tax departments should envision their own intelligent enterprise technology as their primary blueprint and roadmap to deploying their end-state BI visions 6Copyright 2017 Turning Deloitte vision Development into value LLC. All rights reserved. Copyright 2016 Deloitte Development LLC. All rights reserved. 6

9 The State of State Tax Departments

10 Current State of State Tax Departments State Tax Departments Have Four Responsibilities High Value Add Strategic Risk Planning Higher Value Add Tax Accounting Risk Mitigation Low Value Add Compliance Activities 8Copyright 2017 Turning Deloitte vision Development into value LLC. All rights reserved. Copyright 2016 Deloitte Development LLC. All rights reserved. 8

11 What our clients are saying Improvement in tax access to data? Biggest challenge in executing an analytics strategy? No 24% Ye Budget 23% IT/Tools 25% Somewhat 52% Skillset 20% Data Tax focus around data analytics: Tax analytics used to address: Not embrace Extremely 14% Exploring 46% Direct taxes 49% BEPS 7% Indirect taxes 20% Transfer pricing/ic 24% Source: Deloitte Dbriefs Tax Operations Series, September 17, 2015 Tax Data Analytics: A New Era for Tax Planning and Compliance Responses received from approximately 3000 participants; excludes N/A or Don t Know 9Copyright 2017 Turning Deloitte vision Development into value LLC. All rights reserved. Copyright 2016 Deloitte Development LLC. All rights reserved. 9

12 Two key resources facilitating Tax data analytics Need to harmonize and integrate tax data across the organization Spreadsheets may proliferate multiple versions of data and terminology Need to include tax data in enterprise data warehouse Human Infrastructure Data Infrastructure Need people who understand both tax and analytics! Universities not turning them out now Perhaps easier to start with a quantitative person and teach them tax than vice-versa Tax planners may be a good starting point 10 Copyright 2017 Turning Deloitte vision Development into value LLC. All rights reserved. Copyright 2016 Deloitte Development LLC. All rights reserved. 10

13 The Art of the Possible

14 Tools today give you the user the power Tax ownership IT freed from helping Tax, now able to do their day jobs Excel connected to ERP systems Drag and drop data queries supporting ad hoc reporting Tax platforms enabling application model 12 Copyright 2017 Turning Deloitte vision Development into value LLC. All rights reserved. Copyright 2016 Deloitte Development LLC. All rights reserved. 12

15 Leveraging Technology to Drive Value BUSINESS INTELLIGENCE = DATA + ANALYTICS + VISUALIZATION DATA The age of Microsoft Excel spreadsheets ( Excel ) and manual data crunching is long over. ANALYTICS The purpose and business value of Tax data analytics is to get answers and ultimately tell a story. VISUALIZATION Visualization enables the context of the story to stay in tact. Big Data MDM Hadoop Exalytics HANA Netezza Structured data Unstructured data In-Memory. Oracle BI Cognos Micro Strategy Business Objects Power BI Cloud Analytics SAS SPSS Tableau Qlik View TIBCO - Spotfire Pyramid Alteryx Microsoft. Copyright 2017 Deloitte Development LLC. All rights reserved. 13

16 BUSINESS INTELLIGENCE = DATA + ANALYTICS + VISUALIZATION Define Business Priorities Do we have this data? Do you spend most of your time in data preparation or business driven analysis? How much time would you need to conduct a new What If analysis from data preparation to Data analytics to reach Desired results? Do you know what your competition and industry is doing in this area? Standard Industry & Regulatory Speed to Market Insights turned into intelligence Improved processes and efficiency Better Planning for efficient tax provisioning Faster forecasting Data Management - DOTS Objective Achieve Efficiency Establish trusted source for your Tax processes Establish tax enablement in your enterprise initiatives like ERP transformation and Financial transformation Advance your tax technology in par with the industry and build the ability to transform into an Analytical Tax Department Technology Strategic Enablement Automate data flow avoiding manual processes (ETL / ELT / ODI) Single source of truth with an integrated technology Analytics platform enables actionable intelligence Data visualization leading to better business decisions Cloud technology enabling faster decisions Advanced analytics enabling proactive decisions Copyright 2017 Deloitte Development LLC. All rights reserved. 14

17 BUSINESS INTELLIGENCE = DATA + ANALYTICS + VISUALIZATION ILLUSTRATION OF ANALYTICS USING Oracle BI landscape: Intelligent enterprise While every organization needs a custom architecture that meets their specific imperatives and requirements, a general vision for Intelligent enterprise BI architecture can be useful to provide a departure point for discussions on leading practices and capabilities. Sales Analytics Service Analytics Marketing Analytics Financial Analytics HR Analytics Profitability Analytics Tax Accounting Analytics Tax Payments Analytics Tax Forms Analytics HFM Analytics Hyperion Analytics Procurement & Spend Analytics Supply Chain Analytics EDGE Analytics CMO CFO CHRO TAX VP COO Strategic Performance & Analytics Geospatial visualization & Analytics Executive Dashboards Interactive Analytics CIO Source Integration Real Time Analytics Data Governance Copyright 2017 Deloitte Development LLC. All rights reserved. 15

18 BUSINESS INTELLIGENCE = DATA + ANALYTICS + VISUALIZATION Data visualization tools like Tableau provide rapid-fire authoring environment that can be used to create and publish views, reports and dashboards and the POWER of ad-hoc dashboard development is made available at USER LEVEL Copyright 2017 Deloitte Development LLC. All rights reserved. 16

19 BUSINESS INTELLIGENCE = DATA + ANALYTICS + VISUALIZATION Departing point for Discussion Visualization on top of Analytics = More Meaningful Insights Analytics Tools Oracle BI/ SAP / MicroStrategy. DATA Single Source of Truth Tax Tech + ERP Copyright 2017 Deloitte Development LLC. All rights reserved. 17

20 Technology enabling a better approach What is NEXT? Traditional approach Compared to Integrated approach Many users, multiple points of entry Many users, single point of entry Disconnected tax processes Tax Compliance Tax Planning Investor Reporting Audit Defense Integrated tax processes Tax Compliance Investor Reporting Tax Planning Audit Defense Disparate Systems & Data Sources Spread sheets 3rd party admin Vendor Systems Integrated platform Data Calculations Reporting Analytics Visualization Dashboards 18 Copyright 2017 Turning Deloitte vision Development into value LLC. All rights reserved. Copyright 2016 Deloitte Development LLC. All rights reserved. 18

21 The Art of the Possible Bringing the Pie in the Sky to our workplace Motor Fuels Partnership K-1s Invoices Amended returns The IOT OCR Credits & Incentives Indirect Tax Income Tax Diagnostics Other?? Artificial Intelligence Robotics E-filing automation Compliance sub-processes Document management Block Chain Cognitive Platforms Transfer pricing Indirect tax recovery 19 Copyright 2017 Turning Deloitte vision Development into value LLC. All rights reserved. Copyright 2016 Deloitte Development LLC. All rights reserved. 19

22 Cognitive advantage can help address some of the sector trends New technologies show significant application for Finance and Tax, delivering sustainable savings and efficiencies Low Medium High Futuristic Degree of Cognition Robotic Process Automation Intelligent Automation Cognitive Automation Artificial Intelligence Mimics human actions Mimics human judgment Augments Human Intelligence Mimics Human Intelligence Computer program or robot that mimics rules-based actions in existing applications Applications: Invoice receiving, 3- way matching, customer credit assessment, reconciliation etc. Tools that allow for the natural language generation based on a dataset and business rules to Applications: Invoice processing and filing, workers comp. filing, underwriting advisor etc. Computerized models that simulate human thought processes through predictive decision making Applications: Creation of competitor analysis, advanced planning & predictive forecasting etc. The theory and development of computer systems that can perform tasks which normally require human intelligence Applications: Self-sustaining reconciliations etc. You must look to technology for sources of sustainable cost reductions Copyright 2017 Deloitte Development LLC. All rights reserved. 20

23 Automation is the new transformation engine for Finance and Tax The Digital-shore is eroding the benefits of traditional cost reduction levers, while creating new capabilities A New Workforce Evolution of the Digital-shore Challenging the Status Quo The Digital Workforce, once an emerging concept, now has proven applications technology is no longer an enabler of your workforce, it is the workforce A Digital-shore strategy, leveraging nascent technologies, is the natural progression of more traditional offshoring and outsourcing options Technologies, like Robotic Process Automation, complement many existing or proposed cost reduction initiatives and can help accelerate realizing benefits Automation outperforms other forms of cost reduction on multiple measures Automation yields larger cost benefits than traditional opportunities and can act as a hedge against uncertainties like offshore labor rates The benefits from automation can be recognized faster than traditional cost reduction initiatives due to a shorter planning and execution timeline Unlike other options, it is possible to pilot automation and explore opportunities at a low cost to reduce risk during full scale implementation Automation can be deployed quickly, with low risk, while delivering significant benefits Copyright 2017 Deloitte Development LLC. All rights reserved. 21

24 Tax Technology Robotic Process Automation (RPA) RPA is delivered through software that can be configured to undertake rules-based (deterministic) tasks RPA is RPA is not Software configured to operate other software Walking, talking auto-bots Automation to replace humans performing repetitive, rules-based tasks Physically existing machines processing paper Able to operate any software on your computer Artificial intelligence or voice recognition and reply software Copyright 2017 Deloitte Development LLC. All rights reserved. 22

25 Tax Technology Robotic Process Automation (RPA) IN AN RPA SOLUTION, ROBOTS ARE CAPABLE OF MIMICKING MOST USER ACTIONS Opening and attachments Scraping data from the web Logging into web/ enterprise applications Connecting to system APIs Moving files and folders Making calculations Copying and pasting Filling in forms Reading and writing to databases Following if/then decisions/rules Extracting structured data from documents Collecting social media statistics Copyright 2017 Deloitte Development LLC. All rights reserved. 23

26 Analytics in Action Practical Applications

27 Visualization use cases Utilizing data analytics to surface insights and action Indirect State apportionment Compliance/ Provision Tax data warehouse Controversy Transfer pricing Credits & Incentives 25 Copyright 2017 Turning Deloitte vision Development into value LLC. All rights reserved. Copyright 2016 Deloitte Development LLC. All rights reserved. 25

28 Getting Started

29 Leveraging the power of data and technology Some ways to get started `Identify Pain Points Standardize processes Data health check Assess the Art of the Possible Develop automated data solution Apply data analytics Explore opportunities to apply artificial intelligence Copyright 2017 Deloitte Development LLC. All rights reserved. 27

30 Questions? Copyright 2017 Deloitte Development LLC. All rights reserved. 28

31 Contacts Andy Gold Partner Deloitte Tax LLP Multistate Tax Houston, TX Brandi Langhans Director Nationwide Columbus, OH Copyright 2017 Deloitte Development LLC. All rights reserved. 29

32 About this presentation This presentation contains general information only and the respective speakers and their firms are not, by means of this presentation, rendering accounting, business, financial, investment, legal, tax, or other professional advice or services. This presentation is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional advisor. The respective speakers and their firms shall not be responsible for any loss sustained by any person who relies on this presentation. Copyright 2017 Deloitte Development LLC. All rights reserved. 30

33 About Deloitte Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity. Please see for a detailed description of the legal structure of Deloitte Touche Tohmatsu Limited and its member firms. Please see for a detailed description of the legal structure of Deloitte LLP and its subsidiaries. Certain services may not be available to attest clients under the rules and regulations of public accounting. Copyright 2017 Deloitte Development LLC. All rights reserved. Member of Deloitte Touche Tohmatsu Limited

34 The Transformation of Tax Something Big is Happening Here

35 Expectations of the tax function are evolving Real transformation requires a diverse team Three factors driving the transformation imperative Next steps for CFOs and tax executives Implications of transformation for four central stakeholders It s the tax department s turn

36 In recent interviews with chief financial officers, two notable and recurring themes have emerged: CFOs have new and very specific expectations of the tax executives and tax operations within their organization. Those finance leaders share a sense of urgency to transform the tax function to elevate its capabilities to match those of the finance function and other areas of the business that have already undergone transformation. 1 Why is tax rising to the top of CFOs priority list? What are they asking for? And what is this new emphasis likely to mean for tax executives, tax departments, and tax advisers? To begin finding answers to these questions, it s important to understand changing expectations of the tax function and the drivers of change. Tax executives who respond early and strategically can be leaders in transforming tax and elevating its role in the business. 1 Deloitte interviews with CFOs from across industries in preparation for Tax Transition Lab sessions, As used in this document, Deloitte means Deloitte Tax LLP, a subsidiary of Deloitte LLP. Please see com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries. Certain services may not be available to attest clients under the rules and regulations of public accounting. The Transformation of Tax: Something Big is Happening Here 1

37 Expectations of the tax function are evolving 2

38 The need for tax departments to elevate and expand their role in the business isn t new, but the demands being placed on them are, both in type and intensity. Mandates from CFOs and other important stakeholders across the business that are driving this shift include: Become a stronger partner to the broader business Companies are continually refining their business structures and CFOs often lead the associated transformation initiatives. Tax executives are well positioned to work with CFOs and business unit leaders in their decision-making processes by clearly articulating why tax matters and identifying areas where potentially significant value can be gained by taking a tax-aligned approach. Do what you ve been doing... better As business model transformations are undertaken, refinements to the operating models typically follow i.e., roles, responsibilities, processes, technology, data, and sourcing strategies across the organization. CFOs indicate that they expect the tax organization to continue performing its traditional tax planning, compliance, and risk management duties, but do so in a more sustainable and efficient manner. To accomplish this, CFOs expect tax executives to enhance tax function operations for greater impact. The Transformation of Tax: Something Big is Happening Here 3

39 Expand your thinking and role The current environment requires tax professionals to learn about the broader business and how tax considerations integrate into its decision making and approach to risk management. The tax organization can help lead strategic initiatives in which tax cost is a major decision factor. Communicate effectively The C-Suite, the board of directors, and the audit committee can all benefit from clearly presented insights into tax issues in language those stakeholders understand and in the context of business issues to which they can relate. How is the tax function generating value for the business? What are tax executives doing to build sustainable tax processes around compliance and reporting? How are tax personnel leveraging technologies used by the rest of the finance function? What is the succession plan for critical tax professionals? The ability to answer questions like these with confidence can show stakeholders that you are effectively evaluating, managing, and communicating tax issues. 4

40 When asked in a Deloitte Dbriefs webcast how closely integrated tax and finance are within their organizations, nearly half (48%) of the more than 1,800 non-deloitte participants responded that the two functions have only a minimal or moderate level of collaboration. 2 2 Polling results, Tax and Finance Convergence: The Trend and Its Impact, Deloitte Dbriefs, March 20, The Transformation of Tax: Something Big is Happening Here 5

41 Three factors driving the transformation imperative 6

42 Transformation has been a pervasive theme in the business world for much of the past two decades, parallel to and enabled by the emergence of enterprise resource planning (ERP) systems. Successful initiatives in areas such as manufacturing and supply chain, human resources, sales and marketing, customer relationship management, and, of course, finance and accounting underscore how the effective application of organizational design, process improvement, and enabling technology can improve efficiency and performance while driving value for the business. While these functions undertook the massive, at times painful, path to transformation, the tax function was often relegated to the sidelines or completely overlooked as a black box of arcane rules and requirements. Recently, three factors have driven the tax function to the forefront of transformation opportunities, with profound implications for tax executives and departments, and even their tax advisers: The Transformation of Tax: Something Big is Happening Here 7

43 Three factors driving the transformation imperative 8 Accelerating globalization Intense marketplace competition is driving companies to look for opportunities to grow beyond their traditional markets. Entry into new markets requires companies to account for, report on, and plan for taxes under different and potentially unfamiliar regimes. Tax considerations can be pivotal in strategic decisions regarding expansion and adaptation of business structures and operating models. As a result, businesses increasingly are transforming their global tax-related processes from a decentralized approach to a standard global approach, often integrating tax operations into shared services centers, standardizing technology platforms, and integrating with globally standard financial processes. Growing regulation and business complexity Increasing regulation is a familiar challenge for businesses in virtually every industry. The continuing introduction of new requirements in a company s traditional markets, as well as the rules applicable in new markets, both tax specific and more broadly, are creating new levels of complexity and concern for tax departments. The country-by-country interpretation of the Organisation for Economic Co-operation and Development s (OECD s) Base Erosion and Profit Shifting (BEPS) initiative and guidance is one recent and prominent example. Legislators and tax authorities in jurisdictions around the world are passing new laws and boosting enforcement efforts to combat perceived actions by businesses to avoid income taxes. In this context, business complexity grows. As businesses look for new ways to create shareholder value, the complexity of where (new markets), what (new businesses), and how (built or bought) new business is conducted increases. Tax executives need to be at the table informing business choices about potential tax costs and insights about possible tax risks. The evolution of commercial tax applications One of the most important developments accelerating transformation of the tax function is the expansion of tax-specific modules for ERP and enterprise performance management (EPM) systems, as well as indirect tax applications. Having converted businesses to these systems over the past couple of decades, ERP vendors are now heavily focused on integrating functionality passed over in initial implementations, tax in particular. In the past few years, vendors have begun acquiring providers of tax provision, compliance, and risk management software and integrating this functionality into their systems, or developing it themselves. They also have expanded the scope of system functionality from a local focus to a global focus to address the global tax requirements of multinationals. These new technology approaches enable wholesale process change and, in turn, become a catalyst for re-engineering tax department professionals roles and responsibilities.

44 Implications of transformation for four central stakeholders The Transformation of Tax: Something Big is Happening Here 9

45 Transforming the tax function places new demands on everyone involved in planning for and fulfilling the many tax obligations companies have today: The CFO The need for tax transformation has profound implications for CFOs. The CFO will often need to serve as the chief champion of transformation, laying the groundwork for change, both in the tax function and across the business. Throughout the transformation journey, the people involved may look to the CFO to clearly communicate evolving expectations. Perhaps most important, the CFO will likely take the lead in assembling the financial resources, talent, capabilities, and political support needed throughout the business to make transformation a success. Tax Executives The role of the tax executive can be viewed as having four faces: an operator, who balances tax department costs and service levels to fulfil compliance and planning responsibilities; a steward, who is charged with protecting and preserving organizational assets; a strategist, who provides specific tax direction and aligns tax department activities with broader business strategies; and a catalyst, a driver of action across the business to support financial goals. Interviews with key stakeholders considering tax department transformation reveal a majority of tax management spends most of their time as operators or stewards of the business, leaving them less time to spend in the value-add roles of catalyst or strategist for organizational change and growth. Transformation offers tax executives the opportunity to expand their skills in these two vital and challenging roles and increase their value to the organization. 10

46 Tax Personnel As tax leaders assume more expansive roles, they will look to their tax personnel to carry out traditional responsibilities more efficiently while developing new skills to support activities relating to those four faces. In a shift similar to that experienced by finance, sales, and other functions, ERP integration will provide tax personnel with greater access to data, workflow applications, and analysis tools. These tools will help tax personnel to free up time that can be deployed toward more value-added activities or to fulfill new requirements. Certainly tax personnel will need to refine processes used in their traditional roles. Tax Advisers To help get the most from their people and data, tax executives will look to tax advisers for help in ramping up new processes and technologies, aligning the tax function with business strategy and operations, and deploying talent. Advisers can also play an important role in addressing the change management implications of transformation, as well as filling skill and resource gaps until the new organizational structure and processes are stable. The Transformation of Tax: Something Big is Happening Here 11

47 Interviews with key stakeholders considering tax department transformation reveal a majority of tax management spends most of their time as operators or stewards of the business, leaving them less time to spend in the value-add roles of catalyst or strategist for organizational change and growth. Transformation offers tax executives the opportunity to expand their skills in these two vital and challenging roles and increase their value to the organization. 12

48 Real transformation requires a diverse team The Transformation of Tax: Something Big is Happening Here 13

49 As many organizations have discovered in change initiatives, transformation is often complex, and it s almost always difficult. From a technology standpoint alone, challenges can arise in implementing tax functionality akin to those that plagued ERP implementations, such as unclear requirements, unrealistic expectations, user adoption issues, hidden costs and delays. Finance and tax leaders could encounter a belief within their organizations, and perhaps their own minds, that tax technology is a silver bullet that will solve many issues. But realizing the benefits of transformation will most likely require process and organizational redesign, as well as technology implementation and even culture change. These diverse elements will demand more than tax or technology experience alone to translate new requirements into definite roles, responsibilities, processes, workflow, and governance and controls. A tax transformation team will need to possess a combination of skills: 14 Industry and business-specific knowledge so tax transformation aligns with broader finance function and enterprise objectives. Tax technical expertise to devise new ways of gathering, analyzing, and using tax information. In the context of this type of crossfunctional team, technologists certainly will be instrumental in configuring systems, developing interfaces, and connecting tax applications to the broader enterprise systems. But taxtechnical specialists will be vital for verifying that relevant, accurate tax information is being collected and used appropriately across the dimensions of tax planning, compliance, reporting, and analytics. ERP and tax technology experience for tying together the other elements through the underlying data and systems. Change management skills to encourage adoption of changes resulting from the transformation, guide and support necessary training to support adoption, and effectively communicate throughout the transition period. A team with this combination of skills Successful Transformation

50 The importance of cross-functional skills A Fortune 100 global technology company discovered the benefits of the cross-functional approach as it sought to centralize its international tax data collection process, migrating from more than 700 spreadsheet packages globally to OneSource Workflow Manager (OWM). The objectives of the initiative were to improve the quality of information used inside and around the company s tax compliance process and to streamline tasks completed by its corporate tax department. An integrated team of international tax specialists and tax technologists worked together to redesign the international tax package for each of the company s foreign legal entities, including branches. The team developed and assisted in the implementation of a technology solution that bridged tax information from OWM to the company s overarching compliance system; created an Internet-based data collection tool; supported integration of different software packages; and enabled extraction of tax data from OWM. The project produced tangible impacts for the technology company, including: Reducing the amount of time that package preparers and business units spend gaining access to the tax packages Allowing for business units to monitor progress in real time Reducing the use of Increasing visibility into the status of each package Enabling online access to interested authorized parties, even those outside of the tax department Streamlining the movement of data from tax packages to consolidated reports and the company s chosen compliance system The Transformation of Tax: Something Big is Happening Here 15

51 Next steps for CFOs and tax executives 16

52 Transformation will place significant demands on finance and tax leaders. Taking a structured approach to the transformation process can help smooth the transition, identify issues as they arise, and capitalize on opportunities along the way. Important elements of such an approach include: Planning Align tax department and business objectives. Understand the goals of the business and what it will look like in five years. Identify how the tax department can help the business achieve its objectives and set goals and direction accordingly. This will put the tax department in lock step with the broader business and help make the business case for investment and change. Envision the future-state tax department. With business and tax goals in view, strategically consider the people, process, and technology components that the tax department will need, including: information and analysis the business should have; the likely scope of the regulatory landscape that will need to be addressed, both in the United States and globally; and the skills and experience tax department professionals will need to address regulatory and business requirements. If your business goals are transformative, your tax department s evolution will need to be as well. Create a roadmap. Understand current tax department capabilities, areas of underperformance, and tendency to focus on activities that are not strategic to the function and overall organization to determine what it will take to reach the new vision. The transformation could take three to five years, so prioritize the initiatives and use early improvements in efficiency to fund or make the business case for future investment. The Transformation of Tax: Something Big is Happening Here 17

53 Execution Enhance and streamline tax processes. Create greater efficiency through technology-enabled processes a key element of transformation is to free up tax professionals time so they can address emerging needs and provide strategic value to the business. Early opportunities for process improvement should be those that involve multiple handoffs, long cycle times, support from multiple tools, and quality or risk issues. Evaluate enabling tools and technologies. No one-size-fits-all technology solutions exist, so consider tools that are compatible with existing ERP platforms and other vital business systems to facilitate integration with minimal enhancement. Analyzing data will be just as important as reporting on it, so look for systems and tools that provide broad analytics capabilities, from identifying data anomalies to modeling various planning scenarios. Design new organizational models. Take the opportunity to white-board roles, responsibilities, and skills the tax department might need to support the vision. Besides tax and accounting backgrounds, consider other types of experience that can support business collaboration and teaming, including project management, technologists, mathematics (e.g., decision sciences), and finance. This exercise can help with development of a training program for existing tax personnel who might take on new roles, as well as a recruiting effort to locate external resources, if needed. Communication Measure results. Formalize the strategy by developing an effective set of key performance indicators. It takes time and resources to track progress; and measure and communicate results but it is an important step. Helping the C-Suite understand your transformation journey and the real impact it is having will create better transparency and leadership alignment; and build continued support and confidence. Support the change. The changes implemented will not only be new to your tax department, but the rest of the business. Dedicate time to creating a plan that generates awareness inside and outside the tax department of the vision and new capabilities the tax department can offer. Within the tax department, set clear expectations and align performance management systems as needed. 18

54 It s the tax department s turn The Transformation of Tax: Something Big is Happening Here 19

55 For years, tax departments remained in the shadows as transformation swept across other business functions. Now, it s the tax department s turn to step into the spotlight. With a clear view of how the tax function s role can evolve and expand, and the commitment of the CFO and tax executives, something big can indeed happen. The tax function can enhance operational efficiency at a global level and contribute significantly to decision-making across the business. Its operations can become more transparent to CFOs and other senior executives, from performance and risk management perspectives, in much the same way other business functions have become in the past decade or two. And, importantly, tax executives and other tax specialists especially those willing to develop a broader understanding of the business and play leadership roles in the transformation should be able to build eminence within the business and lay the foundation for career growth in the future as the business reaps the rewards of the transformation. 20

56 Out front, leading our clients through change For nearly a decade, Deloitte has observed the growing momentum to transform the tax function. During that time and in anticipation of the types of tax transformation businesses are now undertaking, we have been evolving our own organizational structure, building our resources, preparing our people, and strengthening our alliances. We are intent on leading our clients through whatever change they re dealing with, helping them pursue their business objectives with the highest quality and integrity. Our tax-technical, technology, and management consulting specialists find innovative ways to help tax departments uncover insights and solutions for navigating an increasingly complex global environment. In this way, we are helping tax departments have a greater impact within their organizations. The Transformation of Tax: Something Big is Happening Here 21

57 Contacts For more information on Deloitte s Approach to Tax Department Transformation, contact your Deloitte adviser or one of the transformation leaders listed below: Nathan Andrews Partner Deloitte Tax LLP nandrews@deloitte.com Jodie Beining Director Deloitte Tax LLP jbeining@deloitte.com Scott Shafer Principal Deloitte Tax LLP sshafer@deloitte.com Jeff Ausnehmer Partner Deloitte Tax LLP jeausnehmer@deloitte.com For more resources that can help address the challenges tax departments face today, visit: This publication contains general information only and is based on the experiences and research of Deloitte practitioners. Deloitte is not, by means of this publication, rendering business, financial, investment, or other professional advice or services. This publication is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional advisor. Deloitte, its affiliates, and related entities shall not be responsible for any loss sustained by any person who relies on this publication. Copyright 2016 Deloitte Development LLC. All rights reserved. Member of Deloitte Touche Tohmatsu Limited