Corporate tax department automation: Achieving successful execution & adaption

Automation has been cited as one of the innovations that has rescued most corporate tax departments over the last two years. Unfortunately, most automation was unplanned, as it was a necessary solution to being able to work over the previous two years.

Moving to automation didn’t just come about during the pandemic, however; according to the Brookings Institute, automation has assisted the way we work for more than the past 30 years, with businesses adding more automation after each recession in anticipation of staff attrition. It’s now hard to remember that the computer and internet has automated what tax professionals used to do with only a calculator.

Now, as businesses and their workers must again get used to the new way in which work is performed, businesses are faced with renewed focus on process and automation in order to build upon what has been started and respond to the Great Reshuffle. In addition, the increased need for the correct governance to comply with the continually changing national and international tax regulations. For example, the updates to the trade and transfer tax rules under the Organisation for Economic Co-operation and Development (OECD) and the Superfund Excise Tax alone are a strong motivation for increased technology and automation.

Corporate tax departments, like most enterprises, have “a pretty good idea” of their business processes and desired outcomes. However, having an idea isn’t enough. Business processes must be thoroughly thought out with the idea of how it should be customized to the department. A business process or workflow must include at a minimum the following steps:

• • • events and activities that occur within a workflow;
    • the owner or initiator of those events and activities;
    • decision points and the different paths workflows can take based on their outcomes;
    • devices involved in the process;
    • timelines of the overall process and each step in the process; and
    • success and failure rates of the process.

The tax department team can create the business process model before working with IT on the creation of the business process itself, allowing for clarity and the ability to fine-tune what technologies and systems should be employed for automation. Having the business process as the roadmap to automation doesn’t mean perfect is the immediate outcome. To be thoughtful and thorough requires fine-tuning to get to where the team needs to be, and so below are some considerations department leaders need to think about when automating their tax department successfully.

1. Start with the basics, the beginning of what the tax function’s operational role is within the organization — According to a KPMG’s Global Tax Benchmarking report, most tax departments are responsible for such task as: i) tax returns and compliance; ii) business unit support and consulting; iii) transaction taxes; iv) accounting for income taxes; and v) transfer pricing. In addition, the report highlights that “the most effective, highly valued tax departments are those that manage tax risk and compliance while identifying opportunities for adding value through core tax management skills.” This may seem obvious, but clarifying and reclarifying the role of the tax team in how it supports the overall organization is the foundation of what the department should do. Focusing on this will help determine what areas can and should be automated; and this is especially true as leaders consider what tasks needs to be automated so that resources can be freed up for other opportunities.

2. After identifying areas where automation is needed, clearly state the expected outcomes from the implementation of automation — Again, it is a seemingly simple step that is often overlooked, yet ignoring it could lead to failure to adapt to the new process or early abandonment of a new innovation because people believe it isn’t working. Many organizations begin their automation journey by setting a broad mission to drive productivity across the business, hoping it will lead to cost savings or some other miracle savings, such as in time or other resources. It is necessary, not critical, that those involved in the automation decisions state their expectation of what the automation will solve and then establish a timeline for that outcome.

3. Who will do what? Understanding the current skillset and bandwidth of your team — Another common mistake is believing everyone on the team needs to be trained on the new technology. Unless it truly impacts or changes the job of everyone on the team, don’t do it. It is wasteful to train someone on something they may never or rarely use. Return the team’s focus to aligning with the targeted outcome, and those that will work on the technology will be trained. And remember, it may not be a bad idea to ask workers if they are interested in this training or whether they would want to work on some other job function that may not require the training — this too may help minimize adoption failure.

4. Now you have not only pinpointed the technology and the accompanying talent, but created a roadmap — The automation roadmap is key to identifying specific parameters and benchmarks for the process. This roadmap should include tight timelines such as three to six months from its start over a period of time. Because technology changes so rapidly, using this approach helps measure whether the tools you have are still working. Of course, this doesn’t mean technologies may need to be replaced, it could be as simple as making sure your team is working on the last version of the software or technologies you own. The roadmap can also provide opportunities to review the skills and talents of those working on the technology and determine whether they are still the right fit or if additional training or even new hires may be needed.

Eventually, tax teams will work with tax technologists or the company’s IT team, but tax department leaders will need to drive the initiation or expansion of automation in the tax department. As a business leader and advisor to the business, tax team leaders need to ensure that the processes and automation undertaken can make the tax team better at managing risk and delivering value to the business.