Four Tips for Successfully Implementing and Innovating with Tax Technology

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Most tax departments have started implementing tax technology or plan to do so in the near future. Whether your department has just begun to tap solutions like tax provision or compliance software, or you’re looking toward more advanced solutions like AI and robotic process automation, following best practices will help make tax technology deployment as smooth as possible.

In this issue of Talking Tax, we’ll discuss four tips to successfully implement tax technology at your organization. To hear more about the transformation of the tax function, listen to Tax at the Speed of Tech, a new podcast from BDO hosted by Managing Director Chris D’Ambola.

1. Identify the problem and then enable the solution

When determining which technology solutions to implement for your tax department, distinguishing between hype and tangible value can be challenging. Tax professionals may feel tempted to rush into adopting technology out of fear they will be left behind. On the other hand, the looming impact of AI has already sent shockwaves through the tax community, and organizations are just beginning to understand how to wield it.

Introducing technology without first identifying the problems it will solve, implementing a governance structure, and developing a process for implementation is not a recipe for success. This can result in developing or buying technology that is cumbersome to use or does not solve major challenges. Don’t fall prey to “shiny object syndrome” but instead invest in tech that will improve the experience of employees and stakeholders. Tax leaders should take a product mindset; think about the biggest problems their tax department faces, and then build, buy, partner, or enable solutions that address those problems.

2. Incentivize upskilling by demonstrating how it supports your team

Tax departments are often overstretched, and professionals may have limited time to learn new processes and technology in addition to their day-to-day responsibilities. Tax leaders can incentivize time investments in this kind of training by clearly demonstrating how new solutions can save their teams time in their day-to-day tasks.

For example, showing tax employees how technology can automate the calculation of sales and use tax per state may motivate them to complete the training so they can take advantage of that tangible benefit. Additionally, they may be inspired to experiment with these innovative technologies to figure out how to automate other manual processes.

Encourage employees to share technology certifications and achievements through social channels and praise them accordingly. In a remote work environment, tax professionals are less restricted in their choices of employer and are more likely to stay if they are challenged, engaged, and appreciated.

Management can also support employee interest in training by allocating extra time and budget to a task when the tax department is using new technology. The first time it is performed, it may take 20% longer to complete the task — but each succeeding time it is performed, that technology could result in an 80% time-savings, for example.

3. Create an organizational culture that fosters innovation

Tax departments are rooted in a compliance-first mentality, which means innovation inherently comes second. Innovation thrives when employees at every level feel empowered to look for creative solutions and present them to leadership with the confidence that the company values their voices.

By fostering a culture that rewards curiosity, learning, and data literacy, tax departments can facilitate cross-functionality and problem-solving. In such cultures, innovation can emerge naturally at every level of the organization as people independently identify problems and solutions. This can help drive faster adoption of new technology across the organization, as users are invested in the solutions they helped create.

4. Leverage evolving skills and knowledge to advance solutions

Just a few years ago, many tax departments were unfamiliar with application programming interfaces (APIs), which allow different software programs to share data and cross-functionality. Today, we are encountering more and more teams that have started to empower their employees or hire skilled resources to augment their teams. Many have begun building technology workflows, analytics, or visualizations for one-off use cases and are wondering what’s next.

As your tax department increases its level of sophistication and skill, it can begin developing and/or implementing more advanced solutions, including solutions specific to tax or customized for the individual business. As tax professionals become more comfortable with their technology skills and language, they can better liaise with other aspects of the business, including IT professionals, accounting systems specialists, and more, to develop the custom solutions that will deliver the most value.

The “how” is just as important as the “what”

It’s important to map out the entire process for each technology implementation project from start to finish. This includes diagnosing where opportunities exist, identifying solutions, and building a culture of curiosity and innovation that enables new technology to deliver long-term benefits to your tax department and the broader organization.

Hear more insights on tax technology and innovation on BDO’s new podcast, Tax at the Speed of Tech. Guests from our first season include:

• Evan Croen, SVP of Product at Bloomberg Tax
• Shawn Malhotra, Head of Engineering & Site Lead for Toronto Technology Centre at Thomson Reuters
• Eran Schiff, Senior Director of Transfer Pricing at Avalara
• Paula Hansen, Chief Revenue Officer at Alteryx
• Dr. Michael Platt, Director of Wharton Neuroscience Initiative
• Monika Loving, Managing Partner and Specialized Tax Services Leader at BDO
• Spencer Orlin, Tax Automation & Innovation Manager at BDO