TX vs TaxTech

Technologies come and go; Transformation is forever.

In her influential book,?Digital Transformation, Lindsay Herbert argues that transformation is a one-time event, after which new technologies are taken in their stride due to cultural recalibration. That seems simple enough until that cultural aspect is taken into account. In terms of business strategy, changing belief systems, altering personal values, and shifting embedded behaviors is as tough as it gets. For a sense of this issue's human side, check out cognitive dissonance in Wikipedia.

At its extreme, this pits an immovable object,?traditional tax, against an irresistible force,?digitalization. In this newsletter's opinion, tax has lost ground, pegged back into the 'specialist compliance & loss prevention' pigeonhole by enterprise technology in-house, and, more recently, by AI for advisory. Tax departments are moribund, trapped in the morass caused by falling behind the digital curve.

Travelogue tales: After a $$million spend, one company is no nearer finding a way forward than when it started looking for corporate-wide solutions three years earlier. Desperation then bred the need for certainty, which, of course, does not exist in their current mindset. Their tax manager is now looking for opportunities elsewhere.

Yet, the story is often told differently. Small successes with technology are celebrated fervently, while bigger failures are swept under the carpet. Behind the scenes, expectations remain low, and problematic projects are normalized. In this paradigm, tax tech is a stop-gap measure and rarely graduates beyond the speculation stage, even when on a large scale.

Sadly, none of this is necessary. If Lindsay Herbert is right - and we believe she is - all this is avoided through transformation. Granted, it's not easy - capturing hearts and minds takes time, dedication, and stout leadership, but the rewards are epoch-defining. Here are a few 'before and after' scenarios:

Scenario:?Tax technology acquisition

Before: Selection criteria driven by old-world symptoms and pain points

After: Selection driven by digital root cause analysis and impact on the tax data model.

Scenario:?Digital skills and capabilities

Before: Reliance on a few talented individuals (key person risk) or outsourced

After: Extensive knowledge management, in-house skills succession, new career paths.

Scenario:?Adjusting to new technology

Before: Avoidance, delay, inability to assess impact, gap between rhetoric and reality

After: Clarity, visibility, and control within a new cultural framework.

So, 'tax transformation?(TX)?makes technology make sense'; otherwise, tax is tech's victim, not its master. Also, taming one technology is unlikely to suffice when AI is about to rejig all technologies. Only TX offers the future-proofing needed.

Stay tuned for TX awareness offers coming soon.