US CEOs’ views on technology: What it means for the tax function

I recently wrote about CEOs’ frustration with the global tax burden facing multinational businesses. This is not their only fear. Our 2015 US CEO survey found CEOs are also concerned about the game-changing effect technology is having on every aspect of their businesses. They realize that adapting to this change and finding new ways of operating in this evolving environment is critical to their success. These trends are clear pressure points for the tax function as well.  

Data and data analytics – Tax function slow to adapt

No surprise here: US CEOs rank data and data analytics as the top functional area where technology is creating organizational value, with 89% of respondents saying it creates high value. Yet our research shows that the majority of tax departments are not using these critical tools to:

• combat increased tax burdens,
• address filing requirements, and
• help address tax controversies.

But some companies know that being better able to harness data and store it centrally allows them to run analytics. They are creating dedicated tax data hubs that enable tax functions to receive information in a tax-ready format. Internal IT functions or third-party vendors are developing technology systems for the tax function, where all tax data is stored centrally for use in tax compliance, planning and controversy – and to run analytics. In addition, this tax data can be shared across all corporate departments and integrated into strategic planning, unlocking data possibilities for the company as a whole.  This is the future – and it’s not too far away.

Companies need clear plan for technology

Most of the CEOs surveyed agree that technology presents significant opportunities for their companies and must be embraced to remain competitive – 95% say that technology needs a well-thought-out plan and defined measures of success.

Despite this almost universal sentiment among CEOs, research we conducted in 2013 with the Manufacturers Alliance for Productivity and Innovation showed that 77% of the companies surveyed did not have a tax technology strategy in place. If they did, it had not been integrated with the overall finance roadmap.  

As a tax professional, I know that a data and analytics strategy is crucial to the tax function’s future success within the larger enterprise. I think that tax departments should develop a three- to five-year roadmap that integrates data, analytics, technology, process and management of the growing tax burden. Also, the tax function must work with the finance function to harness the power of its systems and future updates/enhancements of its roadmap. 

Looking toward the tax function of the future

Much of the US CEO survey findings confirm what we have learned through our own research discussed in our white paper, Reshaping the Tax Function of the Future. Tax functions that chart a course for continuous technology transformation will be viewed less as a compliance center and more as a strategic business asset that adds value on an enterprise wide basis. If your organization wants to be at the forefront on effectively managing tax issues, read our white paper on what it will take for you to get there.

Also, increase the pace of your tax technology projects and related transformation initiatives. This is not about simply implementing a vendor technology tool. Rather, it’s about a holistic approach that integrates data process professionals and technology. And look seriously at creating a tax-specific data hub, the cost of which has dropped considerably, enabling this technology to quickly become more mainstream.

Can we get your thoughts?

What do you think the tax function of the future looks like? Join the conversation by sharing your ideas below.