Cliché Busting: The Substance Behind the Sound Bites

Part 4 of 5: Key Concepts in the Future of Tax

There’s a saying that goes, “technology requires tax to upskill, but transformation requires tax to reskill“. For those that follow this series, it will be no surprise that we fully subscribe to this.

Of course, we don’t mean that current skills must be forgotten, but the impact of digitalization is so pervasive that shortly – if not already – every aspect of tax will be in a state of flux.

One of those aspects, a critical one, is how industry knowledge is managed. In addition to general tax skills & knowledge, in-house tax professionals must add tribal knowledge – that is, all the hard-won wisdom around their organization’s own tax footprint.

But, even that is not the end of it. Progressive in-house tax departments are taking on the challenge of understanding how that tax footprint is represented in the company’s enterprise systems, taking the reins of control for themselves through tax engines and other digital tools. This is a vital part of tax’s in-house value proposition going forward, a point we have stressed throughout this series.

The consequence of all this is that mountains of new & up-calibrated information, intelligence, and knowledge are being generated. As an example, tax departments looking to become full business partners & digital co-pilots at their companies will need to acquire good levels of competency in:

Note that collectively, we call this taxology, and persons well-versed in these competencies for the tax industry specifically are taxologists.

But in reality, this list is a subset, and anyway none of it works very well if not within the context of transformed mindsets and new ways of working. In fact, at this point we feel we should issue a gentle word of warning:

“The idea that tax technology & digitalization should be natural for existing tax professionals because, after all, it is still just ‘tax’, is a false one. Experience shows that tax professionals are ‘surprised’ and unfamiliar with the impact of technology, and typically overspend and/or end up with solutions not fully fit for purpose. The time for learning by trial ‘n’ error has passed.”

What is natural, however, is for tax to be deeply impacted by technology, and particularly – at risk of overstating the obvious – information technology, or “IT”.

If tax departments were factories, they would have one input, raw data, and one output, information – that is, data with business relevance imparted to it. This is the root of tax’s value proposition, so if “IT” means putting information on steroids through the use of powerful technologies, then tax is perfectly positioned to profit. For this reason alone, it should be welcomed with open arms by the industry.

Lastly, not every tax department is at sea with technology. An increasing number have managed to acquire IT skills in some form and now partake in the broader corporate digital alchemy. This is great as far as it goes, yet nearly all suffer from:

1. Key person risk – highly reliant on a few individuals who can do it

2. Digital skills succession – informal and little or no notion of how to make them a permanent, embedded feature of tax with genuine career paths.

Consequently, this cannot yet be called a truly transformed state as the tax function has yet to redefine itself by digital-age capability. Also, you cannot assume that once the system is configured that everything is fine, and let all the knowledge reside in the heads of a few persons who cannot explain it to others.

So, how is this resolved?

Towards a Solution

As with the rest of this series, the challenge is not new and others before tax have faced the same challenge – that is, an information & know-how explosion. As such, knowledge management is already a major focus area in general.

Tools like the internet and email revolutionized the communication & dissemination of information, but it was search & tagging that brought meaning to the content. Early in-house attempts were collectively called ECM, or enterprise content management, but these were mostly half-hearted and largely ineffective.

At Xyto, as always, we are only concerned with meaningful answers and found that wiki-style knowledge management is the right approach for tax. To make that realizable, we are introducing a Tax MetaBase to capture, refine, and share new-age tax knowledge. The “meta” refers to the fact that it contains information about the information – or metainformation – that make up digitalized tax landscapes.

It follows the principles used by Wikipedia, the world’s largest online encyclopedia, and early customer experience has revealed two important knock-on benefits:

1. Creating the Tax MetaBase itself was an immense learning experience even for highly experienced tax professionals, and

2. Portions of it are common to all tax functions in terms of some areas of tax, knowledge acquisition methods, and technology – SAP, Oracle, Vertex, etc.

Consequently, we have been able to put together a Tax MetaBase Prototype, which offers a big head start on this highly challenging undertaking. After all, international tax by its very nature is vast & highly complex, never mind trying to capture & explain the details of its digital manifestation as well.

However, like the concepts in Parts 1-3, this works best within a transformed state, but even here we found a mutually beneficial effect at work – namely, that a Tax MetaBase helps foster transformative journeys, which in turn are greatly improved by the Tax MetaBase – a.k.a. they strongly reinforce each other.

So, What Does This Mean For You?

Firstly, it means that we can explode the myth that digitalized tax cannot be written down & shared. Of course it can, and while it takes some extra effort to start, the long-term benefits are incalculable. In fact, they’re hard to imagine at the outset, as one of our customers – a graduate of Smart Tax Technology – told us:

Secondly, well, forget secondly for now. It’s easier to show you, so why not Contact Us for a Tax MetaBase demo. You won’t be disappointed.

In Part 5, the final one in this series, we explore why this or any of Parts 1-4 will lack meaning & value unless people & corporate cultures begin opening up and start to relinquish their addiction to the “pre-digital + automation” mindset.

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Key Concepts in the Future of Tax – A five part series

In one sense, taxology is about excellent delivery of tax technology with built-in digital future-proofing.

Xyto and partners are all about realizing both for the price of one, such that…

Their combined value is far greater than the sum (cost) of their parts.

But how? … Well, it’s no big mystery and we’ve nothing to hide.

We simply run journeys that unshackle the most powerful concepts already available today!

The associated sound bites are not new and many in tax have heard of them, yet they remain curiously out of reach.

This 5 part series looks at the truth behind five critical keywords that tip the balance towards success when tax embraces digitalization.

Part 2 of 5: Key Concepts in the Future of Tax

Cliché Busting: The Substance Behind the Sound Bites

 Part 2: The Essence of Transformation

Of the five concepts under review, perhaps transformation is the most high profile, but also misfires the most. That’s a shame because it’s vital to avoiding disruption and succeeding in the digital world.

Almost every tax technology effort, or systems project with a tax component, is either named “transformation” or has transformation as a stated objective. But once the rubber hits the road, they rarely stay on track.

Instead, they kick off as automation initiatives or application integration projects (such as an ERP rollout), where the work typically lands with IT or an external partner. The trouble is that this does not deliver transformation.

To understand why, let’s start with a definition of transformation.

A transformed state exists only when the end state bears little or no resemblance to the start state, for example, as in nature when a caterpillar becomes a butterfly. In the same way with digital transformation, it only occurs once all four of its main components – people, process, technology and ‘data’ – are fundamentally altered.

Traditional technology, IT and automation projects fall short because they leave two critical components behind without meaningful change:

1. People – who after the project, typically go back to the work they did before; and,

2. Data – remains undefined, undervalued, poorly governed, and subservient to process.

As always, people will argue differently. For example, when challenged they will say, “but we trained our people in new software”, or “we’ve put data quality measures in place”, but when you scratching below the surface, these paintjobs are more likely to actively suppress real change than cause it.

That’s because true digital transformation has an entirely different quality about it. For starters, transformation is strategic, while traditional technology, IT and automation are tactical. It’s also unfamiliar to most (even in IT!), and yet it’s the only way to truly unleash the towering value proposition of digital capability and make the tax profession comfortable with itself again.

So, what are the key features? Firstly, data outranks automation as a source of value. Secondly, automation is no longer about replacing humans with machines – instead, the main purpose of automation is to support the data model, especially for knowledge based industries like tax.

This leads to a place where technology complements upskilled humans, who no longer fear being disrupted by it. In fact, they learn to accept their jobs cannot be done without it and start to fully embrace it. Ultimately, they become fundamentally recalibrated and redefine themselves by their close relationship with technological tools and the rich data platforms they support.

As we said, like caterpillar to butterfly, transformation impacts everything. Nothing escapes. For example, HR must now recruit, retain, and motivate an entirely different kind of person; and the legal department can forget scouring software license agreements for liabilities and risk, because technology that complements humans is better suited to the simpler subscription model.

But herein lies the issue. Full digital transformation is so different that it’s just too much for most people and corporate cultures to swallow. It intuitively feels wrong even when it’s not, and quite frankly, can be terrifying. So, our recommendation is to not even try! Let me elaborate on that.

Basically, transformation is not a project, and it will fail if you try and run it that way. Instead, it’s the product of a series of specific actions taken over time that cannot be forced. Here’s the formula:

Read as, “Vision plus Strategy plus Skills plus the sum of innovation efforts over time will lead to a transformed state, where Transformation is not a destination but the way of being at the end of a journey.”

Transformation cannot be done all at once because, as stated in Part 1, the outcome cannot be known in advance. Partly for this reason, we at Xyto avoid mentioning “transformation” except to leaders and visionaries. Managers and pragmatists still want transformation, but can’t understand why it’s not a normal project. Hint: this is where the proper use of Agile comes in.

Instead, we’ve devised a combination of education, methods, coaching, upskilling, messaging, influencing, leadership and partnering capabilities to engineer effective innovation journeys with the right trajectory that fit in with existing tasks and projects. Meaningful, intentional, and balanced action every day is the key.

In Part 3, we look at Data, and reveal why tomorrow’s greatest asset is often today’s greatest liability, and what tax can do about it.

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Taxology Part 1: Why Agile Matters

Read Now

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In one sense, taxology is about delivering tax technology with built-in digital future-proofing. 

And at Xyto, we’re all about realizing both for the price of one, such that… 

Their combined value is far greater than the sum (cost) of their parts. 

But how? … Well, it’s no big mystery. 

We run journeys that involve unshackling the most powerful concepts available today! 

Many in tax will have heard of them, yet they remain curiously out of reach. 

This 5 part series looks at the truth behind five critical common keywords.

Part 1 of 5: Key Concepts in the Future of Tax

 Cliché Busting: The Substance Behind the Sound Bites

In one sense, taxology is about delivering tax technology with built-in digital future-proofing. 

Xyto and its partners are all about realizing both for the price of one, such that… 

Their combined value is far greater than the sum (cost) of their parts. 

But how? … Well, it’s no big mystery. 

We run journeys that involve unshackling the most powerful concepts available today! 

Many in tax will have heard of them, yet they remain curiously out of reach. 

This 5 part series looks at the truth behind five critical common keywords. 

Part 1: The Essence of Agile

The Agile movement, which began 20 years ago with the goal of building better software, has grown to be applicable in nearly every field. Yet, its core principles, that are central to its value proposition, are easily side-stepped.

One key Agile theme states that, “good digital solutions must be ‘discovered’ through collaboration and iteration, rather than predefined upfront”. This applies because digital technologies change the rules of the game in ways impossible to fully grasp in advance.

Yet, many organizations hesitate to adopt true Agile because it lacks predictability. But by doing so, they suppress the learning, exploring, and innovating so vital for digital success. Instead, they opt for the illusion of control at all costs, even as those costs reach debilitating levels, especially for tax.

Therefore, to break through this impasse, we must bust some taboos and listen to what Agile is really telling us. Here are three vital pillars that few dare speak:

1. In the digital world, the users do not know their requirements;

2. Even if they did, IT could not deliver it for them; and

3. Business and technology are not independent of each other. 

This is a hammer blow to some, almost too much to take, even if in their hearts they felt it was true all along. Nowhere is this more true than in tax, which has now irreversibly gone digital. The tax profession is still figuring out what that means, both for day-to-day and the big picture.

However, the only way forward is to boost their own digital journeys. Each person must discover it for themselves, and the first step is to jettison any notion of already knowing what the destination must look like!

Xyto and its partners make that happen in a way that today’s organizations can get behind.

By adopting Agile methods and working hand-in-hand with our customers, we are collapsing the gap between tax and technology such that each is altered fundamentally (some might call it transformation). The results are extraordinary.

Overall, in the context of people, process & technology, Agile is key to the “process” part. It’s so critical that meaningful digital journeys cannot happen without it.

Therefore, it’s vital that real Agile is core to every tax function’s digital ambitions.

In Part 2, we look at Transformation, and reveal why so many projects are called “transformation”, yet have little or no transformation in them.

Until next time…

Happy Happy New Year! This year has extra meaning!

From Insight to Full Digital Naturalization

The goal was always clear. To the traditional approach to tax technology, which is ‘IT & automation’, we needed to add:

1. Future-proofing – to protect you and your tax function from the further digitalization of tax
2. Digital upskilling – so that technology complements modern tax professionals, not replaces them
3. Skills succession – sharing & normalizing new digital knowledge and avoiding key person risk
4. Data as an asset – from ‘plumbing’ to ‘meaning’, and a platform to elevate the role of tax, and
5. Get tax data right first time at source! – the correct response to tax authority digitalization.

To anyone that follows our blog, these are not new. Yet, despite huge advantages being self-evident, readers fail to see how to realize them for themselves amid challenging circumstances & turgid corporate cultures. That changes in 2023.

It’s a big step forward, and to be able to say that, we owe a lot to the excellent work done in 2022. Here is what was achieved:

1. Beyond training – our popular Smart TaxTech program now occurs in the context of full end-to-end digitalization journeys
2. An ROI model – so that we can present to pragmatic stakeholders who then see the value of this in a way that makes sense to them
3. A working knowledge base – a wiki-style single source of truth for all your learnings and to benefit from the learnings of others
4. Referenceable examples of how this worked in the real world
5. A rebrand as Xyto to reflect our shift from taxology pioneers to a mature mainstream offering in transitioning lock, stock ‘n’ barrel to digitalized tax.

In fact, our secret is that there is no substitute for engaging with the technology and seeing it through digital eyes. Anything else is guesswork or a short cut so inherently inefficient that we can normally do this at no additional cost to projects.

But, what we do need is ramp up time. We are happy to show you how this works and why it leads to 100-200% more value from your investments in technology. Just ask one of our customers:

“I valued the Xyto approach at several €100k or 5x cost, but that was before, when even as a graduate I understood only 5% of it. Now, seeing it in action for ten months, I am so glad we did it this way.”

If we don’t embrace these new powers, the tax profession is left behind as the industry becomes more digital. This leads to unhappiness in the profession and affords you no option other than relying on more lackluster ‘IT & automation’.

However, with these new tools in hand, and the wherewithal to deploy them, this year we can very confidently say Happy New Year & have a Breakthrough 2023!

Recommended Action 

If you wish to get clued up now, even before our updated social presence is ready, contact us now for a no obligations chat. Waiting until a project is already underway will unfortunately restrict the progress you can make.

Until next time…