Tax Needs Digital-Age Toolsets for Digital-Age Problems

Taxtanic meets digitalization iceberg!

Acknowledgement @Digital Journal

The tide turned during the pandemic. Flood gates are buckling as it becomes clear that the need for action around technology & digitalization is now urgent and imperative. We see it happening across our contacts & network, and the big service providers, specialist industry recruiters, and vendors of software solutions have never been busier. It is an amazing time to be in tax.

However, when you look at the actual work being done, the picture is less rosy. The feverish activity, unrelenting talking shops, endless spreadsheets, tight-but-largely-ignored deadlines, and eagle-eyed oversight are all flashing amber warning signs that something is not quite right. There is a worrying sense that the investment continues only because senior stakeholders have had their hand forced, rather than due to clear business cases, good track records, and solid results.

We believe these are the conditions for breeding less-than-optimal activity in the organizational Petri dish, and a good litmus test for this are the toolsets in use. If they have not been considered during the initiative charter, then this is a good indication that the nature of the digital beast has yet to be fully grasped. Let’s look at some examples of toolsets, starting with the default one:

  • Excel, RACIs, and SOPs*1 based on humans
    Just because these tools have been the stalwart of tax departments for years does not mean they will remain so going forward. They still have a role to play, but the digital tax world is vast and endlessly complex, and they are just not fit for purpose when it comes to the heavy lifting in this space. By themselves, they are too feeble, imprecise, and blunt.
  • Microsoft 365, Agile capabilities, and data tools
    We are constantly amazed at the new toolsets already available at people’s fingertips in many organizations, and dismayed at how ineffectively they are used. For example, SharePoint is used simply to replace the old shared drive without recognizing its capabilities as a full content management platform*2. Data tools such as Power BI or Tableau replace ERP reports without realizing their potential role in supporting ‘data’ literate tax professionals in the 21st century.
  • Robotics, AIML*3, and data meta-information tools
    These technologies are making inroads and are tentatively supported, but are still a long way from the mainstream. They tend to be either regarded with suspicion (need not be true) or blindly seen as panaceas (definitely not true). On the ‘data’ side of tax, the tools needed are still largely misunderstood and overlooked.

Of course, this is just a microcosm of examples and there are many others, but the reality remains that opportunities are routinely being lost. Like any set of tools, they are only as good as the artisan that wealds them – a paintbrush is an entirely different prospect in the hands of Da Vinci than those of the author, for example. While we are not expecting everyone to become the tax digitalization equivalent of a classical artist, we have prepared a few psychographic notes that may help in this crucial area:

  1. Treat technology & digitalization in tax as an opportunity, not something to be suffered and endured
  2. Accept that today is already different and tomorrow even more so. Prepare for some grassroots re-education in systems, process transformation, and ‘data’
  3. Be acutely aware that what worked in the past is highly unlikely to be the same in the new digital space. The goalposts have shifted drastically, and in this regard, toolsets fall under “process” in the fundamental reappraisal of people, process, technology and ‘data’
  4. Look outside your comfort zone and try new sources for innovative, challenging information, and avoid the falsely reassuring and commercially-driven same ol’, same ol’
  5. Adopt a growth mindset, get help, and collaborate, explore, & discover. Know that moving the needle in this realm is best done as a team sport.

Good luck!

*1 – SOP = standard operating procedures, and Google “the RACI matrix” if you need to

*2 – Common tools like SharePoint and Tableau are mentioned, but there are other similar examples

*3 – AIML = artificial intelligence/machine learning.

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