Conspicuously Absent from Tax Transformation is … Transformation

Instead, the delusion of transformation is rife!

Acknowledgement Simon Butler and his book of the same name

Tax Transformation efforts have become almost ubiquitous, at least in name. Yet, when measured against recognized references such CXO Transform, Digital Transformation People, or the teachings of taxology, they frequently have little or no transformation in them.

This is a shame because it is now a prerequisite for genuine success in the digital realm.

So, why is it missing? Well, for two main reasons. Firstly, it is challenging and hard; and secondly, it is the polar opposite of all that’s familiar (hint: the clue is in the name, “transformation”, that is the end state bears little or no resemblance to the start state).

Surely, it cannot be that different“, the people cry, “It’s still just a project, right!?”.

No, not really – it’s more of a journey than a project, and there are some outlandish aspects to deal with. For example, the more than you learn about it, the more you realize you must take into account that under true digital transformation:

  1. Automation is not the main objective;
  2. A meaningful project plan is all but impossible;
  3. It cannot be mandated or controlled;
  4. The tax SMEs no longer know the requirements; and,
  5. A direct ROI cannot be determined.

These are radical reveals to say the least. Some of the points can be argued but they do demonstrate the depth of the discussion around transformation. However, the following are far less disputed:

  1. It starts with a vision, not a plan;
  2. It is driven entirely by people, process, technology, and ‘data’;
  3. Pre-digital cultural imprints must be broken;
  4. Outcomes are uncertain; and,
  5. It requires leaders and leadership, not managers.

So, what does your current tax transformation effort look like? Is it driven by requirements, process maps, MS Project Plan, KPIs, RACIs and slideware? If so, then discovery, digital learning, effective explore workshops, tolerance for failure, and above all, ‘data’, are all being suppressed, and real transformation cannot take place. It is a delusion and your project should be renamed “incremental improvement”.

In a way this is fine, but it offers no response to digital disruption in tax. That requires new thinking, stout souls, and “unfriending” some old faithful ways that are quashing innovation. Otherwise, you are sure to overspend, underachieve, miss expectations, and probably end up with more problems than you started with. You also avoid creating the new future that the digitalization of tax demands.

In truth, you probably need both for a while, but for the sake your initiative, your organization, your colleagues, your career, and the tax industry as a whole, please take a step back and look again at the true nature of digital transformation. It is no longer an option.

New Taxologists Making a Difference

And they are headed for the mainstream. Join them!

It is no secret that digitalization is confounding the tax & tax technology industry in a big way. Everyone is looking for answers, yet at the same time, more and more are finding a meaningful way forward.

For example, Martin Pindak, who is approaching Week 5 of the Smart Tax Technology program, says:

This program explains the things you secretly suspected were true about technology all along. It now makes clear sense and I have gained the confidence to articulate it.”

With only one more week to go, Martin will shortly join the ranks of tutored taxologists. In recent weeks, four more have benefitted from certification. Here is what they have to say:

Learn more, or click here for a conversation with a new taxologist.






Open Season on Tax Data

Taking aim at Tax Data Quality in Source Systems!

The spring conference season was different this year, and not just because of Covid. An ever-present topic amongst tax professionals was how to deal with digital regulatory environments being introduced by the tax authorities. In response, it seems that every company is coming up with its own approach.

There is no one size fits all solution, or is there?

Yet perhaps this is fitting. With business models, tax footprints, enterprise types, jurisdictional requirements, and technology landscapes so diverse, maybe there is no silver bullet solution to this problem. Experience shows that sometimes messy problems beget messy solutions, and that’s that.

However, a few companies spotted something else. They noticed that as a natural consequence of tax authority digitalization, it’s important that tax data is right first time at source, including in ERP. This makes sense,  given that the option to first cleanse, correct, and enrich data downstream, before submitting to authorities, is fading fast in the face of e-invoicing and other “live” reporting requirements.

The other silver bullet …

Now, most source systems are common platforms that reach across geographies, functional groups, and jurisdictions, with the major ERP solutions able to adapt to almost any organization type and business model. If tax data can be “fixed” in these systems, then suddenly the possibility of major synergies appear – namely, “fixing” it for one jurisdiction means fixing it for many, at least partially. This is how a good platform works in any case, and ERPs already do this for other business operations with global reach.

… and then shooting yourself in the foot with it.

However, there is a problem with executing this strategy. If automation and tax technology are difficult without a degree of tax function transformation involving people, process, and technology, then it is next to impossible once you reach the realm of ‘data’ (see article The Five Laws of Tax Data where Law #5 states, ‘Data’ only exists in a transformed space).

Unfortunately, this is a recurring story. As the non-digital world faces the digital arena, it will instinctively use a multitude of pre-digital mechanisms to try and solve digital problems without first understanding how the digital side of it really works. For example, for ‘data’ they might ask:

  • Who owns the data?
  • How do we create KPIs for the data processes?
  • What is the $value of our tax data controls?

However, finding a data owner is of little help if that owner is unaware how digital data operates. The same goes for a RACI, or KPIs that are unsure of what they should measure when digitalization has changed the rules of the game. Yet, this won’t stop some kidding themselves, sometimes for years, that this is the correct course of action, even as stresses build and evidence to the contrary piles up.

Changing the way it goes

Instead, better questions must be asked, and explored first, before the others. For example:

  • What does data quality really mean in the digital world?
  • How do we know the data is right from first principles, and not just by counting issues?
  • In this context, what does truly effective data governance look like?

However, the answers lie deep in the digital realm, which is no surprise given this is where most tax data resides today. Unfortunately, that realm is still unfamiliar territory for most, yet it is really important that this state of affairs must stop no one from taking action!

Fortunately, when taking action, the first step is a simple one – accept that many of the ways that worked in the past are simply not calibrated correctly to work well in the digital world. You can stick with them for a while, because they’re better than nothing, but at the same time search hard for new knowledge and methods, and ultimately new mindsets, treading carefully as you go. The journey is guaranteed to be well worth it in the end, unlike the alternative.

Putting ‘data’ front and center

It’s not hard to see that tax data right first time at source is an excellent response to the new digital regulatory conditions, even if it’s not the simplest one. However, the case for it becomes even more compelling because of another potentially huge benefit it can bring.

One day, when the tax profession is truly digitally-enabled and properly ‘data’-literate, it can leverage the same data reservoir for data-driven analysis and strategic decision making, and at last realize the long searched for productivity gains demanded of it by rapidly digitalizing organizations.

This is possible because source data is now an accurate digital representation of the entire tax landscape at the organization and, all being well, can be “trusted”. The scourge of garbage in-garbage out is banished, and ‘data’ becomes an asset and the basis for true tax function transformation.

Taxology’s new challenge

So important is this goal that taxology is taking on a new challenge, and that is to solve ‘data’ rather than just manage it haphazardly. After all, digital platforms are based on mathematical and logical models, so why not? Perhaps we can prove tax data is right and correct.

Yet the truth will almost certainly be more complex. ‘Data’ itself is a reflection of reality or something going on in the real world, and that has its own complexities that will not always be describable by solvable equations. However, by bringing in good design principles as well, maybe we can get close.

If this can be done, then it is a mouthwatering prospect, especially given the absolutely fundamental & pivotal role that ‘data’ plays, or should play, in the new world of tax. Therefore, over and above its existing aims, taxology is adding a new mission statement:

“Solve ‘data’, then solve everything else in digitalized tax”.

For the taxologists of this world, it’s open season on hunting down and culling the issue of tax data quality. Watch this space!

SNI Tax Digitalization Online Symposium , 15 June 2021, 2pm CEST

“Taxology” means understanding tax technology without having to know IT.

Evidence from the street suggests that without taxology, tax technology almost always underachieves.

Therefore, tax professionals must become familiar with the basics to help them navigate their careers as digitalization takes hold.

To learn more, join us at the SNI Tax Digitalization Online Symposium, 15 June 2021, 2-4 pm CEST.

Get all the benefits of a full conference including networking in just 2 hours free of charge.

Register online :


“You Made Tax Technology Interesting”

“You made tax technology interesting”, a valued colleague told me as I was winding up an engagement with her team. This pleased me enormously because it meant she was starting to see a new way.
Now, if I had been there as a tax technologist, it is unlikely she would have made this comment, but I was there as a taxologist, and that is something quite different (in truth, at times I operated in both capacities).
Just installing software and configuring systems is not very interesting, but bringing them to life as central to the digital-enablement of a tax function, now that is really worth sitting up and taking notice of.
Another way to look at it is that without taxology, tax technology is missing something – it lacks heart and substance, or tangibility. It has no soul, which makes it impossible to have a “connection” with it, or a touch ‘n’ feel for how it works. This leaves your relationship with it as strange, remote, and troublesome.
Only alongside the ideas & skills of taxology can tax technology truly take its place in a redefinition of people, process, & technology, and ‘data’, where the people “get” the technology. Most people instinctively feel this is where they need to be, but few know how to get there.
If you would like to hear our story and you are not already registered, click here. Join us free of charge for a chat at our own virtual coffee table.