Bots, Natural Language Processing, and Machine Learning: Yes, these will impact your tax practice, but when and how much are still unclear.

• Author: Rainev, Steven K.

Tax professionals in all industries run into a common problem: the constant confrontation with rapidly changing technology that is camouflaged by overly complicated terminology, with few people explaining things in language that laypeople can understand. Such is the problem when you start a conversation on, say, robotic process automation or RPA, one of the hotter topics in tax today. The first question in return may be, "Are we talking about R2-D2-type robots?"

Robotic process automation. Digital technology. Machine learning. Enhanced process automation. Natural language processing. Artificial intelligence. Big data analytics. Cognitive automation. How many different monikers are possible? Could the terminology be any more confusing?

Initially, we will steer clear of technical descriptions, which might sound something like: "We are building a cognitive autonomic, data-analytic, neutrally heuristic knowledge engine." While that may not sound like something you need, it is almost certain that these technical innovations will change how you do business in ways even the pundits are still figuring out.

This article puts some of the terminology aside for a moment and describes an evolving field of study we will call "intelligent automation," which encompasses the more common term "robotic process automation" but includes much, much more.

Call it what you want, intelligent automation may not be a choice. It is no longer about "if" but about "where, how, and how fast." We will provide insights into why intelligent automation is important to the tax profession, your tax department, and business in general. Along the way we will tone down the hype and debunk some of the myths about intelligent automation.

In the marketplace, multiple terms, such as RPA and digitalization, have been used to capture the concept of automation of labor by leveraging digital technologies to augment, or automate, the tasks undertaken by workers in your business, including the tax department.

This may not sound so new--after all, you have probably been leveraging technology for years to augment your approach to the tax function. In some ways this is still true, but in others, this time things are different.

Part of the confusion is that intelligent automation covers a very broad spectrum. On the one hand, intelligent automation is about automating simple tasks, such as cutting and pasting content from one system to another. Imagine sitting in a swivel chair, clicking back and forth among various software programs. You repetitively click through the programs in the same sequence time after time, making countless identical cut-and-paste moves. But now, imagine executing the same routine in far less time, using only one click.

On the other (more complex) hand, intelligent automation includes software that thinks and reasons--that is, it provides cognitive solutions. In fact, some advanced intelligent automation solutions can perform activities (e.g., business, medical, (1) and legal) previously performed exclusively by humans--and often do it far better than their human predecessors. In this article, we break down this spectrum of automation into three distinct categories to better differentiate among the types of intelligent automation.

Tax departments are beginning to understand and apply the great potential of intelligent automation to their core functions. Intelligent automation can support a tax department's strategy related to the business and many activities that support the tax department's strategy. A recent poll of over 1,000 professionals in various industries asked, "Do you believe process automation tools will offer value to your tax function?" and found that sixty-eight percent said yes, seven percent said no, and twenty-five percent responded that these tools were "not applicable." (2) So, while more than two-thirds of respondents believe that aspects of intelligent automation will offer value to the tax function, it is interesting to note that this belief is not universal.

Breaking Down the Intelligent Automation Spectrum

From a strategic perspective and to simplify these communication challenges, we have divided the spectrum of intelligent automation into three categories: basic process automation, enhanced process automation, and cognitive automation.

These categories are not black and white. An automation tool may have the characteristics of multiple categories or straddle the boundary between two categories.

This spectrum is not to be confused with a maturity model, as tools in each category have specific capabilities that address specific automation opportunities. In other words, each category addresses real-world issues and provides the appropriate capabilities to solve those specific...