Clearing Skies: Demystifying the Transition to the Cloud for Tax; Make sure you really do have your head in the cloud.

• Author: Deutsch, Jen

In recent years, cloud(s) have been gathering on the horizon for many organizations, both global, multinational organizations and smaller, agile organizations. These clouds represent sweeping changes for most organizations that may bring major disruptions and may require corporate tax executives to make career decisions.

This article provides tax executives and their teams with insights into how to navigate the upcoming transition from current environments and tools to cloud-based applications and services. With key insights, tax executives will be able not only to navigate but also to thrive in the new environment, leading to clear skies in the future.

What Is the Cloud?

What exactly is the cloud, and what are cloud-based solutions? According to the National Institute of Standards and Technology (NIST), "Cloud computing is a model for enabling ubiquitous, convenient, on-demand network access to a shared pool of configurable computing resources (e.g., networks, servers, storage, applications, services) that can be rapidly provisioned and released with minimal management effort or service provider interaction." (1)

What this means is that an entire ecosystem has evolved steadily in the last few years to provide more focused and agile solutions for business process applications from sales to procurement to full financial enterprise resource planning (ERP) with tax design enhancements. Several key reasons explain why these solutions are becoming more acceptable to organizations of all sizes.

Historically, as organizations grow and expand, so too do their information technology (IT) infrastructure needs. These needs typically include more hardware, more software, and more in-house maintenance. Organizations are increasingly looking to shed this operating overhead. In response, the cloud presents the opportunity to:

1. increase business agility, by gaining greater flexibility in architecture and sourcing. Organizations can scale up and down as needed, enhance efficiency, accelerate time to value, and reduce time to start up and complete projects. This typically manifests with the ability to bring new operational functions, tools, or applications into the organization and to provide greater computing resources to speed products through development life cycles, facilitating user self-service and allowing functions like tax to "go digital";

2. reduce IT capital spending by using pay-as-you-go models instead of purchasing or leasing expensive hardware, which allows IT to move its costs from capital to operational spend;

3. increase innovation that assists in shifting focus from asset ownership to service-oriented models, allowing IT to tap into private sector innovation, encouraging a more entrepreneurial culture and closer links to emerging technologies such as leveraging artificial intelligence and machine learning and wrangling millions of data points to gain the insights that drive business; and

4. reallocate resources to more value-added activities by automating routine processes through the cloud. One example is shifting time from manual review of errors or manual reclasses to more automated analytics so that resources need investigate only exceptions found in data.

   Why Now?

   Although the opportunities the cloud offers have driven some of the transition, simply put, recent disruptions from the current pandemic and economic uncertainty have forced the acceleration of the general move to the cloud.

   For organizations with legacy on-premise applications, including ERP systems, they need to make decisions in the near term, as ERP suppliers begin to phase out their on-premise solutions in favor of wholly hosted cloud-only solutions. Additionally, as internal corporate budgets are challenged to do more with less, the IT functions aim to relieve organizations' reliance on on-premise technology (i.e., hardware/software).

   In other words, systems, technologies, and software that companies historically purchased or licensed and maintained through in-house resources are...