Elevating tax department productivity with an "efficiency dividend".

• Author: Cranford, Steve

Introduction

The tax department faces an increasingly difficult operational environment given today's challenges. There is a broad effort underway at many companies to boost productivity, but it is not always easy to know where to start. Asked to do more with either flat or fewer resources, tax departments are looking for practical solutions. A tailored data management strategic plan that embraces technology and systems already in use can transform a high-pressure environment into an integrated ecosystem that drives improvements in productivity, quality, and risk.

The Challenge

There is a broad effort underway at many companies to increase productivity in the tax department. The ever-increasing regulatory burden--coupled with tight budgets, unprecedented collaboration among domestic and foreign taxing jurisdictions, and the unshakably high threshold to consistently produce timely and accurate tax accounting--have contributed to a difficult operational environment for the tax department. There is, however, an important and largely untapped opportunity that, if executed well, can significantly boost tax function productivity.

The keystone to this opportunity is a tailored data management strategic plan that embraces technology and systems already in use by the company, but not yet deployed in a way to support the requirements of the tax department. Insiders know that tax functions are not always top of mind when organizations design large-scale technology improvements and upgrades. Compounding the operational challenges are trends like having systems in place that are so disconnected, only tenured personnel know how things work, or maintaining a proliferation of spreadsheets that have become unnecessarily complex over the years. This can lead to an operation burdened with inefficiency, low productivity, and unnecessary risk.

Investments in tax systems and process improvements are lagging behind those deployed for use by groups such as financial reporting, treasury, and financial planning and analysis in the face of an escalating regulatory agenda and increasingly, a complex global business environment--something has to give.

How Things Work Today

Tax departments are being asked to do more with either flat or fewer resources in an environment where there is no room for error. But error is precisely what happens when companies rely too much on commonly used ad hoc tools for data collection and information exchange, such as (1) email, (2) undocumented phone conversations...