Strategy: tax impacts often neglected in IT deals.

• Author: Marshall, Jeffrey
• Position: BusinessBRIEFS - Information technology

More than 70 percent of corporations don't include the tax function in the decision-making process of major IT acquisitions, risking a substantial reduction in long-term efficiency, tax noncompliance and the potential loss of millions of dollars in unrealized one-time savings, according to a survey by Deloitte Consulting and IDC Research. Although the business case development process for major IT acquisitions/investments routinely includes input from several functions, tax is the last function considered.

The study also uncovered that many of the available tax benefits to organizations making major IT acquisitions are time-sensitive, such as state and local training grants, and must be addressed during the initial stages of the acquisition process. Failure to include the tax function early in the acquisition process could result in the permanent loss of potential savings.

"The bottom line is [that] companies are leaving money on the table and, at the same time, potentially increasing their risk of tax non-compliance," says Raffi Markarian, a principal with Deloitte Tax LLP's ERP Integration Services practice. "Major IT purchases, such as an SAP implementation, are often expensive undertakings; in many cases, tax savings could significantly offset the total cost of ownership and accelerate the return on investment."

Major IT acquisitions are assets, Deloitte...