The stars are aligning for tax transformation.

• Author: Norton, Bob

Tax executives know that their professional raison d'etre is to manage global tax risks and create value by minimizing the tax burden of their companies. They also know this is increasingly difficult to do against a backdrop of relentless regulatory change, globalization of business, heightened scrutiny on all fronts, and resource constraints.

The truth is that the job is just nowhere near as fun as it used to be. While tax staffs are extremely dedicated and will go to any length to "hit the deadline," they are also burning out and spending entirely too much time chasing data rather than adding real value. Meanwhile, the possibility of material weaknesses in tax internal controls remains a concern. Even though first-generation "tax transformation" projects offer some measure of relief, the tangible results typically lack the deep effect desired by the tax department.

This is a familiar story for those who work in corporate tax. The stars are aligning for tax process improvement, however, and new possibilities appear on the horizon. The Finance Department has learned from enterprise resource planning (ERP) implementations, and the lessons learned--coupled with technology improvements and the tax executive's evolving role (from merely a tax technician to a combined corporate strategy stakeholder, risk manager, and efficiency engineer)--have set the stage for wholesale tax transformation. The result is a sea change in how tax executives and their departments conduct and manage future global tax operations.

Finance Is Now Ready and Able to Take on Tax

First, consider briefly the evolution of "transformation" in business over time. It all started with a well-known transformational leader, Henry Ford, who achieved productivity gains by integrating Ford's production lines. In the 1930s, Toyota evolved Ford's concepts into the Toyota Production System and later the Materials Requirements Planning (MRP) system of the 1970s. The technology revolution spawned ERPs, creating systems that are now part of the infrastructure of all major companies. Since then, the management theories of Lean and TQM, Six Sigma, and Business Process Reengineering (BPR), brought further transformational changes in pursuit of the optimal "better, cheaper, and faster" equation.

With successful ERP and Business Intelligence (BI) implementations, Finance is ready for tax transformation. Why? Because the ERP systems integrated all core accounting functions and enabled new and significantly more productive operating models. The depth and breadth of these systems in terms of managing transactions, processes, and SEC reporting have been phenomenal. It took years of extraordinary effort, investment, and leadership to reengineer finance operations, but it happened. Regrettably, because Tax's data and system needs are so extensive and...