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Case study: Hypertherm

100% ROI in Year 1: How our Oracle solution delivered a standardised approach to tax in Hypertherm’s new shared service centre model

Key points

Our automated solution for Oracle used by Hypertherm to standardise VAT determination and reporting as it moved to a shared service centre model.

Oracle solution implemented to fully automate tax determination and reporting in Poland, Netherlands, the UK, Germany, China and Singapore.

Complete ROI achieved in under one year – as well as a significant increase in the amount of input VAT being reclaimed for the lifetime of the solution.

About Hypertherm

Hypertherm develops and manufactures advanced cutting and gouging products designed to slice through metal more quickly and more accurately than ever before. It is recognised as one of the world’s leading industrial technology brands, with a rich history of innovation and a vast portfolio of advanced products to its name.

Founded in 1968, Hypertherm has grown to become a leader in technologies such as plasma, laser and waterjet cutting.

It was built upon the principle of customer-focused innovation and this remains central to its success today. Its rate of development is unprecedented and its plasma products continue to outperform those of its competitors in terms of cut quality, productivity and cost-efficiency.

Hypertherm’s success and formidable reputation are as much about its people as its products. Its team is defined by purpose, determination and passion – and everybody within the business is committed to delivering an exceptional experience to every customer.

What’s the story?

Hypertherm had decided to move away from its previous localised, siloed approach to business operations and towards the adoption of a shared service centre; under which tax for the entire business would be managed in a single location.

Use of a shared service centre would bring multiple benefits, including standardised outcomes for VAT reporting. But for its full potential to be realised, Hypertherm required a consistent, global, automated solution capable of providing standardised and reliable output across each of the jurisdictions in which it traded.

As an established US-based company, Hypertherm was already using Oracle ERP and a leading global tax engine for its domestic transactions prior to working with us. As it continued to grow around the world, its tax team identified a need for a tax solution that could be used to manage VAT in Europe, Asia and other key markets.

In early 2021, we engaged with Hypertherm on its VAT roadmap and the role we could play in ensuring its key milestones and objectives were met.

Hypertherm had identified several challenges within its setup that were causing inefficiencies and preventing it from achieving optimum results. Any new solution would need to eliminate these pain points, which included:

  • A lack of in-house familiarity with VAT in Europe and the rest of the world.
  • A shortage of Oracle specialists.
  • Inexperience of maintaining tax structures/fully utilising existing structures within an ERP.
  • Having a rate-driven setup in place, rather than the rule-based system adopted by Oracle.
  • An absence of standardisation in its processes around the world.

The project: What did we do?

While Hypertherm had already integrated a successful configuration for tax in the US using a combination of Oracle native functionality and its tax engine, it was not yet sure on which technology would be the best fit for its requirements across the rest of the world.

We undertook a three-stage process that would ultimately enable us to provide the business with a blueprint for success in managing VAT in the jurisdictions it had identified for the rollout of a new automated solution: Poland, Netherlands, the UK, Germany, China and Singapore.

1) Review of requirements

Our team worked with the Hypertherm tax department to understand its precise requirements and ambitions across each of the countries in which it planned to automate its tax processes.

2) Current solution review

We also undertook a review of Hypertherm’s existing solution for the US and used this as an opportunity to identify successful automated processes that could be replicated within its new setup, as well as any areas that could be improved.

3) Vendor selection

We engaged with all the main tax engine providers and arranged for them to demonstrate their solutions to Hypertherm’s tax team. We scored each tax engine against a comprehensive set of criteria designed to illustrate the ability of each to deliver Hypertherm’s requirements.

Upon completion of this process, we were in a position to deliver our verdict to Hypertherm.

Hypertherm’s requirements did not necessitate a costly implementation of a tax engine at this point in its journey. Instead, all its requirements could be satisfied and significant operational gains made by implementing our solution for Oracle, which contains pre-built tax content for more than 150 countries.

We would integrate our solutions for Poland, Netherlands, the UK, Germany, China and Singapore within Hypertherm’s existing Oracle ERP; providing a wider range of functionality and tailored determination and reporting features to meet the business’ specific objectives.

This would allow Hypertherm to continue to manage tax within its Oracle ERP – delighting both its tax and IT teams for different reasons:

  • At an earlier stage of the project, IT informed us it was keen to keep tax within Oracle to avoid the challenges and additional burden that can come from interfacing with a new, external product.
  • The tax team recognised that none of the tax engines on the market provided a perfect solution. With only native functionality, nor did Oracle. But with enhanced reporting models and unrivalled tax content and logic implemented with our solution, Oracle would be configured to meet – and exceed – each of Hypertherm’s requirements.

What’s more, the tax team did not have unlimited resources to maintain any new solution in-house. It was concerned that issues including classifications and mappings would be labour-intensive should it integrate a tax engine.

By working with us and adopting our automated solution for Oracle, the team now enjoys complete peace of mind by knowing our Support Desk is only ever a phone call or email away from being able to action requests, fix bugs or make updates.

The results: What has Hypertherm achieved?

The project has been ongoing since late-2021 and we are working to a phased implementation. To date, three of the six countries have been fully integrated within Oracle for Hypertherm.

Nonetheless, there are early signs that the new Oracle configuration is beginning to deliver positive results for Hypertherm, including:

  • A substantial improvement in accuracy rates in processed data.
  • A standardised process for tax determination and reporting, which Hypertherm believes will drive greater accuracy and efficiency from the next tax year (stay tuned for updated KPIs!).
  • For the first time, the business is now confident that all potential input credits are being captured.

Hypertherm has also shared with us details of its return on investment (ROI) calculations that reveal the full benefit of implementing our solution for Oracle.

Prior to working with us, Hypertherm processed invoices relating to the six countries covered in this project manually; resulting in a substantial risk of opportunities to reclaim input VAT being missed.

Our Oracle solution has automated this process and ensured every chance to reclaim VAT is identified. The amount of money Hypertherm now saves each year as a result is significantly greater than the total cost of the initial implementation, helping it to achieve close to 100% ROI on the project inside the first year.

This ongoing benefit will continue to have an impact on the company’s financial performance for the lifetime of the solution.

“I would recommend Innovate Tax to any business looking for an indirect tax solution. The reasons for this include the personalised experience given to our company, the knowledge of the Innovate team, the standardisation it has provided across our tax setup and the ability to have all tax managed within our ERP system rather than in an external solution.

“It’s possible to manage your entire tax system within Oracle – and Innovate Tax provides the ability to do just that to any business that doesn’t have the expertise in-house.

“Innovate Tax’s Oracle solution is expertly supported by its team of tax consultants, allowing us to achieve consistency in all our VAT processes and providing confidence that any updates or bugs will be quickly dealt with. In addition, it comes with a transparent pricing model that ensures we never have to worry about volatility in costs as we have in the past with other products.

“In our experience, working with Innovate Tax ensures all the benefits of a specialist tax engine but without any of the challenges of having to deal with an engine provider or ensuring it interfaces with our ERP.

“We now have a managed system that our IT team knows and is comfortable with – and if there’s ever an issue, I can call Innovate Tax and I know they’ll find the answer.”

Chris VanderNoot
Director of Tax, Hypertherm

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