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When it comes to tax technology, selecting the right implementation partner is critical.
Businesses that recognise the cost of not having automation have already taken the first step towards operational efficiency. However, this is only the beginning.
Once the decision to implement an automated tax solution has been made, the focus must shift to ensuring it is done right. Tax technology solutions can provide the expertise needed to avoid costly mistakes and maximise returns.
Implementing tax technology solutions can significantly enhance efficiency and compliance within any business. Adopting a new solution can transform tax operations and provide better financial insight.
However, choosing the wrong solution or failing to implement it correctly can have disastrous consequences. A failed tax technology implementation wastes investment, strains resources, risks penalties, and damages customer trust, with wide-reaching consequences.
Time and again, we see businesses struggle with ineffective tax solutions.
The financial burden of a poorly implemented system is significant and often underestimated. Let’s break down the true cost:
Initial implementation: A loss from the start
The cost of a sub-par tax technology implementation is a direct loss to the business. Investing in a solution that does not meet business requirements or regulatory needs leads to wasted resources, unrealised benefits, and operational inefficiencies. This sunk cost is the first sign of a misstep in the implementation journey.
This was the case for one of our clients prior to working with us. The business was struggling with tax issues; including a reliance on manual processes and poor-quality master data that was plagued by gaps and inaccuracies. It decided to go to market for a compliance solution and sent us an RFP. Upon reviewing its situation, we advised the company that the core problem wasn’t compliance, but rather it was bad data at the determination level.
Unfortunately, the business didn’t take our advice and went ahead with purchasing a compliance tool. The Tax team spent a significant amount of money, only to discover that the tool simply exposed more underlying issues.
Six months later, the client returned to us, asking for help to reimplement its tax solution with automated determination.
The takeaway? Garbage in, garbage out. Technology alone won’t fix your problems unless your data is clean and accurate. It’s critical to fully understand the root of your issues before investing in a solution.
Downstream costs: The true bottom-line impact
Once a faulty solution goes live, it creates a domino effect of financial strain across an organisation.
A poorly implemented tax solution can lead to significant financial repercussions, including penalties and interest charges due to non-compliance with tax authority requirements.
Rectifying a poorly implemented solution often requires extensive reconfiguration, additional consultancy fees, system configurations and rework processes; all of which potentially increases the total investment several times over.
Ongoing maintenance and internal operational costs
Beyond the immediate issues, the long-term operational cost of maintaining an inadequate system can be significant. This includes:
- IT support and infrastructure costs: Frequent patches, system updates, and workarounds required to keep the system running.
- Internal resource allocation: Staff time spent on managing inefficiencies rather than focusing on strategic initiatives.
- Training and knowledge gaps: Continuous training efforts to adapt to a suboptimal system increase internal costs.
A poorly functioning tax technology solution drains both financial and human resources.
A critical question that businesses must ask themselves is: How long can they afford to absorb these costs before seeking expert help? The longer an ineffective system remains in place, the greater the cumulative cost and the risk of exposure.
The value of an experienced, proven partner
Choosing a trusted implementation partner is important to ensure that the tax technology investment yields maximum value.
One of our clients opted implement a native Oracle Tax solution after we provided extensive discovery and proof of concepts. However, the Tax department, which had declined to engage with us during the process, bypassed IT approval and purchased a third-party solution, believing it would be ready in weeks and automate their processes seamlessly.
We advised them otherwise, but they proceeded. Nine months later, the project was cancelled before going live, and the Head of Tax left the company soon after. They have since re-engaged us to deliver the original project.
The moral of the story is to ensure all departments, especially IT, are on board. Do thorough due diligence and don’t blindly trust sales pitches.
No tax technology is plug-and-play – it can streamline processes but it won’t do everything for you. Success requires effort, a clear understanding of your business processes, and realistic expectations.
This example shows that a trusted partner can bring industry expertise to align solutions with business goals. The right partner ensures thorough planning, stakeholder input, and recommends proven technology providers with expertise.
Ultimately, a successful implementation has the potential to turn tax processes from a liability to an invaluable strategic enabler.
Just read through this properly – it’s really good and Sam’s examples definitely add a bit of weight to it. The only suggestion I’d have for next time is whether we could add a stat or two in there too. External research always adds credibility to an opinion piece.
