Now part of CenturyLink, Level 3 Communications is a global communications (Telecoms) provider headquartered in the United States of America but with operations all over the globe reaching more than 500 markets in more than 60 countries. They provide communication services to enterprise, government and carrier customers with extensive fiber networks on three continents, connected by undersea facilities. Level 3’s global network reliably and securely provides enhanced, scalable network capabilities to address the increasingly complex operating environment of today’s technology landscape. Their initial requirement was to implement 37 countries across the EMEA and APAC region and then follow up with the re-implementation of the USA and Canada.
Already a heavy Oracle eBTax user, their original indirect tax solution was created by a hybrid of Oracle 11i to Oracle R12 upgraded tax regimes and newly, manually created tax regimes for countries added after the 11i to R12 upgrade. The upgrade meant that they were unable to take advantage of many of the features and enhanced functionality that the Oracle eBTax module can provide.
As a result, they were heavily reliant on manual intervention on both the entry of tax-related data when entering transactions or during the maintenance of the tax solution. In particular, AP and AR sub-ledger teams were required to understand and correctly apply VAT treatment on transactions across all the EMEA countries that in most cases were done manually and without any inbuilt validation, this led to multiple mistakes, many of which were not traceable or easy to identify.
The accounting and VAT reporting teams then had to manually re-class incorrect data and make manual adjustments to VAT returns which would consume valuable time that was often rushed, putting the teams under enormous pressure during the month-end processes.
They also knew that they were at risk of not being compliant with the local authorities as they could not produce several regionally required regulatory reports with the current tax set up. So along with the improved efficiencies gained, they wanted to also ensure that they were on the path to total compliance.
The maintenance of the solution was also something that was a cause for concern because of the ever-changing boundaries and requirements issued by the various tax authorities they had to deal with. They had internal resources who were capable of doing Oracle eBTax setups but over a long period of time, they had several resources adding their own ‘flavor’ to the tax configuration resulting in a fragmented and very difficult to maintain the solution. Any issues or new fiscal requirements became harder and harder to implement placing an extra burden on the already limited internal Oracle resources, particularly during periods of frequent tax rate changes.
As a global telecommunications company, they also had to rely on several external billing systems that had to determine the tax and interface this back into Oracle via interfaces. The interfaces were built with no real cohesion with each other, resulting in interfaces that were very different from each other when it came to the determination or passing of tax information. The quality of the data being passed through the interfaces was also a cause for concern for the business with no room to validate the data after it had been coded in the source applications.
Rather than looking for an external tax engine, Level 3 was able to justify the use of the Oracle eBTax engine due to its powerful tax determination capabilities and its full integration with the Oracle suite. They recognized that setting up eBTax correctly would result in a reduction in VAT compliance risk, the ability to take away the complex tax decision making away from individual (often untrained in tax) users and put the onus on the tax logic that would ultimately be controlled by the tax department.
They also understood that by a fully automated tax solution, they would improve the efficiency of all of the areas that had to handle VAT which was in effect every stage of the supply chain and procurement process. This efficiency would also have a positive outcome of the VAT/GST reporting due to the higher level of detail available to analyze the VAT data and ultimately create the tax returns and comply with local tax compliance needs in a proactive manner.
Innovate Tax provided the winning bid to undertake the reimplementation of the eBTax solution for Level 3 coming in with a price that was 60% cheaper yet far more detailed with more functionality than any of the other bids. This was possible because Innovate Tax is the leading Oracle eBTax Consultants globally and have designed a global tax solution that they were able to rapidly install at a far higher specification than was anticipated by the client.
Because of this standardized approach, as well as the tax configuration, test scripts, training guides, configuration documentation, and interface designs were just some of the other processes that Innovate Tax had productized and dramatically improved the speed of deployment but maintaining a superior level of quality. Using the words of the Client, they said that the Innovate Tax solution was a ‘no brainer’ and that the figures alone were enough to justify the project even though the benefits around efficiency and achieving total compliance were the ultimate goals.
Using the Rapid Install™ tool, the tax solution for all 37 countries was ready for testing in just 3 days of starting the project. The enormous success of the project was achieved by implementing the Innovate Tax global solution, a tax automation solution that took 10 years to refine and is thoroughly pre-tested and part of a global tax solution of over 120 countries.
At the same time the Rapid Install™ was implemented, Innovate Tax started working with the core team from the Client to identify all the areas for consideration including the complex interface requirements. This included directly engaging and incorporating into the project the Payables, Receivables and IT resources assigned to the project.
This approach allowed for a knowledge share from the very beginning and encouraged those assigned to the project to become the eBTax super user for their area, leading the requirements gathering, testing and training for their area and then becoming an active participant in the support process after the project went live.
A key to the project success was the project management provided by both the Client and Innovate Tax. Tax implementations tend to be complex and time-consuming so the regular meetings to drive the project are essential particularly when it comes to gathering data, resolving issues and arranging the resources for testing and training.
The harmonized processes adopted by both Level 3 and Innovate Tax meant we were able to reduce the initial project time-frame from 5 months to just 4 months. This meant that we were able to implement 37 countries and improve all the interfaces for the client, tested and configured into production in just 4 months.
Because this was a Telecoms company, several 3rd party applications were being used, primarily around the billing but also on real estate management. Part of our offering was to streamline the interfaces and ensure that the correct data was being interfaced across.
Any interface into the Payables module should recalculate the tax. This is possible because a tax control amount exists on the invoice header and so when the AP invoice lines are imported, a tax code can be allocated that will allow the eBTax engine to recalculate the tax. The tax control amount will then ensure that any tax amounts determined are adjusted to match that of the tax control amount. This ensures that any rounding differences are automatically handled but any amounts more than the tax tolerance level set will go on hold thus providing a validation step for imported AP transactions. The Innovate Tax approach is always to standardize and improve and this was certainly true for the interfaces. We worked with the Client technical team to enhance the tax data being interfaced in and we reduced over 300 tax codes that would have been manually selected by users in the source system down to just 5 tax codes! This process enabled efficiency gains in the entering of transactions in the source system but also made the maintenance of the interface much easier. We were able to achieve this because a user could use a tax code of STANDARD and when this was interfaced with Oracle we would know the country it was referring to and then map this so STANDARD would become IE VAT STANDARD if the country was Ireland for example.
There were a couple of large billing applications that were already interfacing into Oracle. We were able to clean up the tax rates being used and remap the data to come into Oracle using the new tax codes. This provided a more consistent approach as the standardized naming convention used globally was easy to map.
The iSupplier Module is very restrictive, not allowing users to modify any transactions once they had been imported. This caused problems as the Client was relying on the supplier to choose the correct tax rate code which was often not accurately done. To mitigate any risk and improve the process, we were able to apply a small forms personalization that allowed us to turn the Oracle iSupplier restriction off from the form, make our changes then turn the restriction back on. This process allowed for much faster processing of data from iSuppliers.
What did Innovate Tax achieve with CenturyLink (Level 3)?
Innovate Tax was able to start testing in just 3 days from starting the project! This was achieved by using the Rapid Install™ tool, a proprietary and award-winning product that allows for the super-fast deployment of a predefined tax configuration directly into the Oracle eBTax setups. In fact, at the end of the project, it was identified that 99.96% of the tax logic was provided out of the box and this enabled a huge 98% saving in configuration time over the course of the project and contributed to the ability to go live a full month earlier.
The use of the Rapid Install™ tool also meant that development or additional instances were easily configured in as little time as 30 minutes rather than the weeks it would take to do manually. The client was able to make substantial savings with the estimated return on investment being less than 5 years. The client was able to have the comfort of knowing that their solution was maintained by Innovate Tax under their support and maintenance contract so that all changes and issues were resolved by the Innovate Tax support team.
The enhanced tax solution also meant that Level 3 had greater visibility of the tax issues and was able to resolve them much faster and the well-structured solution allowed for faster audits linked to VAT.
- Global Telecommunications Provider
- Post 11i to R12 technical upgrade eBTax re-implementation for Level 3