The case for a tax technology roadmap

As tax goes digital, technology has become indispensable to the smooth running of the tax function. That’s why my last two blogs explored the need for a Head of Tax Technology, who’s responsible for the department’s technology strategy.

Once the technology strategy is in place, the next step is to ensure that it gets delivered.

This will call for a carefully designed implementation roadmap. As tax leaders know all too well, technology transformation is an arduous process – it can take anything from three to five years. Without a roadmap, you won’t know where you are on the journey, or whether you’re heading in the right direction.

A tax technology roadmap will also keep you focused on the right solutions: the ones that will solve your function’s problems, and ultimately achieve your tax strategy. It will prevent you from getting side-tracked by products with compelling-looking features that don’t actually address your needs.

Your roadmap must strike a balance between importance and impact. To do that, it should organise the projects on the tax function’s to-do list into four categories:

1.    Quick wins (low importance, high impact).

Delivering – and communicating – some early successes thanks to your new tech will be essential. It will generate momentum, establish credibility and build confidence in your technology strategy.

2.    Strategic projects (high importance, high impact)

Major transformations will add significant value, but demand huge effort and resources. Your roadmap shouldn’t include too many of them.

3.    Keeping the lights on (high importance, low impact)

These urgent actions may not deliver much impact, but neglecting them would have a disastrous effect. Spare a thought for the firm that failed to update its billing system, and found itself unable to issue a single invoice for over three months.

4.    On hold (low importance, low impact)

Some activities will be just too complex and too expensive, without promising a significant strategic impact. They’re best left alone while you’re busy implementing your technology strategy.

Your roadmap should include an optimal mix of the first three of these, depending on your strategic goals, the resources available to you and the technology roadmap for the wider finance function. The right blend will be different for every business, but each initiative must be costed, and scheduled in at the right point in your technology journey.

Formulating a tax technology roadmap is an exercise in working backwards.

Start by setting out your ideal future state, so you can identify the gaps between where you are now, and where you need to be. Then scope out the solutions required to close those gaps; the costs involved; and when the investment will be needed.

To illustrate this process, imagine your function’s strategic aim is to become more data-led when making key decisions. You would need to work out:

• how your tax operating model might need to change
• the skills your team would need – such as data analysis and presentation
• which solutions can provide your team with the right data, in the right format the training and support they’d need to use those solutions, and drive meaningful insight from them.

As you go through this exercise, you’ll need to avoid spending on capabilities that are already there. Find out what systems your firm is already running, and what it plans to deploy. Equally, don’t fall into the trap of trying to build everything yourself: identify what you can get from external partners.

Once the roadmap is complete, you’ll need to oversee its execution. That will mean keeping close tabs on what’s happening, what needs to happen, and when. And, of course, managing the interaction with the wider technology roadmap at the same time.

You’ll also need to make sure your technology gets funded, and that the budget flows through at the right points in time. The finance function will therefore need visibility of your roadmap, so that the investment forms part of your departmental budget.

From there, managing the roadmap through will be much like driving any critical business change programme.

Progress should be discussed regularly at senior leadership level. Overall responsibility will sit with the Head of Tax Technology, while the Head of Tax ensures that funding is secured at each stage.

KPMG has extensive experience helping organisations define their tax technology requirements. Our database of tax technology vendors will accelerate the process of selecting technology partners to address any gaps in your roadmap. In our next blog we'll address the requirements definition process and vendor selection in more detail, but in the meantime get in touch to understand how KPMG can help or if you’d like to join our dedicated forum for Heads of Tax Technology.