Digital tax solutions can’t deliver what you need from them if you haven’t clearly defined what that is.
In a previous blog, I looked at the process of developing a tax technology roadmap. Once that’s in place, the next task is to set out your technical requirements.
Without an accurate and comprehensive set of requirements, you might make the wrong choice over whether to buy the solution you need, or build it in-house. If you don’t fully understand your requirements, then what looks straightforward may prove more complex, and expensive, to develop than you anticipated.
When buying a solution, you risk investing in the wrong one if your requirements aren’t clear. There are hundreds of offerings on the market; it’s easy to get distracted by software that doesn’t solve the problems you need to address.
Meanwhile, a ‘build’ project is likely to stray off course. Software development projects should be structured to deliver the most valuable capabilities as fast as possible, and you can’t do that unless you know your requirements in detail. As a result, you might develop something that doesn’t do the job, and so never gets used.
Defining technical requirements is an essential step at the outset of a new technology initiative, or when making major changes to your existing technology. Keep in mind, too, that your requirements may change in response to external developments. For example, many tax functions are now revisiting their data management requirements in light of BEPS 2.0.
Capturing your requirements
There are two categories of technical requirements:
- Functional requirements For example, if you’re automating the tax provision process, you’ll need a solution that calculates deferred tax balances under certain rules.
- Non-functional requirements How many users will need to access the solution? Should it be hosted on-premise or in the cloud? What are the data compliance implications of each option?
In my experience, capturing your functional and non-functional requirements is a two-step process:
1. Identify your stakeholders
You’ll need to consult everybody affected by the new solution. For the functional requirements, that means whoever works on the processes the tool will digitise. Map those processes to identify the relevant teams, and ask each one what they’ll need from a digital solution.
In our tax provision example, that might include local finance teams, who feed tax data into the finance system; the group tax function, who prepare the numbers; and group finance, who need the outputs of the process for accounting purposes.
For the non-functional requirements, work back from the stakeholders you speak to about the functional requirements. For instance, if the processes to be digitised use data from the accounting system, then find out the accounting team’s needs: solution compatibility, APIs, hosting, data security and so on.
Finally, talk to the business – finance, security, business continuity, group IT – about requirements such as resilience. Which crucial systems will need to be switched off during the implementation? What’s the longest they can be down for? What level of redundancy will be necessary?
Your discussions with stakeholders are also a chance to discover what systems they have in place, and how your solution will interact with them. Do they already have access to some of the functionality you’re looking for?
2. Prioritise and iterate
Software development is an iterative process: you can’t produce a tool that meets all your requirements first time. So focus on the main problems you need to solve, and deliver a minimum viable product to tackle them as early as possible. Then build out and hone the solution from there.
The key is to prioritise the capabilities that will deliver value fast. To do that, asses your requirements according to their importance and impact, based on the input from your stakeholders. I’d recommend giving them a weighted scorecard on which to rate their requirements.
The outputs from this exercise will be invaluable whether you buy or build. They’ll inform your vendor selection, and remove subjectivity from the decision; or help you plan your development journey effectively.
Power your implementation
KPMG can support you with a best-practice approach to defining technical requirements for software development, selection and installation. Our prebuilt list of requirements and template scorecard will help you deploy your solution quickly and efficiently – rapidly realising value while saving significant time and resources.
We can also provide a high-level view of the main technology vendors to inform your choice.
Please get in touch to see how we can support your tax technology implementation.
