What do tax functions need to do before setting out on an ERP transformation?

In recent months, we have seen a real increase in tax functions looking for support around ERP implementation - particularly the move to cloud ERP (S/4HANA, Oracle Fusion). This has been prompted by a number of reasons, such as the need to replace and decommission older, on premise systems or the need for greater insight to drive faster, better data-driven decisions. For any tax team setting out on an ERP transformation, I believe there are five top tips:

1. Understand your current state

Know what you need - don't just ask for what you think you need. Assess and document your current processes and systems. Ask yourself: how effective are they currently? What would you like to change? Don’t miss out on the opportunity to transform by lifting and shifting processes that aren’t fit for purpose.

2. Define the vision

What does the end game look like? Establish a set of core design principles and stick to them - perhaps you want to aim for global standardisation, only deviating from this where local tax regulations or commercial requirements mean it’s necessary? Whatever your end game, make sure everyone is clear on the objectives.

3. Document your requirements

Whether it’s through user stories, or a requirements traceability matrix, having a clear documented list of your requirements enables you to track from design through to deployment, testing and go live.

4. Get a tax sign off at Design Authority

It’s unlikely you’re going to have sufficient time or resource to attend every workstream meeting or workshop outside of tax. There’s a danger that a decision is made without tax being properly considered. Ensuring the tax function has sign off rights and representation on your programme Design Authority or Template Review Board will give you comfort that the decisions made have been subject to a proper tax review.

5. Appoint a Tax Business Integrator

Technology-led implementations often fall down because they don’t consider local tax, legal and statutory requirements or how tax authorities apply legislation in practice. In extreme circumstances we’ve seen this lead to loss of operating licence, or goods stuck at the border. A Tax Business Integrator understands tax requirements and how the tax authorities operate and can translate that into a format that your systems integrator can understand and build.

If you’re currently implementing ERP or need advice about getting started, please get in touch.