Sales Tax Software Meets ITs Offensive and Defensive Technology Needs

Alex Forbes
June 26, 2018

You may be familiar with the highly debated Gartner term, “bi-modal IT,” the practice of managing two separate but coherent styles of work: One focused on predictability; the other on exploration. Think of this as projects that keep the lights on or run the business vs. projects of innovation. Both play key roles in digital transformation and have traditionally been discussed in terms of software development, not sales tax tools buying.

Balancing the Need for Offensive or Defensive IT Technology Spend

While many IT leaders may consider these two modes of work during spending decisions with the CFO and CIO, they’re also thinking in terms of “offensive” and “defensive” technology buying decisions. The goal is balancing those technologies that may improve the customer experience and sales growth (offensive), vs. technologies that will ensure the business remains competitive and doesn’t run into any unforeseen setbacks (defensive).

According to the latest 2018 CFO Insights on New Technologies study by Grant Thornton, 69 percent of these executive respondents plan to increase investment in digital transformation in the next couple of years, and 41 percent indicated their DT investment efforts are directed at overtaking their competition through differentiation. I would put that squarely in the “offensive” camp. But while growth and innovation are on the not-so-distant horizon, current CFO goals are focused on improving operational performance and customer experience, reducing costs and improving performance management.

Top IT Challenges for Today’s Organizations

The survey also revealed that systems complexity and integration across the enterprise was a top IT challenge and executives are prioritizing new technology investments for the enterprise that will solve regulatory compliance. According to Grant Thornton, “the survey suggests that the adoption of new technologies in the finance function, now and during the next five years, is correlated with the benefits that bring the most immediate value to the company, such as:

  • Better data quality and mining for strategic analysis
  • Optimized processes
  • Minimizing errors
    Reduced costs
  • More streamlined reporting, and
  • Better process scalability to match growth.”

The Shifting Role of the CFO as FinTech Gains Momentum

CFOs are under further scrutiny to assume more responsibility and have a better understanding of the transformational technologies that increasingly bring value to finance. The report also reiterates their need to better partner with the CIO.

89 percent of CFOs agree that they will require a much stronger data analytics skill set than most current CFOs have with responsibilities falling more closely in line with a data scientist, CTO or CIO and 75 percent plan to upgrade those skills in the coming year.

CFOs already assume technology-related responsibilities according to the report, with 54 percent indicating they influence technology purchases, 53 percent use data analytics to inform technology strategy, and 49 percent will increase their involvement in managing finance and enterprise technology. They also indicated having a better collaborative relationship with their executive IT counterparts than in years past and support each other to collectively make the best technology decisions for the enterprise.

As Srikant Sastry, national managing principal of Advisory Services at Grant Thornton, said, “The ultimate goal is to balance forward-looking technology investments with today’s operational needs.”

How Sales Tax Software Addresses Both Defend and Innovate

Sales tax software has the benefit of addressing both the digital transformation, automation and operational excellence needs of the business with the need to defend existing technology infrastructure from regulatory changes. Integrating with existing financial applications and ERPs, acting as the single source of financial truth with regards to tax requirements, and removing burdens from multiple departments to ensure compliance from purchase to sale provides a compelling ROI for finance and IT leaders today who may still be struggling with the measurement of metrics associated with the implementation of technology.

A solid tax compliance audit defense through sales tax automation software has been proven to significantly reduce penalties from tax audit. According to an Aberdeen survey of manufacturing, retail and software businesses, average audit costs were reduced from $64,524 to $8,733.00, or an 86 percent reduction per audit in the manufacturing sector, when using sales and use tax automation.

Offensively, sales and use tax automation software that is adaptable, connected and global creates competitive advantage by enabling organizations to more easily and confidently expand or upgrade existing technologies that touch financial data (ERP, eCommerce platforms, purchasing, etc.), to add new business channels, evolve supply chains, enter new markets, or support more seamless M&A activity without adding supporting IT infrastructure. The ability to make data available to a broader array of departments such as tax and procurement teams, in order to optimize their processes and remove the “dirty work” from IT’s plate further accelerates technology and process innovation to drive competitive advantage.

Take Action

Be a sales tax hero by safeguarding your business from the disruptive changes in tax with the world’s most complete sales & use tax determination platform. Request a Sovos Sales Tax software demo today. Moving to SAP S/4HANA? Safeguard the value of your SAP implementation.

Sign up for Email Updates

Stay up to date with the latest tax and compliance updates that may impact your business.


Alex Forbes

Alex Forbes is Senior Manager, Content Marketing, at Sovos. When not helping readers navigate their tax-related digital business transformation journeys, he enjoys day tripping around New England with his wife.
Share This Post

Tax Information Reporting United States
How to Respond to the Growing Challenges of 1099-R Reporting

The demographics don’t lie: Reporting for form 1099-R is only going to grow more difficult as baby boomers retire. The form used to report distributions from IRA, pensions, annuities and other similar retirement accounts is poised to explode in volume. As such, financial institutions (FIs) and insurance companies can’t afford to mishandle 1099-R reporting. The […]

E-Invoicing Compliance EMEA
Portugal Issues New E-Invoicing Rules: A Flavour of Clearance but Not Quite There

On 15 February 2019, Portugal published Decree-Law 28/2019 regarding the processing, archiving and dematerialization of invoices and other tax related documents including: The mandatory use of certified invoicing software General requirements for paper and electronic invoices Dematerialization of tax documentation Archiving of tax documentation (including ledgers, etc) Adjacent tax rules and obligations The decree aims […]

EMEA LATAM VAT & Fiscal Reporting
Are We in the Golden Age of VAT Recovery?

The value-added tax (“VAT”) was described in the EU as a “”money machine” over 20 years ago. Yet according to a 2015 study by the European Commission by the Centre for Social and Economic Research (CASE), the “VAT gap” was approximately 168 billion EUR. This represents 15 percent of the theoretical VAT that would be […]

Tax Information Reporting United States
As Legal Sports Gambling Grows, So Does Growth in W-2G Reporting

With the NCAA basketball tournament approaching, the US is gearing up for its biggest gambling weeks of the year. And while most “March Madness” pools might technically be illegal, legitimate sports betting is sweeping the US following last year’s landmark Supreme Court decision allowing states to legalize sports gambling in casinos.   As legal sports […]

E-Invoicing Compliance EMEA Italy
Italy E-invoicing: Esterometro Reporting Requirements for Cross-border Transactions Updated

What is Esterometro? The Italian government’s e-invoicing mandate became effective on 1 January 2019.  While cross-border invoices are exempt, all domestic B2B and B2C invoices must be cleared through the SDI platform. This means that the Italian government and tax authority now have real-time access to the data of all B2B and B2C VAT transactions […]