This blog was last updated on February 23, 2024
Should we move our tax engine to the cloud or keep it on-premise? This conversation is taking place in many organizations as they assess their approach to sales tax management. In this three-part series, we’ll explore some of the problems IT is working through to maintain on-premise solutions that may not always be visible to leadership, but that are creating issues of efficiency, scale and effectiveness.
In our first blog post in this series, we examined the cost and commitment from IT required to keep on-premise technology up to date and manage the number of content updates a modern tax environment demands. In our second installment, we are going to examine another challenge of managing your tax engine on-premise: the cost of maintaining older technology and the impact it can have on your IT organization.
While maybe not as obvious as content updates that come at you fast and furious, legacy technology can have an equally adverse impact on your IT departments ability to prioritize more strategic business initiatives.
Technology that is a generation or more behind often requires a higher level of dedicated maintenance than the newer platforms on the market. This can be in the form of software updates, security patching, dedicated servers and individual IT expertise that may not be prevalent on the team.
Let’s see if this scenario sounds familiar: You are running your tax engine on a technology platform that has been phased out for most or all other applications. It currently exists solely to support your sales tax operation. Since tax is a business-critical task, you need to dedicate time and resources to ensuring that it always remains active and operational and that updates are made regularly. However, this technology is unfamiliar to some members of the IT team due to its age; requiring a more experienced and expensive team member to own this assignment thus taking time away from more strategic and timely projects.
If this sounds like you, you are not alone. I have conversations every week with IT leaders who outline situations just like this. While most recognize that it’s a problem and needs to be addressed, they are still hesitant to overall the operation and these issues continue to linger.
Most common reasons companies are reluctant to change and adapt new technology:
- Because the current setup is working, people are afraid to make a major change that could disrupt a critical business application like tax.
- IT is often hesitant to embrace the unknown. Sure, our current system may be inefficient, but we know how to manage it.
- How would implementing a new platform integrate with our existing systems? We don’t want to create an even bigger problem in the process of trying to solve tax.
Luckily, a move to the cloud is a solution that addresses all your problems and concerns in one fell swoop. By moving your tax operations to the cloud, you can eliminate the need for separate technology, maintenance and oversight of a unique system, while secure in the knowledge that updates are made timely, all the while being protected by the strictest of security standards and protocols.
You can’t solve the challenges of an on-premise tax engine by migrating to a different premise-based solution. Cloud is the proven alternative, one in which you are likely running many of your core systems already. Like those platforms, the cloud is the present and the future of tax.
Be sure to read our final installment in this series, Part III the business case for change.
