Consider Indirect Tax with SAP S/4HANA Migration to Ease the Burden on IT

Having a cloud-based sales tax solution can be greatly beneficial for businesses that are working to stay compliant in an ever-evolving industry. While user-centric solutions that operate on the most up-to-date regulatory requirements are key, organizations cannot ignore the indirect tax burden that can impact IT departments. Moving to SAP S/4HANA will help IT teams better manage sales tax solutions.

Businesses that are considering migrating to SAP S/4HANA will greatly benefit from moving to the cloud. Organizations can also better ensure that their IT teams and tax/finance departments are properly aligned for the migration, which will keep all departments happy and productive.

ASUG, the world’s largest SAP user group, conducted research in collaboration with Sovos to better understand the sales tax solution experiences and change management processes of customers that use SAP enterprise resource planning (ERP) systems. The research also looked at how IT departments are impacted by sales tax solution testing, system updates and sales tax-related issues.

How the IT department is impacted

Nearly half of respondents (47%) said the top benefit in hosting sales tax solutions in the cloud is reduced manual work for IT staff.

The IT team at most respondents’ organizations (58%) spend one to three weeks testing sales tax solution(s) and system updates. Those same departments field an average of three indirect/sales tax-related issues or help tickets per week. Just over 20% of respondents spend less than one week doing the same type of testing. This was noted most by respondents that host sales tax solutions on a managed cloud (33%).

However, when isolating results from respondents in the IT department, research showed other departments may be underestimating the time it takes, as 10% more respondents from other departments report the IT teams spend less than one week testing.

Almost all respondents (94%) use manual testing of some kind (either internally or completed by a third party), while just one-third said they use automated testing. The largest share of respondents using automated testing also have part of their business live on SAP S/4HANA (61%) or host their sales tax solutions on a public cloud (50%).

Communication is also a key issue, with IT teams typically spending no less than one to two hours communicating with tax or finance teams to resolve indirect/sales tax-related issues each month. Results are also impacted by the number of countries in which respondents’ organizations have locations. Overall, IT teams at organizations with locations in only one country face less complexity and spend less time resolving issues than IT teams at organizations with locations in multiple countries.

Getting tax and IT aligned early and often eliminates issues and increased costs. Businesses must take steps to align strategies on ensuring tax is included in the cloud approach. Furthermore, migrating your tax engine to the cloud is the perfect time for IT and tax to align on strategic priorities.

Reducing the time that IT spends on testing will help the business as a whole. IT can refocus their time on other pressing issues, and other departments (such as tax and finance) can rest assured that sales tax systems are running smoothly.

Are you interested to see how a cloud-based sales tax solution could help ease the burden on your IT department? Reach out to our team of experts to see how Sovos can help.