Why the Math for Point Solutions Simply Doesn’t Add Up

Eric Lefebrve
March 11, 2024

A couple weeks back, Sovos introduced the Sovos Compliance Cloud. The industry’s first and only solution that unifies tax compliance and regulatory reporting software in one platform, providing a holistic data system of record for global compliance.

Accompanying this launch, our CEO Kevin Akeroyd wrote about the global landscape of tax compliance and why the market was ready for this type of solution. Recently, my colleague Steve Sprague, our chief product and strategy officer, wrote about the five steps to modern compliance and why they are critical for your business.

As a chief technology officer, I tend to look at things through a slightly different lens. I am hyper-focused on issues such as security, scalability and the absorption of resources that can distract the business from its primary objectives. So today, I’d like to take you on a deeper dive into another aspect of global compliance that is impacting businesses of all types and that is the hidden costs of point solutions.

The fact is the use of multiple compliance technologies and products is creating a resource drain. In any technology architecture redundancy is a key element to increasing system availability, yet redundancy in vendors creates inefficiencies in buying power, cost to operate and suboptimal resource utilization.

In a true micro service-based architectures, we strive to provide a single service that performs a given function. This service is called from any process that requires this function. This ensures that instead of five mediocre services, we have one really good one, with a knowledgeable team enhancing and supporting the service. This creates highly efficient systems and avoids duplication of effort, increased support, and development costs. In addition, it provides the staff supporting the service with focus, thus reducing the need to context switch.

With multiple products providing the same service, we create inefficiency and duplication. Multiple vendors reduce the ability to get the best deal, train the staff on one integration, drive increased adoption through rinse and repeat implementations within business lines and yield generally higher support costs.

A new way to evaluate

Technology partner evaluation is extremely important and even more critical when it comes to compliance. These are providers a company is engaging with to provide peace of mind, so there’s a two-factor evaluation method.

The first factor is to evaluate for functional fit or fit for purpose. Does the solution cover the use cases in question for the given industry and the countries, states, counties, or cities in which operations will be performed? This factor requires a deep understanding of the business, both today and in the future such that the company does not need to find another provider two or three years down the road.

The second factor concerns non-functional requirements, namely, reliability, scalability, security, and experience. Compliance solutions must be available when you need them, fully support the speed and volume of your business, vigorously protect company and client data, all while providing great end user experiences for your staff.

Eliminate the point solution distraction

Due to the complex and ever-changing nature of compliance, I understand that it’s been difficult for many businesses to establish a comprehensive strategy and apply the same technology solution to all global needs. What we typically see is a very reactive approach to compliance. A new mandate is introduced, and a company purchases a point solution. Mandate changes? Add another point solution and so forth. In most cases, it’s the panic buying cycle.

However, this reactive approach has consequences. Over time the number of point solutions in use becomes expensive and unwieldly both in terms of actual costs and the number of resources required to maintain and keep operational. Add in the extra time needed to clean the data you are getting from multiple products that don’t communicate with one another and it’s a substantial investment and distraction. Calculate it anyway you wish, but you are going to find that the numbers simply don’t add up to success.

My advice, centralize your approach to compliance. Eliminate the point solutions, freeing up your staff to focus on business priorities and ensure you are getting a single source of reliable data of your compliance posture.

Take Action

If point solutions are creating an issue for your IT department. Talk to Sovos, we can help.

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Eric Lefebrve

As chief technology officer (CTO), Eric sets and oversees technology strategy for Sovos. With more than 25 years’ experience leading technology teams, he is a strong proponent for establishing a corporate vision and then providing his teams with the room to work, ensuring they have the freedom to tap into their full potential. Eric has a wealth of experience leading teams throughout his career that focused on critical, high-volume transactions. Most recently, Eric was the CTO for Fiserv’s core paymentacceptance business unit where he led a global organization supporting the world’s largest payment card processing volumes. Eric’s leadership style was honed during the six years he spent in the Army National Guard as a combat engineer and squad leader. Here he learned the importance of professionalism, accountability and that the mission always comes first. A self-described passionate and outgoing person, Eric enjoys hiking Kennesaw Mountain National Park and the many trails around Metro Atlanta with his family and dog. When not in his home office, you are likely to find him on his ERG rowing machine, or potentially brewing bourbon barrel porter beers or pitching yeast for wine or mead making.
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