Finance must disrupt itself to stay in front of change. But what should be on the CFOs agenda for digital transformation?
Companies increasingly see digital as an opportunity – a driver to deliver real transformation through achieving the outcomes that a business wants and needs.
Finance is starting to feel the benefit of digital transformation with investment in areas such as robotics, AI and cognitive technology helping finance teams proactively lead enterprise performance while increasing support for innovation.
Increased business agility from adopting cloud platforms boosted by better insight from natural language processing and data analytics is allowing the business to focus on higher-value activities and to leverage the technology to transform its processes and the nature of the business itself.
Tax is in a unique and difficult position. It is pulled by two separate forces: by the internal digitalisation of the business and finance, and by external disruptive forces such as global tax reform, digital reporting requirements and digital sharing with tax authorities. Only by partnering with finance and having a real say in internal transformation can tax respond to the challenges of the digital world and meet these outside challenges head on.
How can finance best manage disruption? We believe that any investment in the change can only make a real transformative difference when it is driven by business outcomes rather than processes or technology. Successful organisations apply a consistent six-pillar framework to manage disruption and drive transformation.
First, CFOs should lead strategy and capital allocation, driving a process that identifies, prioritises, funds and monitors strategic investments and determines where to invest internally and where to partner with third parties.
Second is the adoption of new technologies into the tax and finance ecosystem: automating extended and better integrated business processes; using leading data strategy to combine the best of internal and external data; and selecting best-in-class application solutions which enable organisations to continue to evolve as new technology is delivered by the cloud platform providers.
This extreme automation helps with the third pillar, insights and analysis, as analytics capabilities are no longer confined to the past but give reliable future estimates using machine learning and unstructured data processing.
The fourth pillar, process and organisational simplification, then follows, as automation combined with greater integration enables tax and finance’s delivery model to shift to more flexible, higher-value services.
Fifth, is a rethinking of the skills required. These need to be teamed with strategic and innovation skills focused on providing insight from the ever-expanding organisational data and on how to leverage the evolving available technology to the benefit of the customers of the finance function. The final pillar reflects a more integrated approach to risk management, in which relationships and collaboration are paramount.
How does tax fit within this transformation? Tax has often been a passenger in the finance change journey, needing to fit the data produced for others into its own requirements. The sheer breadth of the changes made possible with digitalisation offers tax the opportunity to drive the transformation – to get the data it needs efficiently and accurately to automate what are often very manual processes, to improve its compliance and, crucially, to enable it to deliver increased value across the organisation.
Tax teams need to start by thinking carefully about what they want to achieve. This involves posing serious questions about how their required results will drive value for the business – insight that will help produce a shared vision while paving the way for the outcomes to be assessed and measured.
Integrating cloud platforms across finance, planning, procurement, reporting, tax, HR and payroll will provide a greater breadth of coverage, enabling the organisation as a whole to focus on evolution and constant change while fostering an environment of continuous improvement.
Simplifying architecture will help create better clarity and consistency of data. One of cloud’s great strengths is the standardised and simplified processes that these platforms use. Putting these in should in itself drive value, making operation and support easier therefore freeing time for value-added activities.
Powered Enterprise is KPMG’s proposition for organisational transformation. This starts by looking at what a good finance function looks like rather than what a finance process action is, and embeds our learning of transformation programmes and the outcomes from many companies all over the world. Powered platforms drive convergence and standard simplified processes with embedded controls and the alignment of the organisation around the delivery of business outcomes creates real transformation from the use of these processes.
The starting point for the transformation of tax has to be setting out the desired outcomes. Having a vision for the tax function and explaining how that vision can help the wider business can create a more integrated approach to data-driven insight and create real value for the organisation.
For this to happen, tax functions need to be more aspirational. If the opportunity to transform is there, grasp it – do not feel hampered by the need to do things in the old way. This means not needing to wait to ask to be involved: take the initiative. The rewards of being part of the conversation around change are well worth making sure you are part of these discussions right from the start, enabling tax to influence the business transformation.
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