Enterprise resource planning (ERP) systems, such as SAP, are powerful tools that help businesses streamline processes, improve operational efficiencies and enhance decision-making capabilities. One of the most critical, but often overlooked, aspects of an SAP implementation is tax. Including tax teams as a key stakeholder during an ERP upgrade can unlock significant value.
In PwC US’s 2023 Pulse Survey, 85% of all executives say the cost of adopting new technologies is a challenge to business transformation. Undertaking any business transformational effort without considering tax implications can result in higher costs and greater overall risk. In fact, only 47% of tax leaders surveyed ranked strategic cloud and digital initiatives as one of the top three ways their function is most aligned with organization-wide priorities.
Tax is a strategic lever that can have a significant impact on your business performance, efficiencies, automation, profitability and valuation. There are several areas of tax that can be explored to unlock the full potential in your SAP implementation, including:
- Identify, analyze and document current-state tax challenges;
- Define the objectives, design principles and requirements from a tax perspective;
- Develop an outline of the future-state tax process model;
- Review and document master data requirements for tax; and
- Perform a gap analysis of the system capabilities to tax business needs.
In addition, there are various tax incentives that can be used to help drive a greater return on investment and reduce some of the costs of your modernization efforts. Some examples include Scientific Research and Experimental Development (SR&ED) tax credits, industry grants and innovation incentives that can unlock cash to offset a portion of the project costs, reduce annual tax compliance costs and drive significant value for the business.
Organizations have an opportunity to reduce risk and costs within the tax function while on their SAP ERP transformation journey. This is typically realized through:
- Improved execution of controls, increased operational effectiveness, reduction of human error and more timely access to tax data;
- Use of on-system or automated processes to manage tax and reduce the amount of manual time spent on data collection, tax reporting, validation and compliance.
Let’s start the conversation today to discuss how we can unlock the value of tax and your ERP investment.