How to overcome the most common challenges of tax engine implementation

Though an automated tax engine will ultimately improve a company’s overall operations, a successful implementation process does place certain demands on a company’s personnel, some of which can be challenging if not addressed properly.

Fortunately, most of these challenges can be overcome with sufficient planning and some awareness of what to expect. Every company is different, of course, but below are some common considerations to think about before starting the implementation process.

Integrating a remote workforce                                                                                       

• Since Covid, most companies have more people working from home, and the workforce itself is often spread out across different states, countries, and time zones. For the purposes of implementing a tax engine, some of these people will need to be involved, so it will be necessary to coordinate communication and logistics between them and the implementation team.
• Fortunately, switching from a legacy system to a cloud-based tax solution means that a third-party implementation team does not necessarily need to access a company’s hardware, just its Enterprise Resource Planning (ERP) system. These don’t require IT personnel, since the cloud systems work off remote data centers managed by third party providers. Most other communications, data transfers, and configuration parameters can be executed via the cloud, so it doesn’t matter where workers are located geographically—only that they have remote access to the system.

How to integrate with other technologies

• A large part of any tax engine implementation is integrating the tax engine software with the company’s ERP system so that together they constitute a smooth-running technological ecosystem. Often, however, companies that are upgrading their ERP system look to simultaneously implement a tax engine, ensuring that both systems are properly aligned is an additional priority.
• In such cases it is important for the company to choose a tax engine solution that has the fully functioning integration needed.
• Not all tax engines integrate well with all ERPs, so it is  important to choose one that not only facilitates system integration and data migration, but is also designed to work well with other tax and finance systems in the company’s technology stack. If the tax engine’s structure and logic are a good fit for the new ERP, the integration itself should go relatively smoothly. Choice of software is imperative.
• For example, Thomson Reuters ONESOURCE Determination software uses standard APIs to connect to business ERPs, applications, or other systems without a complex software implementation.  No extra coding from IT is required, either, saving both time and money.

What is the best way to manage new processes?

• From a management perspective, the best way to deal with these issues is to view the new technology implementation as an opportunity to re-imagine and improve existing processes and workflows. For example, if the new tax engine automates a number of tasks the tax team used to do manually, such as updating tax laws, rules, rates, and tables to keep up with changing regulations, the tax team can be trained to turn its attention to more value-added activities, such as finding tax savings, improving compliance, consulting, advising, business support, and data analysis.
• Over time, tax automation can and should change the tax department’s role within the company for the better, and pro-actively anticipating how new technology will impact the organization should be part of a company’s technological roadmap to begin with. The software service provider should help with guidance and training through the key transition phase, and provide continued support thereafter should any additional issues arise.

Resource constraints

• During the implementation period, some employees may be called upon to do double duty by keeping up with their existing workload while also assisting with the implementation itself. For example, requests for data from accounts payable, finance, sales, IT, and other departments may require people in those departments to take time out from their regular duties to supply that data. And in the tax department itself, implementation team leaders will inevitably shoulder extra responsibilities, some of which may be time-consuming.
• To the extent that these eventualities can be planned for, the internal implementation team should identify who will be affected in other departments, what their responsibilities will be, when they will be called into action, and, if necessary, what accommodations can be made to ease their work burden during this period. Communication with affected employees beforehand is also important so that they know what to expect and have time to prepare.

What does testing constitute?

• The final phase before going live is testing. Thorough testing of the entire system is important, not only to confirm that the system is working properly, but also to prevent future problems.
• Implementation teams typically provides detailed guidance on what to test and how. Best practice is to test as many real-world business transactions and processes as possible, and tests should be designed to confirm that every part of the system is running smoothly. All modules that interface with the tax engine should be evaluated, all sources of data confirmed, and all tax-specific functions stress-tested to ensure they are delivering the expected results.
• The most common testing mistake is simply not testing enough. One practical reason to conduct more thorough testing on the front end is that the same tests can be used for future troubleshooting, so time spent testing now can save money down the road.
• Though every tax-engine implementation presents its own challenges, most issues can be resolved with proper planning, open lines of communication, and a mutually respectful relationship between the software service provider and the company itself.

Thomson Reuters ONESOURCE Determination is a tax engine designed from the ground-up to make integration with different systems as painless and seamless as possible.