David Deputy
Survey: Data Management at Core of Tax-Process Improvement and Quality of Life

The results revealed that improving the cumbersome and time-consuming processes surrounding tax data management is generally seen as the lynchpin for improving tax process efficiency.

November 11, 2010
by David Deputy

The increasing workloads of corporate tax professionals have been widely reported. Behind this increase are the demands of hyper regulation and global business expansion, which have ramped up the levels of scrutiny, risk and financial impact for tax departments. These factors mean there is an urgency to improve the tax process to meet the more complex and time-consuming demands now in place.

At the center of these improvements is the management of tax data.

To explore tax professionals’ perspectives on tax process issues, the largest survey ever done on this topic was recently conducted. In the blind survey, participants ranked “increasing workloads” as the number-one driver for tax process change. Not surprising in light of the effort required by the current regulatory climate.

Further, the results revealed that improving the cumbersome and time-consuming processes surrounding tax data management is generally seen as the lynchpin for improving tax process efficiency and thereby recouping the time needed to meet increased demands and improve the quality-of-life for corporate tax professionals.

In the world of tax, you can’t get much done without access to the right financial and tax-specific data. But chances are your people spend too much time touching, retouching and transforming tax data — all before they can begin using it. If there’s a tax process worth making more efficient, it’s data management.

The results of the survey clearly indicate that, for most firms, a one-size-fits-all technology solution for tax data management is unlikely to yield the desired results. The market needs an extremely flexible tax data management solution that can be adapted to meet the unique needs of a wide variety of companies.

Survey Findings and Interpretations

In light of the importance of data management issues to the overall improvement of the tax process, a blind survey was commissioned in 2009, with some 7,000 invitations sent to professionals working in companies with revenues over $500 million. Representing the largest ever survey deployed on data-related tax process issues, the survey’s goal was to explore the potential, the pitfalls and the barriers of tax process improvement within the broader tax community.

Not surprisingly, analysis of the results reveals that improving tax processes, especially with regard to data management, is generally seen as one of the fundamental changes needed to increase efficiency and recoup the time needed to meet continually increasing workloads.

The survey results were telling. A majority of respondents agreed on the goals for tax process improvement, including improving time efficiency, data accuracy and the overall tax-management process.

When asked what the “desired features of tax process improvement” should be, respondents by and large pointed to data management and data warehouse functionality. A large majority (88%) of respondents agreed that “data in the tax data warehouse should be automatically validated back to the source GL.” The same percent of those surveyed that, “a tax data warehouse needs to easily export data to provision and compliance applications.”

Perhaps most significant was agreement on the more personal issue of “quality of life” for tax professionals. Almost three-quarters of respondents (72%) indicated that “better quality of life for tax personnel” is a goal; clearly indicating that workloads are overwhelming and action needs to be taken to lighten them. An overwhelming majority (92%) agreed that “time spent collecting the financial data required for the tax processes should be reduced.”

Given the agreement among the survey respondents, certain conclusions can be drawn. Quality of life for tax professionals has become a big issue due to overwhelming workloads, and workloads are overwhelming, in part, due to the challenges of data management.

How Technology Can Help Today and Tomorrow

What is clear is that increasing the efficiency of tax data management is the most logical way to free up time and resources needed to handle expected increases in workloads and improve the quality of life for tax professionals.

However, how to accomplish that is less clear. While the survey did show strong agreement among tax professionals about the need to increase efficiency and better manage tax data management, no obvious and clearly agreed-upon “silver bullet” emerged from this study.

In terms of tax data management technology, the survey results point out that for most firms, a one-size-fits-all technology approach is unlikely to yield the desired results. Every company has unique issues that require an extremely flexible, dynamic tax data management solution that can be adapted to meet specific needs. This single solution would support data collection, validation, storage and preparation for use, including automated workflow, business intelligence, reporting and analytics and document management.

This means that technology providers need to rethink everything when it comes to tax data management. Technology innovation is needed to develop a truly flexible solution that meets the unique needs of a variety of companies.

The good news is software vendors are currently developing tax solutions that not only improve tax data management, but also streamline and automate the entire tax process lifecycle. But while help is on the way, these solutions will need to evolve over time.

Where to Start

So what can tax departments do in the meantime to improve tax processes and quality of life? First, talk with peers in upper management, especially IT and finance, about why a budget is needed to streamline and automate the tax data management lifecycle.

Be prepared with data that supports this budget, including a segmentation of the key shared processes around data collection, validation, storage/retrieval and preparation for use. This provides the common ground needed between IT, finance and tax. Next, develop an inventory of data sources, uses and activities, including time spent on collection and a full analysis of key spreadsheets used to support the process because you can’t improve what you don’t measure.

Finally, list all of the data required by the tax department, the origination and destination sources, those responsible for producing the data and data types and then estimate the time required to collect it. Based on this information, you can apply standard costing approaches to quantify the cost of obtaining data, both within tax and other departments.

Armed with this type of hard, factual information about costs, the tax department’s business case stands a much greater chance of getting funded. The fact is, executives often respond to issues around high costs and inefficiencies more quickly and decisively.

Once funding is secured, carefully consider any new technology investments that may need to be removed and replaced in the future. For example, as an IT strategy for tax data management is developed, make a commitment to stop deploying custom, patchwork and point solutions. Instead, get by with what you have today and develop a plan for implementing new and more strategic solutions as they emerge. Then, when the time is right, choose an integrated, enterprise-level solution to collect, integrate, standardize, validate and prepare for use all tax data in real time.


The good news for overburdened tax departments is that there is a way to get control of tax data management issues. By addressing immediate staffing and process issues, immediate improvements can be realized.

But technology offers the best hope for effective tax data management. Companies should prepare now for new way of approaching tax data that will bring with it increased flexibility, automated workflow, business intelligence, reporting and analytics, document management and perhaps most importantly, better quality of life.

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David Deputy is director of Tax Data Management at Vertex Inc. Deputy focuses on alignment of tax solutions with ERP vendor financial solutions, development of analytics and performance management capabilities and integration of tax solutions into broader corporate performance management frameworks.