Future of Financials: Moving Tax to the cloud
Organizations are moving ahead with digital transformation across their ICT landscape. The entire application stack including core applications as well as peripheral ones such as ERP & CRM are being moved to the cloud. The entire application architecture is being shifted from monolithic to micro-services to build more agility, scalability and containerization.
One of the most important business financials functionality managed in these ERPs is tax. With constant introduction of new policies, changing tax brackets, and adherence to tax compliance, the tax process management could certainly benefit from a cloud migration.
With the recent wave of new normal and remote working, it has become necessary for organizations to move their tax to the cloud for remote accessibility, and process continuity. Most of the ERP providers including the OEMs have chartered a path of phasing out their existing on-premise solutions and products and offering only cloud-based alternatives. Some OEMs have stopped application support and upgrades for older on-premise versions. It is a clear indication of a focus-shift from on-premise to cloud-based solutions to leverage cloud capabilities to make the system more agile, scalable, resilient and accessible.
With global tax policies changing frequently, cloud-based ERP will give organizations more control to integrate new policies, make functional changes on-the-go, replicate changes across users and devices, and revise the process without any downtime, or business opportunity loss.
Organizations need to evaluate their existing on-premise ERP and migrate it to the cloud for optimal performance. Continuous investment in maintaining an obsolete and monolithic architecture is expensive and futile. Rather, organizations must start their cloud journey today to enable faster go-to market, dev-ops agility, and business scalability.
Here are a few reasons why organizations must move their tax to the cloud:
The recent pandemic has taught us that remote data-access is imperative for seamless business continuity. Most organizations have adopted the work-from-home mandate, and cloud can help them with remote access to all their tax processes and data anywhere and anytime. It also helps an organization in sourcing talent-pool that is not limited to local regions, and can be expanded across geographies. With tax ERP-on-cloud, organizations can be flexible with their operations, providing them with remote and 24x7 access to the data.
Tax processes are often carried out in silos in an on-premise ERP environment due to different devices, users, and their respective geographies. The information flow is narrow and isolated which leads to reduced visibility from a macro-perspective. Insights on processes such as invoice creation, tax returns, trade information, vendor mapping and management can only be collected if there is data democratization and visibility across the board. Cloud helps organizations to break these data silos and bring all the data at one place. Anyone within the organization with an internet connectivity and access rights can view and work on data over-the-cloud.
Reduced Total Cost of Ownership (TCO)
Cloud technology has come a long way since its inception and offers a plethora of options based on customer’s financial appetite. It is considerably lower than what one might pay for an on-premise IT stack. To save costs, organizations can opt for a lift-and-shift strategy where the on-premise ERP is migrated to the cloud. And as the business scales, they can opt to move their entire infrastructure stack to the cloud. The entire upgrading, scaling, and patching is taken care by cloud OEM, with ‘pay-as-you-go’ model which reduces the overall total cost of ownership (TCO) considerably. In-case the business slows down, organizations can also choose to stop their cloud subscription, helping them reduce their IT baggage.
Tax is an imperative function of financials. It withholds critical business and revenue information that can’t be compromised. With recent rise in cyber-attacks, cloud providers have made it their top priority to provide their customers with a robust, resilient and secure ecosystem for their applications-on-cloud. It is challenging for organizations to shift focus from their core business and create a secure framework around their on-premise ERP. Investing in third-party end-point services, and security solutions might become expensive. Regular patching, checking for latest updates, and rigorous tests on ‘on-premise’ applications can be difficult. Whereas, with tax-on-cloud, OEMs are responsible for overall testing, patch management, latest upgrades, resiliency, and to ensure that your data is safe and secure at all times.
Cloud-based solutions are built-to-scale. When you start at a smaller scale, you can operate with a ‘pay-as-you-go’ model, with few applications on-the-cloud. As your business scales, cloud gives you the option to scale your IT stack with it. It also helps you scale-at-will. You can scale-up your database during your peak business period, and resume to normal when it ends, without investing in any additional infrastructure.
Cloud is the new normal and organizations must consider moving their IT stack to cloud to leapfrog their competitors and build economies of scale. Tied together by a common system, standardized data formats, and reduced manual workloads, a move to the cloud can allow group-level tax leaders and head office executives to gain unprecedented insight into the company’s global tax positions, risks, and opportunities.
The shift to a cloud-based ERP system represents a once-in-a-generation opportunity for tax leaders to define strong, tax-sensitized data and business processes that fundamentally transform their team’s value to the organization.
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