emeatmc client conference transformation€¦ · how to determine an end state vision, prepare a...

EMEA TMCclient conferenceTransformation– managing change

The Crystal, London9-10 June 2015

© 2015 For information, contact Deloitte Touche Tohmatsu Limited

One scenario:

Many tax functions are dealing with financefunctions that are centralising their operating model,rationalising their technology landscape andoutsourcing to business process outsourcing (BPO)providers. Tax is often highly dependent on localfinance, there is little documentation of localprocesses, high degree of manual effort, littleautomation. All making it difficult for the central taxteams to guarantee control and compliance whenroles and responsibilities are in state of change.© 2015 For information, contact Deloitte Touche Tohmatsu Limited

In this case study we will discuss various topics thatclients need to consider during a transformation. Thiswill include:

How to determine an end state vision, prepare abusiness case, manage the change, how to align withstakeholders and external service providers, how tostay in control when there are different moving partsthat tax cannot directly influence. And maybe mostimportantly how to do that in a way that creates theopportunity for tax to improve and be prepared for amore technology and data driven future.


Determine an end state vision

Align with stakeholders

Prepare a business case

Manage the change and maintain control

Agenda


Determine an endstate vision


Tax 2020

MissionVision

Defines the right to exist and theidentity of an organisationDefines the right to exist and theidentity of an organisation

The organisation observes the world oftoday and the opportunities oftomorrow and outlines the desiredstate

The organisation observes the world oftoday and the opportunities oftomorrow and outlines the desiredstate

Enablers

Means which can be used byorganisations to achieve their goalsMeans which can be used byorganisations to achieve their goals

The visionDetermine an end state vision


The 4 enablers of the tax functionDetermine an end state vision


Analysis of what matters A “bite size” first step The vision

Identify the internal and external challengesdriving your compliance and tax reportingfunction globally

Define one or a series of discrete projects tohelp understand your current state and defineyour future

Formalise your vision for global compliance andreporting in 1, 3 or 5 years time around risk,cost and value

• Current global costs?• SWOT analysis?• Effectiveness against

leading practices?• ‘Quick-scan”• Major global compliance

issues?

• Leading practices?• KPI* and SLA* design?• Scoping requirements?• Selecting a provider?• “Ship and fix”?• Best practice governance?

Current state Outsourcing readiness

• Defining value?• Information

requirements?• Preliminary value

assessment?• Profiting and analysing

tools?

• Global process re-design?• Centralisation, off-shoring,

automation, outsourcing?• Role definitions?• Shared services?• Finance function

transformation?

Value generation

• Major global risk profile?• Knowledge

management?• Emerging market issues?• Risk management

process?

• GAP analysis?• Case for change?• Road map for change?• Internal transformation

alignment?

Quality and risk Next steps

Value

• Formatted data sources• Clear definition of value• Measurable value

Cost

• Standardised processes• Offshore and/or automated returns• Effective use of external providers

Risk

• Global visibility and control• Resourcing, experience and knowledge in new or

emerging markets• Awareness of legal and regulatory change

Your future function

Assess your current state to determine your visionDetermine an end state vision

Financefunctionchange?

Technologyenabled?

Greatervalue?

Standardisedprocesses?

Globalvisibility?

Costcontrol

*KPI – Keyperformance indicator*SLA – Service levelagreement


In order to define a tax operating model, the organisation can be broken down into a number of capabilities or layers. These layers need to beconsidered together to take account of the connections between them and reduce the risk of misalignment.

Introducing the Operating Model Layers

Layers Components Area

Scope and design• Global / local

• Standardised / bespoke

Pro

ce

ss

es

Delivery model• Centralised / de-centralised

• Single / integrated

In-house teams

• Tax / finance

• On-shore / near-shore / off-shore

• Permanent / temporary

Re

so

urc

ing

Service providers• Insource / outsource

• Multiple / single

Systems• Off the shelf / bespoke

• Automated / manual

Te

ch

no

log

y

Information and data• Central records / local records

• Multi-source / central source

Organisation and operations• Stakeholders / delivery obligations

• Strategic / operational

Go

ve

rna

nc

e

Roles and responsibilities• Informal / formal

• Framework / ad hoc

Risk management• Transparency / no visibility

• Tax / business

Inter-relation of the components of a tax operating modelDetermine an end state vision


Introducing the Operating Model Layers

Defining a tax operating modelDetermine an end state vision

A tax operating model will utilise design principles to shapeall layers of the model

Layers

Scope and design

Delivery model

In-house teams

Service providers

Systems

Information anddata

Organisation andoperations

Roles andresponsibilities

Risk management

Design principles

High-level design

Business case for change

Roadmap for implementation and execution


Align withstakeholders


Identify stakeholdersAlign with stakeholders

Taxfunction

Tax team

Finance director

Board of directors

Communications team

Local finance teams

Audit committee Tax team

Suppliers

Customers

Shareholders

Tax authorities

Auditors and advisers

Internal External


• Understand each stakeholdersobjectives

• Analyse the overlapping areas

• Use the overlapping areas to directplans and aims of the transformation

Align with stakeholdersAnalysis and alignment

Myobjectives

Taxauthoritiesobjectives

Financedirector’sobjectives


Prepare abusiness case


• Define objectives and drivers

• Base case assessment

− Benefits

− Costs

• Procurement engagement and involvement

• Business case development and requirements for sign-off

• Business case adjustments

Business case developmentKey stages


Business case developmentDefining objectives and drivers


Business case developmentExample value components

The benefits of global outsourcing can be expressed through the following value components:

Compliance

• Reduced costs of non-compliance: re-filing

• Reduced costs of non-compliance: late filing

Additional tax benefits

Decreased local audit fees

Efficiency savings (full time employee (FTE) reduction)

Efficiency savings (quicker processes)

Quality improvement (increased satisfaction)


Business case developmentExample summary of contributing factors

Benefit Rule One-off benefit Recurring benefits

Reduced costs of non-compliance: re-filing

Re-filings can be reduced up to 80%-90%

3%-5% of total global outsource contract value

Reduced costs of non-compliance: late filing

Fines due to late filings can be reduced up to 90%-95%

80% * average cost per filing* 50% * # filings * current % re-filings

Additional tax benefits

Global outsourcing leads to increased quality and increasedinsights in additional opportunities spread over three years.

0.05% * Global revenue of a multinational corporation (MNC)

Decreased local auditfees

Applying a centralised delivery model allows a higher degreeof centralisation of the statutory audit procedures resulting ina more cost efficient audit process.

25% * Local audit fees

Efficiency savings(quicker processes)

Efficiency savings are realised through transformationaloutsourcing by a combination of standardisation, integration,automation, concentration/centralisation

20-30% * Total end-to-end process cost of compliance


Manage thechange andmaintain control


Effective change management is criticalto the success of any transformation.

Many programmes fail to deliver theexpected benefits because people in thebusiness are not equipped to make thechange and plans are not in place tosustain it.


Areas of focusManage the change and maintain control

How do you prepare yourimpacted stakeholders:

• employees;

• customers; and

• suppliers,

for the changes being introduced by thetransformation programme?

How can you be confident that they areready, able and willing to adopt the newways of working?

Stakeholdermapping

Employeeengagement

Behaviouraland cultural

change

Training

Changestrategy

Changeleadership

Key areas of focus for successful change management

Communications


Manage the change and maintain controlApproaches

Reengineeredprocesses and

automation

Currentprocesses

and systems

CurrentServiceModel

NewServiceModel

Modelchange

From

To

1

2

3

Process and systemchange

Key considerations:

- Big bang vs. phasedapproach

- Transition inadvance vs. at pointof delivery

- Resourcecommitments (bothinternal and serviceprovider)

Design

Transition

Route 1: Shift and fix

Improve

Design

Improve

Route 3: Fix and shift

Transition

Design

Transition andImprove

Route 2: Fix when shift


“If you fail to plan,you are planning to fail.”― Benjamin Franklin

“Someone's sitting in the shadetoday because someone planted a

tree a long time ago.”― Warren Buffett

“Plans are nothing;planning is everything.”

― Dwight D. Eisenhower

Manage the change and maintain controlWhy planning matters


What is a plan?

Meeting governancegates

Managing risk

Managingdependencies

Managingresourcing and costTeam members

Project ManagerExternal advisors

Wider stakeholdersFinance Director

What is a plan?A baseline totrack progress

To make sure you candeliver to the agreed

timescales

To help delegate anddistribute work

What is a plan?An agreed way in whichthe project is to be

delivered

The sequence inwhich you will

complete an activity

What is a plan?What would you use

a plan for?

Who would beinterested in seeing

the plan?

What would be mostimportant to your

stakeholders?

Evolves overproject lifetime

Managingcommunications

Manage the change and maintain controlWhy planning matters


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© 2015. For information, contact Deloitte Touche Tohmatsu Limited.

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