tax s role to embrace finance s digital transformation · cfo agenda on digital transformation . 3...

Tax’s role to embrace finance’s digital transformation #FutureOfTax

With you today

1 View of digital disruption from the top

2 CFO agenda on digital transformation

3 Impact on the Finance Function & Tax

4 Managing the transformation journey

Adam O’Brien Director Powered Finance, Advisory

Genevieve Watson Director Global Compliance & Transformation

© 2018 KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of Rethinking tax independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

Document Classification: KPMG Public

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View of digital disruption from the top Finance must disrupt itself to stay in front of change

Finance Disrupted

Experience centricity

New business models

Convergence of industry models

Emerging technology

Shifting geopolitical and

regulatory environment

Growth or die Changing workforce

demographics

Big data



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Finance digital transformation agenda for disruption Leading finance organizations have developed an agenda to deal with disruption

“ ”

Leading strategy and capital allocation

Extreme automation

Insights and analysis

Organizational simplification

Skills and talent

© 2018 KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member Rethinking tax firms affiliated with KPMG International Cooperative ( KPMG International ), a Swiss entity. All rights reserved.


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Risk management

1. Leading strategy and capital allocation

Vision for transformation journey

Role of innovation

Setting strategy by understanding organisational trends

Build portfolio to enables smarter bets

Establish strategic framework with disciplined process

User proper metrics and models for evaluation

Adopt strong governance to drive alignment



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2. Extreme automation

Data management

Blockchain

Cloud ERP

Robotics

Machine Learning

Cognitive

Natural language processing

Digital analytics and delivery

What does Tax need do/ know:

Consider impacts on wider business processes that might happen

Embed t ax requirements into those processes to ensure right first time and from source

Know what to ask for, and the ‘art of the possible’

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© 2018 KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ( KPMG International ), a Swiss entity. All rights reserved.

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3. Insights and analysis Descriptive Data Integration

What happened? Example: Revenue by dimension, geography, product, service, customer

Emerging technology: In-memory computing

What will change: Speed of transactions

Predictive Culture change

What will happen? Example: Future estimates of revenue and profitability based on demand drivers

Emerging technology: Machine learning, unstructured data processing

What will change: Predictive analytics

Diagnostic Analytics capabilities

Why did it happen? Example: Self-service and root cause analysis (explanations of variances)

Emerging technology: Enterprise Performance Management digital delivery

What will change: Speed of analysis

Prescriptive

What should we do about it? Example: Strategic scenario analysis of opportunities to improve profitable growth (new markets, customers, services, channels)

Emerging technology: AI/Cognitive, big data analytics

What will change: Hypothesis generation; advanced customer and market analysis


Know what data it relies on for its processes and who owns that data

Embed tax requirements into D&A initiatives e.g. data lake development

Find out what the wider organisation is doing and planning

© 2018 KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of Rethinking tax “ ”independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.


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4. Organisational simplification What work is done: Higher-value services

— Sophisticated data modeling and virtual visualization

— Innovation and new capital allocation approaches

— Management of digital workforce (Robots and AI)

— End-to-end process management

Who does the work: Reshaped support structure

— Outsourcers as partners vs. doers

— Flexible, more contingent workforce

— Transactional layer is marginalized

— Emphasis on partnerships, collaboration, and reducing silos

— High skill set employees/digital skill set

Where work gets done: Geography no longer matters

— Virtual delivery centers/“no shore”

— Local need highly reduced or eliminated

— Globally controlled

How work gets done: Automation and integration

— Experience centricity

— Robotics and artificial intelligence everywhere

— Language neutralization removes barriers

— One-office combined (back, middle, front)


Review of own processes – Lean Six Sigma principles

Understand how changes in wider processes will benefit or hinder Tax Function

Engage with relevant stakeholders



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5. Skills and talent

In a rapidly changing environment, finance organizations must assess new work to be done, and how this translates to the skill sets of their workforce.

Data utilization and technology

— Data modeling, — analytics, and

visualization — Robotic share (RQ)1

Strategic trend analysis Research capabilities Design thinking background Programming expertise

Behavioral

— Strategic thinking — Service management — Relationship

management Impactful storytelling

— Feedback, communication, negotiation

— Program management Navigation skills

— Ambiguity and white space

Finance technical

— Business modeling — Core financial driver

analysis Process design and navigation


Define new skills needed in tax

Leverage wider changes being made e.g. training programmes etc.



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6. Risk management

Risk management – existing and new risks

to manage

How respond to disruption

Need to continuously evolve

Continuous improvement


Ensure tax risks identified

Review tax control framework in place

Ensure controls are effectively embedded and monitored – continuous improvement and evaluation



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Achieving transformation journey success

Focus on vision for transformation

Cloud platforms – Powered Finance

Solutions

Simplification of architecture

creating better clarity and

consistency of data

Standardisation and conformity

Organisation focussed on

delivering outcomes

Tax embedded into cloud templates –

requirements defined upfront

Specific tax reporting capabilities built into data and analytics

offering

Business outcomes driven

Simplification of systems architecture

and processes

Controls embedded into technology and processes

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Engaging and managing the transformation journey

Change Vision Skills Incentives Resources Action plan

Confusion Vision Skills Incentives Resources Action plan

Anxiety Vision Skills Incentives Resources Action plan

Resistance Vision Skills Incentives Resources Action plan

Frustration Vision Skills Incentives Resources Action plan

False starts Vision Skills Incentives Resources Action plan



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Objectives of a business case Document and gain agreement of the value and benefits associated with making changes

Establish achievable targets for business performance improvement as a result of the changes

Position the project as an investment, rather than a cost, by quantifying the potential business benefits

Provides a clear payback/return on investment profile

Establishes the business performance baselines and goals used to evaluate and drive change



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Common mistakes

Skipping the ‘business Leaving out intangible/ Personal incentives as usual’ scenario – the soft benefits misaligned

baseline Over-reliance on 80:20 rule – imperfectinformation in the early

days

Business case ≠ financial metrics to stretch goals

determine go / no-go

Inability to describe the business change and No business buy-in /

outcomes ownership of changeIgnoring the ‘business

Business case ≠ costs’ of a project/action Technology led, budget /decision business passengers

© 2018 KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative Rethinking tax (“KPMG International”), a Swiss entity. All rights reserved.


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Thank you

If you have further questions, please speak with us during lunch or tweet @Gen_Watson

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tax s role to embrace finance s digital transformation · cfo agenda on digital transformation . 3...

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