Leveraging Big Data in the Modern Tax Function
by Terri Eyden on
One example might be leveraging the reams of paper and electronic documents and e-mails that were previously unavailable for FATCA-related analysis, but which can become fully utilized through data mining or document management solutions. Starting small, with a specific objective, leaves room for refinement and expansion as the team becomes more comfortable with the new tools and methodologies, while minimizing investment until the value of the endeavor is proven.
Identify quality data
It cannot be overstated: the knowledge gained from big data is only as good as the data itself. Identifying the important, quality information from within the multitude of available data is critical to the success of a data management strategy. At a minimum, even if no other technology is utilized, tax departments can gain efficiencies from simply organizing and standardizing the currently available data.
Beyond that, knowing which data is important can help determine the best investment in technology and processes to meet the stated goal. It is also important to consider the need to coordinate data from multiple sources, including those external to tax. Finance, customer relations, and even marketing data can all be potential sources of meaningful information, and an effective strategy should include a mechanism to gather data from all relevant sources in an efficient manner.
Embrace new roles
With the growing emphasis on data-driven decision making, organizations will need to find resources with the proper skill sets to find the meaning in the vast quantities of data that are now available to them. Embracing the role of the data scientist in every area of the organization, including tax, is a necessary step to get the greatest benefit from advanced analytics. Creating opportunities for tax resources to increase their analytic skills and build their data literacy will also be crucial. Ultimately the mind-set of the tax function must be transformed to one that focuses on data and the corresponding algorithms to make decisions and generate knowledge to the benefit of the organization.
One of the biggest benefits of data discovery is its ease of use and focus on business versus IT users, so for organizations looking to leverage deeper data analysis quickly, these solutions can be a good option. However, even without new tools or technologies, the approach to data analysis and the focus on identifying new patterns and new relationships to gather insight about the business must be at the core of any data management strategy.
Change the culture
No new strategy will succeed if the culture within the organization does not evolve with it. Sponsorship from the top down and emphasis on the importance of data-driven decision making are essential. Regardless of the scope and level of investment in a data management platform, organizations must change the way that data and the resources that use it are perceived. Data analysis and insight is no longer the sole province of IT; it must be a common thread throughout the organization. Defining business goals supported by data and analytics, developing the appropriate skill sets, and implementing the proper architecture and framework to support data initiatives will send a clear message from leadership that data literacy is now a core value of the organization.
As the data-driven economy continues to evolve, it is clear that organizations that embrace the opportunities presented by an effective data management strategy will maintain a competitive edge within the global marketplace. While implementing a full-scale and comprehensive solution designed around big data will require significant investment and may take time to come to fruition, taking smaller steps to enhance the use and management of available data immediately is an essential step in today's information focused culture.
For the tax department in particular, the explosion of new regulations and reporting requirements along with increased scrutiny by management and tax authorities alike makes this even more crucial. Redefining the tax technology strategy with an emphasis on data management can help tax functions meet increasing demands for transparency, quality, and reduced risk and become a more integrated and influential component of the larger organization.
About the authors:
Stephanie Maxwell is a senior manager at PwC. She has worked at PwC for fourteen years, focusing on tax technology application implementations and support.
David Steiner is a partner at PwC. He has been in the financial services industry for nineteen years, principally involved in the audit and taxation of hedge funds, private equity funds, funds of funds, and investment advisors. In addition, Steiner is the national partner in charge of technology and process for the Asset Management practice.
Scott Stein is a managing director in PwC's Asset Management tax practice. During his sixteen years with PwC, Stein has been involved in the design, development, implementation, and support of various tax technology initiatives.
Wait, there's more!
There's always more at AccountingWEB. We're an active community of financial professionals and journalists who strive to bring you valuable content every day. If you'd like, let us know your interests and we'll send you a few articles every week either in taxation, practice excellence, or just our most popular stories from that week. It's free to sign up and to be a part of our community.
2 weeks 4 days ago by claudilocks