The State of Indirect Tax Compliance Among SAP Customers Although most SAP customers are currently operating their tax systems on premise, research from ASUG and SOVOS shows that a majority are planning to move to the cloud to increase efficiency and visibility. Insight Spotlight ASUG is the world’s largest SAP user group. Originally founded by a group of visionary SAP customers in 1991, its mission is to help people and organizations get the most value from their investment in SAP technology. ASUG currently serves thousands of businesses via companywide memberships, connecting more than 130,000 professionals with networking and educational resources to help them master new challenges. Through in-person and virtual events, on-demand digital resources, and ongoing advocacy for its membership, ASUG helps SAP customers make more possible. Sovos was built to solve the complexities of the digital transformation of tax, with complete, connected o¬erings for tax determination, continuous transaction control compliance, tax reporting, and more. The company supports more than 20,000 customers operating in over 70 countries, including half of the Fortune 500. Its SaaS products and proprietary Sovos S1 Platform integrate with a wide variety of business applications and government compliance processes. Sovos has employees throughout the Americas and Europe, and is owned by Hg and TA Associates. For more information visit sovos.com. © 2021. Americas’ SAP Users’ Group. All rights reserved. All SAP products are the trademarks or registered trademarks of SAP SE in Germany and in several other countries. Moving to the cloud is one of the top ways SAP customers can modernize their indirect tax operations. Organizations want to streamline disparate, on-premise tax systems to allow for increased flexibility with minimal disruption to the business. Research from ASUG and Sovos shows that SAP customers are evenly split between using multiple (37%) and single (35%) indirect tax compliance solutions, with 19% opting to use their ERP for indirect tax compliance. Figure 1: A Varied Approach to Indirect Tax Compliance 37%35%19%5% Have multiple solutions Use a single solutionUse our ERPNot using a solution but are evaluating them 5% Not using a solution and do not plan on evaluating any ERP Source: ASUG/SOVOS research, 2021 Most SAP customers are hosting their tax solutions on-premise (34%). Although research indicates that 10% are actively working to move to the cloud, 60% are planning to or are considering moving their tax solutions to the cloud. SAP customers are moving their tax solutions to the cloud to stay current with ERP evolution and support and to reduce complexities and cost. Additional benefits include better integrations with other systems, faster updates, and better alignment with the strategic business direction of the organization. It is important to note that there are challenges to hosting sales tax solutions in the cloud. The biggest issue respondents noted is a lack of in-house knowledge to manage cloud solutions, which is followed by the inability to find integration support to make the cloud more functional. Latency and unplanned downtime also were among the top issues SAP customers experience. Implication: Migrating to the Cloud is Essential for Modernizing Your Organization Moving to the cloud is an essential part of streamlining your organization, as well as emboldening your tax operation. Your organization can avoid compliance issues by automating tax processes in the cloud, which is especially important for operations with a global footprint. Issues can arise because of changes in geography or the types of goods and services you sell. These problems can have a substantial impact on your reporting and tax obligations. Additionally, SAP customers who host their tax solutions on-premise experience increased manual work/updates, higher costs, difficulty integrating disparate systems, and hardware maintenance issues. Bringing on a third-party vendor will help you work through and overcome the cloud challenges experienced by SAP customers. A third-party vendor will provide support, whereas organizations still operating on-premise must solve issues themselves. Learn how to eliminate barriers and increase the productivity of your tax operation by moving to the cloud.Boost Tax Compliance Capabilities and Visibility with SAP S/4HANA Half of SAP customers do not include tax solutions as part of their SAP S/4HANA migration prior to the start of the project. This leaves them open to downtime and costly mistakes that can halt operations. Insight Spotlight ASUG is the world’s largest SAP user group. Originally founded by a group of visionary SAP customers in 1991, its mission is to help people and organizations get the most value from their investment in SAP technology. ASUG currently serves thousands of businesses via companywide memberships, connecting more than 130,000 professionals with networking and educational resources to help them master new challenges. Through in-person and virtual events, on-demand digital resources, and ongoing advocacy for its membership, ASUG helps SAP customers make more possible. Sovos was built to solve the complexities of the digital transformation of tax, with complete, connected o¬erings for tax determination, continuous transaction control compliance, tax reporting, and more. The company supports more than 20,000 customers operating in over 70 countries, including half of the Fortune 500. Its SaaS products and proprietary Sovos S1 Platform integrate with a wide variety of business applications and government compliance processes. Sovos has employees throughout the Americas and Europe, and is owned by Hg and TA Associates. For more information visit sovos.com. © 2021. Americas’ SAP Users’ Group. All rights reserved. All SAP products are the trademarks or registered trademarks of SAP SE in Germany and in several other countries. Almost half of SAP customers have limited (38%) or no visibility (5%) into most or all the current tax processes at their organization and how they connect to SAP systems. In fact, only 15% of SAP customers have complete visibility into tax processes. This must change as customers migrate to SAP S/4HANA. Half of customers (48%) are not making tax a strategic priority prior to their SAP S/4HANA migration. This leaves organizations open to integration and compliance issues. Figure 1: When Tax is Factored into SAP S/4HANA Migrations ? Have not decided 12% After we have gone live with core functionality 16% During the first phase of the project 20% Prior to project start 52% Source: ASUG/SOVOS research, 2021 Tax should be at the forefront of an SAP S/4HANA migration. This will ensure that organizations working with a sales tax solution provider have their needs met in the short- and long-term. It also will increase visibility into disparate sources of data and complex transactions and allow organizations to identify hardware and software issues. If an organization does not correctly account for these challenges, compliance issues can arise. It also can cause problems auditing, assessing, and reporting tax that can lead to strained customer relationships. Keeping IT in the loop is essential as you migrate. The top concern of IT teams related to organizational change is inadequate staffing and a lack of internal skills. In their own words, SAP customers note how difficult it is to prioritize multiple projects at the same time, obtain the internal knowledge needed to support solutions, and achieve an ROI for the business. “ In order to simplify tax processes, we will be implementing the tax solutions in SAP S/4HANA.” – SAP S/4HANA customer Implication: Tax Should Be Involved in SAP S/4HANA Migrations Prior to the Start By not involving tax early in SAP S/4HANA migrations, organizations run the risk of having to re-engineer projects after they have begun. Going back after the fact to automate tax processes is costly and time consuming. Additionally, you run the risk of departments creating manual workarounds, which can live under the radar for both IT and tax, significantly increasing compliance risks. The relationship between IT and tax needs to be an active partnership. It is important that tax understands the changes being proposed so it can advise IT on potential impacts. Learn how to eliminate barriers as you migrate to SAP S/4HANA and increase the productivity of your tax operation.Next >