Enabling Compliance in the Cloud

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T a x T u e s d a y W e b i n a rOvercoming Common Sales and Use Tax Challenges

for Manufacturers

How IT can leverage the cloud to support efficiency, scale and compliance

March 28, 2017

S o v o s C o m p l i a n c e P r e s e n t e r s

John Landy, Chief Technology OfficerCharles Maniace, Director – Regulatory Analysis

Proprietary and Confidential the information and materials in this document are not for use or disclosure outside of Sovos Compliance, LLC. except under express written consent.

2 Agenda• Introductions• Trends impacting manufacturing –

Compliance problems and implications• Strategic approach to compliance

leveraging cloud technology• Questions


3 SOVOS, the leader in Business-to-Government tax compliance

Sales & Use Tax

1099 Reporting

Beverage Alcohol

ACA

AEOI

E-Commerce Tax Automation

LatAm Compliance

VAT Reporting

4

• Trusted by more than half of the fortune 500.

• 4,500 clients operating in 120 different countries.

• The #1 private filer of IRS 1099 forms.

• #1 software provider in the beverage alcohol industry.The global leader in in tax compliance

and business-to-government reporting software.

http://www.google.com/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=GUkNPhPx4YbnAM&tbnid=H-84Y70qn1oE_M:&ved=0CAUQjRw&url=http://ufiie.org/blog/2013/09/17/meeting-2-jpmorgan-chase/&ei=dh1cUumwIaew2AWh-ICYDA&bvm=bv.53899372,d.b2I&psig=AFQjCNFJ2cjne2SHrPkvKYQK6zydrx9LxA&ust=1381854961221947

http://www.google.com/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=eotBX_e-CPrFkM&tbnid=7UV51aigOz0GDM:&ved=0CAUQjRw&url=http://ja-utah.org/?attachment_id=780&ei=Ch5cUuGhI4Lt2QW364GYBQ&psig=AFQjCNFASyMoz5mUsaaO-Fl45yFad4cXlQ&ust=1381855109431763


Trends Impacting Manufacturers…and what is making Sales and Use Tax

compliance harder


6 Trends Impacting Manufacturers

Technology Disruption

Growth / Expansion

Operational / Process

Improvement

Regulatory Complexity

Manufacturing at a crossroads


7


Growth / Expansion


Improvement


Trends Impacting Manufacturers: Disruption

Will invest 6% of revenue in R&D in the next 2 years

Have a defined goal to reduce product development cycle time (32% with target of >11%)

49% 55%

Source: Industryweek Future of Manufacturing: 2020 and Beyond, May 2016,


8


Growth / Expansion


Improvement


Trends Impacting Manufacturers: Disruption

Implications for IT:• Greater technical adaptability to

support rapid change in the business

• Resources focused on reducing operational cost and supporting new production technology

• Increased need for IT to focus resources on enabling growth opportunities


9


Growth / Expansion


Improvement


Trends Impacting Manufacturers: Growth

of manufacturers say growth is a top priority over the next 2 years.

say they have plans to enter a new geographic market.

74% 56%

Source: http://www.nam.org/outlook/

http://www.nam.org/outlook/




10


Growth / Expansion


Improvement


Trends Impacting Manufacturers: Growth

Implications for IT:• Supply chain, distribution and

business relationships• New systems and processes (web

store, purchasing, ERP, etc.)• More transactional data to

aggregate and reconcile


11


Growth / Expansion


Improvement


Trends Impacting Manufacturers: Operations

Manufacturing IT leaders say improving business processes is top priority

Taking buy rather than build approach to improve technical agility

72% 47%

Source: Harvey Nash/KPMG CIO Survey 2016


12


Growth / Expansion


Improvement


Trends Impacting Manufacturers: Operations

Implications for IT:• Legacy technologies harder to

improve and support• Decentralized and/or redundant

processes• Increased reliance on IT from

business partners• Slower response times


13


Growth / Expansion


Improvement


Trends Impacting Manufacturers: Regulatory

Most common business problem is unfavorable regulatory climate

of the top 10 market challenges relate to regulation

#2 3

Sources: Industryweek Future of Manufacturing: 2020 and Beyond, May 2016 www.nam.org/Outlook


14


Growth / Expansion


Improvement


Trends Impacting Manufacturers: Regulatory

Implications for IT:• Expanded footprint means more

obligations / rates and rules to support • Need for increased agility for timely

systems administration / updates and filing processes

• Changing regulations often demand different data

• More time supporting compliance activities / audit support

Compliance is Now a Barrier to Growth

Technology-enabled enforcement of tax and

reporting at the transaction level.

Patchwork of regulatory requirements that span states, regions and the

globe.

Increasingly aggressive regulatory environment.

Aggressive Rapid Response

Borderless

16


16 From Reactive to … Intelligent Compliance

Most businesses are tactical and reactive:• at risk in ways they can’t see

coming• burdened by onerous

processes and unreliable, disconnected systems

• unable to grow as quickly as C-suite desires

Global Leaders are strategic and able to project 3-5 years out:• real-time access to

comprehensive regulatory analysis

• full tax automation embedded with core systems

• scalable solutions capable of supporting businesses as they grow


How cloud-based tax solutions can remove the compliance barrier

A strategic approach to drive growth and operational efficiency

Intelligent Compliance In the Cloud

Secure, adaptable platform that can

supports your business strategy

Empower business owners

Complete and accurate regulatory

analysis / capabilities

Accuracy Agility Efficiency


Accurate Tax DeterminationOvercoming rapidly changing and expanding

regulatory obligations


20 There are over 10,000 taxing jurisdictions in the US…2016 at a glance:State and Local Rate Changes: 1,995

Total Rule Changes in our Determination Engine: 341,018

Total Form Changes in our Filing Solution: 296/1394 = 21%

“Too much time spent on regulation, compliance, taxes and not enough resources dedicated to growth of the business.”

Electrical equipment and appliance manufacturer

National Association of Manufacturers Outlook Survey – Q3 2016


21 Typical Manufacturing Filing ProcessBuy: Accounts Payable

Purchase Transactions:PO, P-Card, Invoice, Other

Validation Correction, Short Pay, Accrual

Data Consolidation

Review: Corrections / Reconciliation

Filing:Returns Prep / Transmittal

DOR

1

Invoices / Billing

Taxability: Sales, Exemptions

Sell: Accounts Receivable

Audit Audit

Tax Systems:

People:

ERP

TaxabilityDetermination (Use, Direct Pay,

Vendor Validation)

AP

Tax

IT

Pur

RF XL

AR CRM

E com XL

AP CSRAR

Credit

Pur

DOR

2DOR

3DOR

4


22 Typical Manufacturing Filing Process – Rate or Rule ChangeBuy: Accounts Payable



Data Consolidation



DOR

1

Invoices / Billing



Audit Audit

Tax Systems:

People:

ERP


Vendor Validation)

AP

Tax

IT

Pur

RF XL

AR CRM

E com XL

AP CSRAR

Credit

Pur

DOR

2DOR

3DOR

4


23 Typical Manufacturing Filing ProcessBuy: Accounts Payable



Data Consolidation



DOR

1

Invoices / Billing



Audit Audit

Tax Systems:

People:

ERP


Vendor Validation)

AP

Tax

IT

Pur

RF XL

AR CRM

E com XL

AP CSRAR

Credit

Pur

DOR

2DOR

3DOR

4


24

Complete Regulatory

AnalysisAccurate Determination

Value to you:• SaaS is ideal for complex, rapidly

changing regulatory environment• No more rate files or ERP work-

arounds• Easily handle – hundreds or

thousands of tax rates and rules, caps, thresholds, forms and filing methods

• Ability to manage data from all transactional systems

1Key Capabilities:• SaaS • Technology fed by

expert regulatory analysis

• Capabilities designed for complexity

• System interoperability for easy data transfer


25

Complete Regulatory


Value to you:• One Tax Determination platform

and vendor to manage• Single point of calculation• Reduced maintenance• Capabilities Tax and Finance need

for all transaction types – AP, AR, Use Tax, etc.

1Key Capabilities:• Centralized platform

for determination• Real time and On

Demand flexibility for all transaction types

2 Single Point

of Truth


26

Complete Regulatory


Value to you:• No more patches or system

updates to manage• Faster response time for

business change• Reduced audit risk

1Key Capabilities:• Automatic Updates• Every rate / rule to

support business change

2 Single Point

of Truth

3Always Accurate


Agile Systems to Support Growth

Overcoming business and technical change


28

Gartner predicts that within the next three years, more than 30 percent of the 100 largest vendors’ new software investments will have shifted from cloud-first to cloud-only — thereby pushing any enterprise fence-sitters in the direction of cloud.


29 What are manufacturing IT leaders saying about the cloud ?

www.kpmginfo.com/cioagenda


30 System InfrastructureAgile Systems

Value to you:• No environment to maintain• Minimal local footprint• Continual investment and

innovation (rather than every 3-5 years)

1Key Capabilities:• Hosted environment• World class

infrastructure, data centers and support

• Continual supplier investment



Value to you:• Rest assured your data is

safe and secure:• SSAE 16 SOC 1• SSAE 16 SOC 2• ISO 27001

• Meet or surpass requirements wherever you do business

1Key Capabilities:• Security Certifications• Annual penetration

testing• Encryption in transit

and at rest• Employee Security

certifications• Frequent client audits 2

Data Security



Value to you:• Reliable Up Time• Backup protocols for critical

business functions• Easily and quickly add users,

capabilities, geographies and solutions – with little IT effort

• Focused innovation

1Key Capabilities:• High Redundancy• Scale “on demand” as

needs change• Easily expandable

platform• Best of breed

innovations 2Data

Security

3Performance/

Adaptability


Save Money and Improve IT Operations

Overcoming inefficiencies by giving control back to business users


34 Manufacturing Leadership looking for Operational Efficiency

www.kpmginfo.com/cioagenda


35 Improved ResponseImprove IT Operations

Value to you:• Let the vendor manage the

complexity and the updates• Help business users help

themselves• Minimize the risk now by laying

foundation for future growth• Compliance will always be changing • Broader impact as you grow• US is just the beginning – VAT? E-Invoice?

1Key Capabilities:• Turnkey compliance

for rapid change• Business Level

Reporting:• Data aggregation• Reconciliations• Benchmark KPI’s



Value to you:• Allow IT to focus on strategic

activities • Add needed capabilities faster with

less team impact• Save time and reduce risk by

streamlining vendors

1Key Capabilities:• Streamline maintenance

and expansion• Give control to users• One vendor to manage

2Focus on the Core



Value to you:• No need for CapX spend (or

resources to maintain)• Low ongoing operational cost• Turnkey, fast start up and rapid

time to value• Streamline providers for best value

1Key Capabilities:• Single provider• Simpler, less costly

implementation• Optimize capacity of

existing resources

2Focus on the Core

3Reduce

Costs


38 SaaS Delivery - Rapid Time to Value

Cloud Based

SW Acquisition

On-Premise

Live in Production

HW Acquisition

Installation

Non-ProductionTest

Value Gap— Sovos decreases risk of failure and speeds time to value for the customers

Tim

e

∆Tim

e to

Val

ue

Implementation Stages


Questions to ask yourself…


40 Is your team ready for intelligent compliance?• What is happening in the business that is likely to be your top priority over the next 2-3 years? Will this create a shift

in resources or focus? If so – what is your plan to support current processes? • Does your team have any process improvement objectives? • Have you noticed the Tax or Finance Team coming to you more often for help or support? Is that getting in the way of

higher priority projects?• Has the amount of time your team spends on supporting compliance changes and updates increased? How much?

How many systems need to be touched each time there is a change? • What transactional business systems are likely to be added or changed over the next few years?• What are the implications for Sales and Use Tax compliance, data and ongoing maintenance? • How many system interfaces are you maintaining? How much time is that taking?• How often are you called upon to build complex queries and reports in order to analyze sales and use tax transactional

data?• Does your team maintain an environment to store tax documents (i.e. exemption certificates)? How does that work?

Is your tax team happy with that approach?• What are the impacts on you or your team when there is an audit?

Are you satisfied with your answers to the questions above?


41 A Few Questions to Ask a Vendor?• Is your software able to work with all of our existing business systems? • Can you support all of the product codes and tax content we need everywhere? US and

International?• What data security certifications do you have? Are you ISO 27001 certified? • Tell me about your implementation process – how long does that take? • How is the service and support organized after sale support?• Are you able to provide a full end to end solution – determination, exemptions and filing?• Can your system be used real time and “on-demand” based on our needs? • What kind of reporting do you provide for Audit purposes?

And lastly – Will the answers be the same three years from now?

42

Intelligent Compliance in the CloudRegulatory Analysis + Cloud Software

Make sure your long term compliance strategy enables you to:

Respond to new tax and reporting obligations you don’t yet see coming

Operate with confidence that your business is running with the most complete and accurate regulatory analysis

Be in control of the data you need across a patchwork of systems

Allows you to adapt quickly with the compliance capabilities you need on a reliable, stable and secure global platform.

T H A N K Y O U

Visitwww.sovos.com/solutions for more information on Sovos solutions for Sales and Use Tax compliance.

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