Technology, Robotics, and Automation: Keeping Your Tax Department Current Andy Gold, Deloitte Tax LLP Tyler P

The 2019 National Multistate Tax Symposium State tax reboot—The age of Multistate

February 6-8, 2019 Technology, robotics, and automation: Keeping your Tax department current Andy Gold, Deloitte Tax LLP Tyler P. Juckem, Anthem, Inc. Emily VanVleet, Deloitte Tax LLP

February 6-8, 2019 Agenda

• Introduction

• Transforming Impacts on the State Tax Department

• From the “Art of the Possible” – Technology Applied

−Automation

−Analytics

−Migration to the Cloud

• Getting Started

• Q&A

4 The impact of technology

“We stand on the brink of a technological revolution that will fundamentally alter the way we live, work, and relate to one another. In its scale, scope, and complexity, the transformation will be unlike anything humankind has experienced before.” World Economic Forum, 2016

Tax department trends Related emerging technologies

Data management & process automation Analytics • Big Data • Disparate systems Robotic Process Automation (RPA) • Need for speed • Global integration Optical Character Recognition (OCR)

Regulatory changes & scenario planning Extract Transform Load (“ETL”) solutions

Suite expectations

Cognitive computing

6 Copyright © 2019 Deloitte Development LLC. All rights reserved. The National Multistate Tax Symposium: February 6-8, 2019 Business value enabled by tax transformation comes in 3 ways Enhancing the tax function and strategic partnering across the business increases value from the tax department

Enhanced operational Improved risk Increased value to the efficiency management organization

Free up personnel to perform Increased transparency and Known as a value-added tax value-added tax planning formalized risk procedures may function, aligned with the activities with increased help effectively address financial organization’s strategies through compliance and reporting statement and audit risk partnership within the efficiency driven by automation organization and process standardization

8 Automation - Data Wrangling - Robotic Process Automation

9 What is Data Wrangling? Data wrangling is the process of transforming “raw” data into user- friendly data that can be analyzed to generate actionable insights.

2 Benefits of Data Wrangling • Automation • Integration Staging • Data Accessibility and Preparation • Autonomy • Data detail • Data reconciliation 1 3 Extraction Analysis Applicability of Integration Layer Data Wrangling

• Apportionment Provide seamless workflow across • Compliance modules to simplify user experience • Provision • Indirect Tax

STORING RESHAPING Data wrangling requires a series Modify and manipulate data into of data structures or objects that a consistent data structure by contain or store data in it’s “raw” gathering columns into rows or form, e.g. data-frames and creating multiple columns from a tables single row

SUBSETTING AGGREGATING Selecting or retrieving a Grouping multiple data records particular part of the entire that share one or multiple dataset by specifying subset of characteristics and calculate columns and/or rows values that describe the group as a whole

MERGING TRANSFORMING Combining or joining multiple Applying a mathematical or data sources into a single unit; logical function to a particular merging can be either column- column to either enrich, extract wise or row-wise and done by or translate information specifying a joining key

What It Is What It Is Not

Computer coded software Physical hardware

Cheaper and faster way A multi-year technology to automate processes deployment

Cross-functional, cross- Artificial intelligence application macros

Source: 2018 Deloitte RPA Survey

What It Can Do Benefits

Open, read and Pull data from the web Lower labor costs / labor redeployed to higher value activities create emails Log into Obtain human input via Increased process throughput web/enterprise apps email / workflow Improved process quality Move files & folders Make calculations Greater delivery model flexibility Copy / paste Extract data from docs Better scalability Fill in forms Collect statistics Better payback / ROI – relatively low cost to implement Read / write to DB’s Follow “if/then” decision rules 13 Copyright © 2019 Deloitte Development LLC. All rights reserved. The National Multistate Tax Symposium: February 6-8, 2019 How to identify suitable process candidates for RPA Well-defined, measurable, rules-based processes can be prioritized for automation by rating complexity against value

Criteria Typical examples and questions

High transaction volume / Process candidates with high value or volume transactions (especially monotonous) are often strong candidates value transaction for automation

Processes with many manual activities in the process today that result in a substantial number of errors due to Prone to errors or re-work human operator mistakes, e.g. flexibility of work-force, complexity of work or infrequency of activity

High predictability / Processes with a defined set of predictable, unambiguous business rules are ideal for automation rules-based

Processes with few exceptions in delivery are excellent candidates for automation in the beginning. With Limited exception handling learning, the organization can expand to processes which are complex or error prone Processes with little automation support today and large chunks of manual work involved benefit more from Significant manual work involved RPA, although the process does not need to be completely ‘straight through processed’ to benefit from automation Processes that vary greatly in terms of throughput and require large influx of resource support may be a strong Seasonal Peaks and Troughs candidate for robotics

Out of Office Hours Processes that involve out-of-office hours support are often strong candidates for automation as they contribute Support to the normalization of an employee’s workday

Processes with no planned changes or updates are often stronger candidates for automation as significant Process/system stability changes can create a substantial amount of rework

14 Copyright © 2019 Deloitte Development LLC. All rights reserved. The National Multistate Tax Symposium: February 6-8, 2019 RPA: How It Works RPA can easily be deployed and managed from a central controller to interact with a wide range of business applications

Indirect tax compliance – sub processes

E-filing

Use tax reconciliation

Pulling invoices

Tax provision – sub processes

Direct tax compliance – sub processes

And more….

Capitalizing on broader RPA initiatives

Early experience with Alteryx

Sustaining the automation

17 Copyright © 2019 Deloitte Development LLC. All rights reserved. The National Multistate Tax Symposium: February 6-8, 2019 Realizing Value from RPA: More Than Just Building Robots Building robots is only the start to deriving value from an automation program

Value

Bot Automation Development Barrier to Only Approach Realizing Value

Efficiency

Automation Key RPA Decisions, Impacts, & Considerations Improved Quality & Operating Model Governance Process Accuracy How are roles and Who manages exceptions Redesign responsibilities being and escalations? Who How does a shifted? Who is makes key decisions? process need to Deloitte’s accountable? change to drive Comprehensive savings, Approach to RPA improved accuracy and/or Financial Analysis & Labor Impact the shift of Decisions resources to Resource Shift Who is impacted? What is higher value What are the the future for those work? To Higher implementation costs? Who resources? What training is Value Work is funding? required?

Choosing the right technology tool(s) based upon need

Approaches to deployment

Training and change management needs

Lessons learned

19 Copyright © 2019 Deloitte Development LLC. All rights reserved. The National Multistate Tax Symposium: February 6-8, 2019 State Tax Analytics - Visual Data Analytics - Analytics within Tax Portal - Tax Modeling

20 State tax analytics / dashboards

Activity Map and KPIs for Sales, Property, and Payroll

Interactive Search & Filtering Drill-Down into detail by Entity, Account, State, and Location

CHALLENGES BENEFITS

 Getting at the data  Ability to leverage for insights

 Access to technology platform(s)  Getting behind errors / improve accuracy  Leveraging experienced resources  Effective communication tool  Understanding where to start  Drives fact based action / outcomes  Cost

Knowledge Search & management versioning Forms framework

Document Planning management Finance & emails Data management Legal Human Resource Tracker & myInsight notes Operation Info Reporting Data collection/ surveys R&D Marketing

Security

Master Data

Workflow Dashboards Analytics

Financial data Data Data model Applications Control center End user management

Tracker Data Workflow & ERP ERP data Consolidation Model Process DM Workflows Data collection Business templates CRM executive Master Dashboards Other data HRMS Mobile Survey Master Data analytics Manager Non-financial templates Tax Systems data Knowledge Product Info /social Management Data Nielsen IRI External Marketing Casual integration Customized user platform Data Discovery Mapping & Data Data Collect Automation Multi-dimensional Model Platform Surveys & data Other Ad hoc Data Advanced analytic Ad-hoc reports collects Model & predictive models Community

Standardized • Transparency and accountability supported by global calendar Processes • Access and reporting to key department filings, documents, and data

Produce and • Tracking document versions consume • Centralized repositories shared by access given users large volume of • Ability to secure documents to limited desired users documents

Consistent data • Automated and integrated data collection across functions, countries, gathering across regions, or global functions or • Standardized data collection processes locations

Reduced silos • Connected processes connected corporate functions across functions • Common user interface, workflow, and document management platform

Data analytics and • Designated idea repository and data analytics platform information • Ability to prioritize and track planning ideas and future projects management

27 Copyright © 2019 Deloitte Development LLC. All rights reserved. The National Multistate Tax Symposium: February 6-8, 2019 A Framework for Analytics – Deloitte’s 3DIntelligence™ An illustration using S4/HANA & BOBJ and Tableau

Data automation What If BOT VERTEX 1 4

TAX SYSTEMS TAX BUSINESS INTELLIGENCE LAYER where calculations Hybrid Cloud Data

automation take place TAX TAX

- SPREADSHEETS 3 Viewing the Tax Use Case SYSTEMS NON 1• Data will be extracted directly from the data sources including ERP, non-tax systems, and tax systems Data 2• Data can be stored in the existing analytics warehouse automation and sometimes can be directly accessed from the

ERP Enterprise sources ERP 2 Data Warehouse (EDW) 3• Business layer of BI tool will do the required calculations 4• Results will be displayed in Tableau Users will be transparent to the automated data flow Mail Notification to ERP and analytics engine calculations, but are empowered Administrator to perform analysis in Tableau

29 Copyright © 2019 Deloitte Development LLC. All rights reserved. The National Multistate Tax Symposium: February 6-8, 2019 Cognitive technology Indirect tax – use case The tool uses machine learning to develop artificial intelligence.

Robust Insight Generation

Raw Data Data Cleansing Taxability Insights Opportunity

Client Raw Consolidation Taxability Interactive & Savings Data Import and Data Identification & Predictive Insight Considerations Mapping Validation Generation Identification / Prioritization

Machine Learning Process

User interacts with data and validates taxability decision Structured Data GL, AP, EDI, and other structured Tool gains artificial intelligence data through taxability validation of the structured data and OCR- Non-Structured Hypothesis Validation captured data to enable faster Data and smarter insight generation Invoices, PO’s, contracts, etc. 30 Copyright © 2019 Deloitte Development LLC. All rights reserved. The National Multistate Tax Symposium: February 6-8, 2019 Migration to the Cloud

31 Migration to the cloud supports everything

From on-premises… …to cloud based

Using a local server or Using a network of remote servers computer to store, manage, hosted on the Internet to store, and process data manage, and process data

BUSINESS PROCESS-AS-A-SERVICE (BPaaS)

SOFTWARE-AS-A-SERVICE (SaaS)

PLATFORM-AS-A-SERVICE (PaaS)

INFRASTRUCTURE-AS-A-SERVICE (IaaS)

PUBLIC HYBRID PRIVATE

Off-premises Integrated public & On premise or external private service or internal

33 Copyright © 2019 Deloitte Development LLC. All rights reserved. The National Multistate Tax Symposium: February 6-8, 2019 Driving tax value with migration to cloud ERP Quantitative and qualitative benefits for tax

Potential for cash tax savings by identifying new opportunities or sustaining current tax positions Strategy‏

Tax Increase efficiency Policy Compliance in tax compliance and reporting through automation and process standardization Mitigate financial statement and audit risk Risk by increasing transparency, enhancing controls and supporting tax positions

ERP transformation initiatives offer a tax department the opportunity to identify and sensitize tax data for planning and reporting activities. The center box below identifies some key integration points, but it is equally important to obtain and understand the requirements that support the business processes, as corporate income taxes are impacted by virtually every accounting process.

Impacted Tax Topics Tax Integration Points Impacted Financial Federal / Int’l Federal / Int’l Systems  Key Accounting Field Definitions COA  Legal Entity P&L/BS  Tax Reform  G/L Separate Legal Entity  Book/Tax  R&D  Global Consolidation Intercompany Accounting Depreciation &  Local country  Sub Ledger Accounting  Ledgers and Ledger Sets Amortization credits and  Payments  GL design (journal categories)  Gain/Loss on asset incentives  A/P Dispositions  Descriptive Flexfields State / Local Tax  A/R  Financial Derivatives  Tax Fixed Asset configuration  Purchasing  Schedule M-1/M-3  Apportionment  Business Process & Procedures Factors  Asset Management (BPP’s)  1120 Detail  Sales/use Tax  Projects  Withholding tax configuration  E&P Specific Items  GST, PST, VAT  Budgets  Reporting:  AMT Specific Items  Transfer pricing  Expense Tracking RICEF’s  Tax attributes Withholding  Treasury Standard Reporting  Purchase Accounting  Cash Management ERP Cloud Design  Foreign Source  Federal Income and Related  Municipal Reporting  Transfer Pricing  Depletion

36 Leveraging the power of data and technology Some ways to get started

Consider `Identify “Pain Establish a Develop Conduct data Develop Build your leading Points” technology resource plan health checkautomated businessdata case practices roadmap solution

38 Contact information

Andy Gold Tyler P. Juckem Deloitte Tax LLP Anthem, Inc. [email protected] [email protected]

Emily VanVleet Deloitte Tax LLP [email protected]

39 Copyright © 2019 Deloitte Development LLC. All rights reserved. The National Multistate Tax Symposium: February 6-8, 2019 This presentation contains general information only and the respective speakers and their firms are not, by means of this presentation, rendering accounting, business, financial, investment, legal, tax, or other professional advice or services. This presentation is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional advisor. The respective speakers and their firms shall not be responsible for any loss sustained by any person who relies on this presentation.

40 Copyright © 2019 Deloitte Development LLC. All rights reserved. The National Multistate Tax Symposium: February 6-8, 2019 As used in this document, “Deloitte” means Deloitte Tax LLP a subsidiary of Deloitte LLP. Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte USA LLP, Deloitte LLP and their respective subsidiaries. Certain services may not be available to attest clients under the rules and regulations of public accounting.