Business Case for Change: Justifying Additional Investment in Budget and Resources
It is crucial for the tax function to cultivate strong relationships with the business, senior management, finance, and IT departments. A mutual understanding of the company's tax challenges and potential solutions is essential to ensure that investment budgets are allocated effectively. By fostering these connections, we can better advocate for the necessary resources to address our tax needs.
'Multiple stakeholder buy-in' - 'create strategic and operational value of the investment'
Chief Tax Officer, the world’s leading manufacturer of construction and mining equipment, diesel and natural gas engines, industrial gas turbines and diesel-electric locomotives, says:
“If I had to tell a group of CFOs why they need to invest in their tax operations, I would say that they need to fully understand the amount of risk on their financial statements from tax, which is one of the biggest numbers on the financial statements.” Many of these risks are different from the past, she says.
“There is an enormous amount of competition among countries to grab as much tax revenue as they can, and this is not something that is going to go away. Companies will have to defend against unreasonable government positions and face the increase in data requests and resulting assertions, which are going to become more and more onerous from countries around the globe.”
A roadmap for transformation
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Business case and problem statement |
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The business case |
This is a sentence or two that describes why this project should be done, why it has priority over other projects, and indicates the strategic business objective(s) the project impacts |
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The problem statement |
This is a short, measurable statement about the problem. It should indicate how long the problem has been going on, be stated as specifically as possible, describe the gap between the current and desired state, describe the impact of the problem, and be stated in neutral terms with no blame, perceived solution(s) or root cause(s) |
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Project scope |
Scope refers to what the team should focus on, but more importantly, what the team should try to avoid. Define what to work on and what not to work on |
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Goals and objectives |
The goals and objectives are what the team should strive to achieve in the four to six months they exist. (e.g. aim at improving by 50 percent) |
A Comprehensive Overview of Return on Investment
To gauge the potential value of a project or solution, consider the savings that would result from eliminating the existing problem. This could include reductions in software license and support fees, salary expenses, or consultancy costs.
Reflect on the time it typically takes your organization to implement such changes and estimate the annual savings you could achieve post-implementation. This will help you determine the Return on Investment (ROI) period for the proposed solution.
Categories of savings
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Hard savings |
Reduce expenses and result in financial improvement |
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Soft savings |
Financial benefits that may occur, but are not a direct result of the product, solution, etc. |
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Potential saving |
Potential Saving: are hard savings but require some action or decision to be become realized (e.g. go ahead after feasibility study) |
Example of a ROI format for illustration purposes only
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Solution |
Examples of area of investigation |
Hard Savings (EUR) |
Soft Savings (EUR) |
Potential Saving (EUR) |
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Software solution X |
Real-time access to improved quality tax data for stakeholders (e.g. planning and monitoring) |
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Less resources needed for processing |
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No longer time lost on rework/hidden factory |
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Lower external advisory costs |
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Improved working trade capital |
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Lower financial risks during a tax audit |
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Avoid disruption of business |
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Quicker response time to audits |
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Improved internal controls |
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Enhance knowledge sharing |
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Increase data analytics |
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Lower training and/or maintenance costs |
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Avoid reputational risks (vendors, customers, etc.) |
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Avoid financial risks (vendors, customers, etc.) |
Be operationally efficient
Hidden Factory: Uncovering Inefficiencies
The hidden factory represents the rework and remedial efforts that waste valuable time and resources as employees continually correct mistakes.
Our goal is to bring this hidden operation into the light by measuring and calculating its impact on return on investment (ROI). By doing so, we can reclaim precious time and financial resources for the business. This encompasses extra man-hours, increased costs from rework (such as credit and debit notes), and the need for retrospective corrections or disclosures.
Example: how much rework is required before numbers received from finance systems can be used?
During the assessment of any solution, it is important to evaluate the potential increase in workforce efficiency, the reduction in rework, and the decrease in risk exposure. Additionally, consider how the solution enhances visibility and awareness, allowing the tax function to prioritize tasks more effectively.
For example, eliminating duplicate work can lead to improved information quality for the tax function and establish checks and balances that require only a simple double-check of a limited number of invoices.
