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In association with PawPaw Taxology’s Geoff Peck, we are delighted to launch a series of blogs on how technology is impacting the tax industry – and ask if it is changing fast enough.
We often hear about the rise of taxologists, so to kick off, we ask the simple question – what is a taxologist?
The concept of a taxologist was first mooted in 2014 by Thomson Reuters, when the accounting and tax software company presented awards to early adopters or innovators for implementing tax technology solutions.
Thomson Reuters defined a taxologist (with a handy pronunciation guide) as follows:
Noun [taks-ol-uh-jist] a tax professional that excels in the use of technology to maximise tax function effectiveness.
Thomson Reuters elaborated: ‘Taxologists are tax professionals who embrace technology to yield remarkable results.’
‘They expand their thinking and increase collaboration in their organisation. Their actions generate impact far greater than themselves. They are problem solvers. They challenge the status quo.’
There is an important distinction between a tax technician and a taxologist
A tax technician is someone who can use their IT and digital skills to implement systems to get a task done quickly and with more efficiency.
However, a taxologist is an agent of change who sees the bigger picture, and understands how digital disruption is converted into digital opportunity for tax. It is the difference between working on a business versus working in a business.
Technician or Taxologist? Digitisation or Digitalisation?
Geoff Peck on why the distinctions matters
Understanding the difference between a taxologist and a tax technician is absolutely key to the full digital enablement of the tax function.
A tax technologist is someone who knows tax technology tools, for example how to configure a tax engine or implement a specific reporting solution. Also, they are great on projects, especially major corporate enterprise technology initiatives with a tax component to it.
However, in the 21st century tax function, this is not enough and this is where the taxologist comes in.
- Only a taxologist would know how to turn a process-driven tax function into a data-driven one.
- Only a taxologist knows how to help a traditional tax function take ownership and correctly manage their tools and digital impact across the organisation rather than leave it to ‘IT’.
- Only a taxologist would know how to leverage data platforms and commoditised and democratised technologies (other than Excel) through people, process, and technology rather than wheeling in over-engineered, high-cost point solutions as happens today.
- Only a taxologist would know how to begin leveraging data platforms and commoditised and democratised technologies (other than Excel) through people, process, and technology rather than just wheeling in over-engineered, high-cost point solutions and hoping for the best as happens today.
- Only a taxologist can help a tax department graduate past automation to true digital transformation as a mindset and a way of being.
This is so important because the old ways of dealing with technology using tax technologists is failing tax departments. There is an insufficient return of value from tools that are not really good enough. The time where this can be tolerated is rapidly coming to an end.
The digital divide
It is also important to stress the difference between digitisation and digitalisation.
Digitisation is simply the conversion of analogue into digital format with ‘1’s and ‘0’s underneath. Storing information in a database and using Excel instead of pen and paper are examples of this.
Digitalisation addresses the impact of having digital technologies at your disposal. By this I mean how they change the rules of the game – and they do change the rules of the game dramatically.
Nowhere is this more clear than with digital data, which has the power to massively extend the capabilities of a tax function. So, people are storing their data in digital format, which is digitisation, but they are not making anything like enough use of it, and that is digitalisation.
They treat data as a means to an end instead of an asset in its own right and still try and play by the old rules. This is actually a gross misrepresentation of what digital can do. In many cases it returns less than if they had no history of running tax departments at all, and just accepted digital technology for what it is, instead of moulding it into what they think it should be according to pre-digital mindsets.
Almost everyone is now digital, but almost no one is properly digitalised. It’s too big a revolution and cultural shift.
The question is whether the tax industry, and wider society, is ready to move forward with purpose. Look out for next week’s blog on the future of the tax industry.
Geoff Peck is the Founder & Chief Taxologist at PawPaw Technology
From boutiques to the Big 4, and start-ups to multinational corporations, Alex manages a diverse portfolio of clients worldwide which has enabled him to develop a vast global network of indirect tax and tax technology professionals in 40+ countries.