3 ways managed services modernize tax and finance operations

Elevating managed services to a strategic role can mitigate tighter budgets and modernize tax and finance operations.

In brief

• Tax and finance leaders are seeking solutions to address tighter budgets, the need for AI investment and talent shortages.
• Many organizations aren’t data-ready or appropriately staffed to manage the needed changes to tax and financial functions.
• Elevating managed services to a strategic level in the business can help leaders quickly access talent, scale with needs, and modernize tax and finance operations.

The road ahead for tax and finance leaders looks very different to the past — and could pose real challenges for organizations that don’t recognize the shift happening around them. Once siloed, these functions are increasingly embedded into strategic decision-making, and leaders are juggling conflicting priorities. On the one hand, there’s a mandate to meet evolving and complex compliance regulations and, on the other, to maintain operations and grow business. In fact, for the first time ever, the latest EY Tax and Finance Operations Survey of more than 1,600 global leaders cite budget constraints as the top concern for leaders, who are also facing industry-wide talent shortages and the rapid reshaping of operations by AI that is now integrating into almost every aspect of daily business. As budgets strain and AI unlock new opportunities, more leaders are thinking creatively. They’re adopting the deployment of managed services as a strategic rather than a maintenance measure and a sharper focus on three key steps to transform the future tax and finance operating model and modernize tax and finance functions.

2. Address data governance to accelerate integration and AI benefits

Data is central to strategic decisions, but many organizations report serious challenges. The data headlines tell a story. Eighty percent of leaders say the biggest barrier to achieving goals is a lack of AI readiness; accessible data is a challenge too. Ninety-one percent (2) of surveyed businesses report that data is still trapped in functional or departmental silos, 79% say there’s a lack of data governance processes, and only 17% of tax functions or 13% of financial services functions say they’re effective at accessing, organizing and reusing data. As tax, financial services and other functions increasingly align and AI is embedded into evolving operating models, enhance governance in these important ways with your managed services provider:

• Define ownership: establish clear data owners and stewards within tax and financial services teams to better manage data definitions, quality standards and access permissions.
• Unify data architecture: break down data silos across enterprise resource planning (ERP) systems, tax software and operational databases into a single source of data truth.
• Standardize tax data: create universal taxonomies and metadata tags for all transactions to establish consistency across business units and geographic regions.
• Implement continuous monitoring: deploy automated data cleansing and validation tools to detect anomalies, reconcile discrepancies and flag potential compliance risks.
• Establish AI guardrails: set up strict protocols for training AI models so that data inputs are traceable and compliant with corporate policies.

3. Develop a modern talent strategy

The survey shows organizations are beginning to make changes to their tax and finance talent pools and skill sets as operating models undergo change. Eighty-nine percent of survey respondents say they’re upskilling their workforces, and almost as many (81%) are prioritizing candidates with technical skills beyond tax and finance. As more organizations co-source elements to managed services providers, twice as much on-staff time is being redirected toward high-value activities requiring analytical skills and aptitude for data and AI solutions. As you reshape teams, prioritize tech-savviness, agility of staff to perform across functions, and an ability to work with data insights to make better operational and client decisions. Where upskilling and training current teams require planning or an extended timeframe and resources, a managed services provider can help meet any gap in talent and skills. 

As regulatory compliance demands and market conditions continue to put pressure on today’s leaders and tomorrow’s results, it could be time to embrace the sophisticated flexibility and scalability that managed services can now bring. 

Mitchell Weiss, EY Americas Financial Services TFO Leader, Wealth & Asset Management contributed to this article.