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Harnessing Efficiency and Building Effectiveness in the Tax Department

January 1, 2010Advanced Topics in Applied Operations ManagementYair Holtzman, Partner & Laura Wells (Deloitte)
Harnessing Efficiency and Building Effectiveness in the Tax Department

Introduction

Organizations employ a number of formulas to improve their business processes. These actions typically involve searching for internal cost-savings opportunities, developing departmental strategic relevance and efficiencies, and demonstrating an enhanced focus on increasing profitability. The financial crisis that began in 2007 continues to put stress on companies in the global marketplace. As a result, these companies face extreme pressure to tighten budgets and improve their practices. Nevertheless, the tax function is rarely taken into consideration as a viable arena through which to operate more profitably when organizations look to improve the efficiency and effectiveness of their internal operations. This omission can largely be attributed to the perception of the tax department held by the majority of business executives. That is, the tax department is typically viewed strictly as a cost center, a necessary component for the continued functioning of the organization but unable in itself to generate any revenue. This cost center mentality does not need to be the case. The tax department has the potential to produce data analysis regarding future periods rather than simply reporting on the historical data of the company. This perspective enables the tax department to take on an active role in contributing to the organization’s strategic, forward-looking directives. The selective implementation and integration of operations strategy tools and methods, with a focus on maximizing process improvement and efficiency enhancement, can lead to increased value within the tax department. Further, these management and strategy practices will expand the role the tax function plays in facilitating business process improvements, thus leading to increased value within the organization as a whole.

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