Data has been crowned “king” and is frequently compared to the new “oil” and “gold” because of its ability to be mined and monetized to generate additional value and revenue streams for businesses. Data continues to grow in terms of size and value with IDC projecting that global data will grow to 175 zettabytes by 2025, up 288% from just two years ago.
Today, many organizations are using big data to unlock key insights across industries. For example, tech companies use data to personalize the user experience, private equity firms analyze data to evaluate companies more accurately, and even grocers are using data to better manage food distribution and the supply chain. The true value of data is that it can help organizations better understand customers, improve business processes, and eliminate inefficiencies, help leaders make smarter decisions faster and identify new business opportunities and grow sales and revenues — all of which can provide them with a competitive advantage. The use of data is paying off. Forrester Research found that data-driven companies are growing more than 30% annually, on average.
Governments have now joined with other industry sectors in taking advantage of big data. Around the world, regulators are issuing new continuous traction control (CTC) mandates that enable them to connect with organizations’ data stacks in real-time or near real-time. By doing so, authorities can collect data associated with business activities relevant to taxation and other functions. On the flip side, non-compliance with these mandates can put business operations at risk.
CTCs flip the world of retroactive audits on their head. Instead of relying on companies to submit returns and provide historical evidence of transactions, CTCs give governments access to authenticated transaction source data in the moment, improving visibility, and accelerating tax collection efforts.
The implementation of CTCs is just one part of a wider digital transformation strategy in which governments seek all data that can be legally accessed for audits to be transmitted to them electronically. But with this comes three major challenges that, if organizations do not address appropriately, can negatively impact businesses.
1. Quality of data
While having more data is theoretically supposed to be better, companies are unable to use it to its full potential because data quality is poor. The Harvard Business Review estimates that only 3% of companies’ data meets basic quality standards. And this can be costly, considering Gartner estimates that poor quality data is responsible for $12.8 million of lost revenue each year for companies it surveyed.
The biggest problem is that poor quality data is often not recognized until it’s too late, resulting in lost business opportunities, higher costs or, in some cases, even non-compliance with tax requirements. To maximize revenue, Gartner estimates that this year, 70% of organizations will track their data quality levels and improve it by up to 60% to reduce operational and cost risks.
2. Data integration obstacles
The Gartner survey also showed that about one-third of businesses considered integrating multiple sources of data as one of their greatest challenges. The problem here is that there are disparate tools to manage different aspects of the organization, including payroll, billing, procurement, and sales. And these all need to be integrated into a single source of truth to provide a unified view of the business.
Data is extracted from these systems in different formats, structures, and types, resulting in tools that do not speak the same language. Additional steps are then required to manually format, validate and correct the data – a time-consuming process that wastes resources and is not scalable as the organization and the data it creates and consumes grows.
3. Efficiently and cost-effectively scaling big data
Today, more than 40 countries worldwide have implemented CTCs. And most governments with value-added tax (VAT) in place will likely implement CTCs by 2030. Simply put, the government is now directly in businesses’ data stacks. For many companies, there’s temptation to deal with such mandates country-by-country by deploying a local solution provider to comply and keep up with constant changes in a particular jurisdiction.
While localized solutions can assist in solving specific problems for that region only, this approach can end up being costly and unreliable. The cost to build, monitor and maintain multiple local systems is prohibitive at best and extremely difficult to manage or have a consistent view into your global compliance posture.
In today’s data-rich world, it’s important to not only focus on how data can be used to benefit business, but also how it can be applied to help the organization meet government tax data mandates. By developing a global strategy for addressing CTC mandates, corporate IT leaders can ensure compliance with current laws, and leverage high-quality, integrated data to put its business on a path to competitive success.