Transaction taxes are a fact of life, but businesses can’t be bogged down managing their tax obligations. They need to focus on their core business and strategy. Peter Horadan, Executive Vice President of Engineering and CTO of Avalara, a leading provider of cloud-based tax compliance automation, explains the challenges of managing transaction taxes in the face of ever-changing regulations and technology.
With the growth of the cloud for delivering accounting and tax services, how has this changed your approach to service development and delivery?
We think of our service as a dial tone—a customer should just be able to connect. There’s nothing to install, nothing to manage, it just works. And the cloud is a perfect way to deliver this service. Our service goal is customers should be able to turn it on, connect to us over the Internet, get the information needed to calculate taxes, and quickly complete the transaction. We think automation of transaction taxes is inevitable. No business can or should have to keep track of the growing complexity as governments continue to add rules, special cases, and exemptions. We want customers to not have to think about taxes and get back to business.
How have technology advances in automation affected the accounting and finance industry, and what changes are yet to come?
We are seeing governments’ desire for lower fraud, better compliance, and faster payment colliding with technology’s ability to provide all three of those things. So when you file a tax return, you file your summary numbers. Then if the government didn’t believe you, they would audit you. Now governments have realized these numbers are all online, so they have companies send their books as part of their tax return. Several nations now have mandatory filing of full accounting books as part of their tax returns. We’re seeing governments’ desire for more information steadily increasing worldwide, and they’re using technology to ask for a lot more information from businesses.
What has played a greater role in the changing dynamic of the digital economy—developing technologies like cloud and automation or changing customer expectations? Or both?
I think it’s both and they feed on each other. A simple example is in-flight Wi-Fi—that didn’t exist a decade ago. Now that airplanes have offered it, and if you don’t have Wi-Fi on your flight, you’re outraged. Advancing technology creates higher customer expectations that need to be met by even greater technology. If you think about the things you use every day, most were not available 5-10 years ago. Now you can’t do without them.
What has been the most surprising technological advance you’ve faced as a technology leader?
The most interesting challenge has been the emergence of Platform-as-a-Service (PaaS), with AWS being the most prominent example. This is a fundamentally different way to think about building and composing apps. Infrastructure has become code, so building your data center goes from a manual activity to a programmatic one. Change your program and you have a new data center.
Looking ahead, how do you see the role of the CTO or CIO evolving over the next 3 to 5 years? What kinds of challenges will those CIOs face as technology evolves and processes change?
With so many new Software-as-a-Service (SaaS) offerings, businesses are composing themselves from a combination of SaaS services and the CIO has to keep track of those services. If the service fails, how do we keep doing business? What’s our continuity plan around all the SaaS services we use? CIOs really need to think about how their businesses have come to include a lot of external services, and how are those services being managed to keep the business going, even if those services fail.