Siemens digitalises non-cash incentive process

Optimised and compliant incentive processing

Whether it's a gift or a company event – the tax-compliant processing of non-cash benefits involves a great deal of effort. Siemens AG has largely automated the process using CITAX, a smart SAP-based solution. This not only optimises and complies with the recording of benefits, but also saves costs, increases transparency and reduces the effort required for future audits.

We were convinced by the total package: a future-proof, intuitive IT solution, high professional competence within the team and the valuable experience from projects in corporate groups.

Tobias Denk, Siemens AG

The path to digital non-cash benefits processes

Gifts preserve friendships and are a good way to be remembered by business partners or to thank employees for good performance. In this context, gifts are quite a complex issue from a tax perspective, which causes considerable expense in many large companies. Siemens AG has decided to expand its digitalisation strategy to include the field of non-cash incentives. “In line with our objective to consistently digitalise our tax processes, we wanted to further optimise the process of non-cash incentive reporting using state-of-the-art technology and innovative approaches, while taking into account the entire end-to-end process throughout our corporate structures,” says Tobias Denk, Project Manager and Tax Digitalization Manager at Siemens AG, who is responsible for digitalisation and automation. “We aimed at maximum process reliability in the tax-related recording of non-cash incentives while making sure that these are recorded in their entirety,” Frank Bub, Director for HR Taxes at Siemens AG, responsible for payroll tax topics, adds.

Looking for a TaxTech solution for the whole corporation
Following market analysis and research, three suppliers stood out. After a final analysis of the solutions and IT strategies of the potential partners and the costs related, Siemens finally opted for DCCS and the CITAX TaxTech solution. Not only was the IT business solutions specialist able to supply a tool that perfectly fit into the new SAP S/4 based IT landscape of Siemens. “We were convinced by the total package: a future-proof, intuitive IT solution, high professional competence within the team and the valuable experience from projects at other corporations. DCCS was also willing to further develop their product in the form of a partnership, taking into account the total cost of ownership for the solution,” explains Denk. The project was kicked off during a joint workshop during which all requirements and goals for the intended project development cooperation were defined. Based on the workshop results, the IT specialist, together with the Siemens project team, created a catalogue of requirements and analysed existing processes to define the requirements in detail and set the direction for the upcoming project together with Siemens. “From the word go, we involved key users from all relevant departments such as HR, Taxes, Financial Accounting as well as experts responsible for the IT strategy and project management, laying the foundation for a successful project,” Denk reports.

An individual mixture between classic and agile methods
In the completed specification sheet, DCCS – in close cooperation with the Siemens project team – finalised the detailed requirements and clarified outstanding issues. This detailed documentation of basic functions and requirements formed solid foundations. In the early project phase, the team relied on the classic waterfall model. During the initial rollout phase, CITAX was already able to replace the manual recording process and forward non-cash incentives to Payroll automatically. Various systems aimed at increasing user comfort such as a convenient employee search function and an automated rights management system were integrated into the process early on. Extensive change management measures and a comprehensive user training concept accompanied the system's introduction. “First we rolled out the tool to the users together with tips and tricks on recording to make them get familiar with its look and feel and allow them to test the solution. This was followed by Q&A sessions. Using the users’ feedback, we created development packages to further develop the solution on the basis of user requirements,” Denk continues. In order to incorporate the user feedback faster and in a more flexible way, the project team made use of agile methods going forward. “This turned out to be a useful approach to take into account the complex surroundings and to efficiently implement additional requirements. Regular exchange with DCCS and the entire project team was an important success factor during this intense phase,” Denk illustrates.

Automated processes replace manual process steps
During the second implementation phase, the challenge was to link more than 50 SAP financial accounting systems of domestic subsidiaries to the solution to further increase reporting completeness and quality (e.g. through receipts for gifts, entertainment or events). Using a central SAP-HANA data base on which the solution was based, all information was collated and harmonised. Coming in from various financial accounting systems, this data is now constantly imported by CITAX. This so-called “worklist” allows processors to directly allocate receipts from Financial Accounting to the respective instances. “Additionally, we defined book-entry transfer rules to raise accounting quality in terms of tax assessment and to reduce requirements for downstream tasks,” says Denk. In the third step, systems currently located upstream, such as ordering and travel cost accounting, are further integrated to even better support the recording of instances at processor level through automated allocation. “Our goal for this last phase is to largely automate the process that records and simplifies all relevant steps from ordering or travel cost accounting to correct tax assessment. This allows us to further optimise reporting and accounting quality,” says Denk. The further development also includes a digital signature tool aimed at largely replacing the manual authorisation process and saving paper.

With CITAX, we mainly benefit from increased efficiency across the entire process, through simplified recording, increased transparency and higher quality in tax calculation.

Tobias Denk, Siemens AG

Challenges on the path towards the solution
In this innovative and complex multi-stakeholder digitalisation project, various hurdles had to be overcome and the diverse requirements of the different departments and stakeholders had to be taken into account. Getting the relevant departments and stakeholders on board at a very early stage was a key factor in the success of the project. “For example, we supplied a cost-benefit calculation, which strengthened participation,” Frank Bub explains. “One of the technical challenges DCCS had to overcome was changing the base technology from SAP R/3 to SAP S/4HANA." “Another reason for us to choose DCCS was the new SAP S4 technology, which is currently being rolled out in the Siemens Group and thus future-proofs the connectivity and integrability of side-by-side applications,” says Denk. In addition, CITAX was upgraded to the latest technology level by means of the Fiori front-end (based on SAP UI5). As a synergy effect of the successful collaboration, DCCS was able to further develop CITAX to the next generation with input and feedback from Siemens. “Together with DCCS, we were able to overcome all project hurdles and find the perfect balance between high technical accuracy and ease of use with the solution – and all that at a consistent pace that led to the successful completion of the first project phase in just over a year,” Denk summarises.

Success by focussing on the users
Siemens is more than happy with the result of the project. “The solution enjoys a high degree of acceptance among users – not least because it was developed in close cooperation with them,” Denk describes the secret of the project’s success. New paths were also blazed in the fields of communication, information supply and training – for example, a concept was developed that involved virtual training sessions e.g., in comic style, and short instructions and videos were made available to end users to explain how to use the solution as simply as possible. Links to support and contacts, further documentation, useful websites, and the integration of the subject area of non-cash benefits into the Siemens HR chatbot also make it easier to get started. In the form of monthly user calls, the project team collected user feedback and provided information on the current development progress and new features in regular newsletters and internal social networks. “We shaped the training sessions to be tailored to the target groups and to involve short sessions to maximise learning success while minimising the time required. As of now, we were able to provide more than 8,000 learning units to our users, significantly reducing the number of support requests,” Denk illustrates.

High efficiency and tax compliance
Currently, 12,000 end users, 3,000 managers, 200 key and advanced users as well as five users in support and quality assurance are using the solution – at the locations and in 50 Siemens subsidiaries across Germany. The system makes it astonishingly easy to record non-cash incentives and process them in an optimised and compliant manner: The user selects the type of incentive in the intuitive user interface and enters the title, date and recipient. Data can be simply copied and pasted from appointments or e-mail distribution lists, as well as from event agendas. The costs, which are available as receipts in Financial Accounting, can be conveniently imported from the CITAX worklist; manual cost entries are also possible. The solution then calculates the applicable taxes, creates entertainment receipts, if necessary, reports the results to Payroll and transmits posting specifications to Financial Accounting for correct accounting entry. The automated process also includes approvals and queries, postings in SAP S/4HANA, importing company master data, importing posting data from Financial Accounting, displaying invoices from the scan archive, information from the ordering process and travel cost accounting, employee master data, SAP authorisation assignments, and reminder and escalation emails. “Thanks to this solution, we have been able to reduce some 30 manual process steps to less than ten and are working on further optimisation opportunities. We mainly benefit from increased efficiency across the entire process, through simplified recording, increased transparency and higher quality in tax calculation,” Denk happily reports. Additionally, Siemens expects to reduce its expenses for company audits as all recorded non-cash incentives are documented centrally and the auditors have direct access to data relevant to them according to GoBD (access types Z1 and Z3). “By automating this process, we were able to significantly reduce the workload for the processors, processing times and the number of queries as well as the workload in downstream processes such as invoice receipt verification by about 40 percent. We no longer need Excel lists,” says Denk.

Successful development cooperation
After three years of the development cooperation between it and DCCS, Siemens concludes: “Our collaboration was always characterised by trust. Honest and open communication contributed much to the project’s success, as did the tax knowledge and the experience DCCS’s experts brought to the table,” Denk concludes. However, the project is not yet at its end. The next milestones are the expansion of the link-up of ordering and travel cost accounting as well as an event-triggered recording process. All available information will then be brought together automatically at the user's end and the user will be informed directly by the system about new documents, for example. This will additionally facilitate data entry, further increase quality and reduce queries in support.

Images: (c) Siemens
Image Ralph Schmieder: (c) DCCS GmbH   

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