GST for ERP Systems: Can we please get a lil boring?

Pratima H

INDIA: Pixels – that’s where the real action is. Yet, it’s amazing how we tend to get so obsessed and captivated with the big picture that we forget that actual work, pain, and glory reside in the mundane-everyday where tiny things like nails, spanners, mosquitoes, misplaced tacks, precise screws, execution can make or ruin the masterpiece, that too, invisibly enough.

GST (Goods and Services Tax) may be ushering in another huge transition for the way taxes work and are crunched in the country but like always, there are many tiny what-ifs, doubts, confusions that would matter more than the eventual utopia (or otherwise) that it is being envisioned to be.

GST packs a lot on paper when we think of it as the singular, the biggest indirect tax reform of post-independence India, and almost akin to what 1991 did with liberalisation.

Its impact on the concept of origin-based taxation vs. destination-based taxation and its potential ambit where many tax categories ahead come under a uniform, intended-to-be-simple and single taxable event ‘supply’ (that can wipe away a series of multiple taxable events) is indeed tremendous.

If people do not need to continuously track, monitor and report a lot of scattered tax trigger-points as they do currently, then that would translate into some huge purported advantages and by effect, will lead to a lot of work cut out for software infrastructure that makes sense out of all the bean-counting.

Would this mean more complexity, more room for errors, more re-skilling, unlearning and legacy IT headaches? Would it be a blessing in disguise as a big sweeping stroke that standardizes and simplifies a lot of anomalies and disjointed parts?

We ask Ashish Dass, Vice President & Managing Director, South Asia, Infor a formidable ERP name that has etched an impressive spot of its own in a world ruled by biggies so far. Here’s what could happen with GST as it slowly takes over. Here’s why he strongly recommends enterprises to take GST very seriously.

Should enterprises and software makers be concerned about the GST change, or is it still a long way ahead?

GST is India’s largest tax reform post-independence. This requires a substantial change in the way enterprises operate in terms of the processes followed at an operational level. At a strategic level, this will require enterprises to take decisions about manufacturing and distribution policies (and locations). Enterprises need to take the impact of GST on their businesses very seriously; else there is a risk of losing to competition.

Are ERP solutions ready (or about to get ready) for the kind of complexity and functional-silo-wipe-out that the new regime might need?

Specifically for software makers, such changes will impact the core of the product structure and thus requires a significant change in the way the entire supply chain is handled – from forecasting, to material planning, manufacturing and finally invoicing. As a leading ERP solutions provider, Infor has prepared for this change for quite some time and we strongly believe that we are ready to embrace this change once it becomes effective.

Ashish Dass, Infor

How easy and fast would the switch be for enterprises already using a big ERP? Like can it be a matter of just an upgrade or something more detailed, across many modules etc.?

Such changes can be quite catastrophic if not planned properly, since these will have to be implemented over a short period of time in a running business. Apart from the process change involved, software makers will need to make it as smooth as possible for deployment of the new functionality – effectively like a patch. An enterprise will require a cut-over strategy which will cover the patch deployment, handling of open transactions, user training, document modifications (invoice or Purchase Order), reports etc.

What major impact would it have in terms of changes that would be required (specially upgraded vs. non-upgraded versions) and how disruptive would that be for existing systems?

If not handled in a planned manner, this change has the potential to impact business operations. If an enterprise does not have an upgraded version of the ERP, some of the processes will need to be done manually which may bring down efficiencies. Compliance issues such as tax utilization/adjusting tax amounts from pre GST (for example VAT) could also occur.

Would this open up/expand/penetrate the market for ERP systems in a new way? Also, how much would this affect the space for big data, analytics, MDM etc.

For ERP makers, this is a significant opportunity to re-align their products and customers to the new regime. Beyond the upgrade, we also see new opportunities of business consolidations, planning and warehousing systems deployment due to warehouse consolidations and BI and Analytics which would help analyze the new models. Because companies will see more efficient way of manufacturing and storing goods, we foresee a demand for Big Data analytics which would give a foresight into the real major markets.

Would the new model take care of state-wise variations, twin rates, exclusions, specific interpretations, specific processes and snag-free transitions?

The new model will take care of intricacies of GST but may have to be done in phases.

What about issues around a broader readiness for digital transformation, the equation between speed and compliance in accounting systems etc.

Infor has a unique advantage of being a one stop shop for a number of solutions such as ERP, Warehouse Management, Demand Forecasting and Planning, Manufacturing and Distribution Planning as well Analytics.

Specifically with regard to digital transformation, we recently announced H&L Digital. H&L Digital, together with Infor's existing software and platforms, enables Infor to offer Digital as a Service, or solutions that drive new capabilities, generate new revenue streams, create differentiated IP, and help Infor customers run their business better.

On GST, we believe that the new tax regime will drive new manufacturing efficiencies with the option of subcontracting and locating near the major demand centers within enterprises. This will give rise to demand of all the above. Simplification of the tax regime will improve compliance and also increase the speed of operations. We also believe that new channels of selling will become more popular and companies will look for a better customer and supplier connect.