Meeting the ever-changing compliance needs of global businesses

Meeting the ever-changing compliance needs of global businesses

Sovos is purpose-built for modern regulatory environments – it meets the ever-changing compliance needs of today’s global businesses through innovative technology that is highly scalable, reliable and secure. It has more than 2,600 employees working in 14+ countries, and it supports more than 100,000 customers (including half the Fortune 500) that operate in more than 70 countries. Steve Sprague, Chief Product & Strategy Officer, Sovos, talks about the importance of the company’s technology, the trends he is seeing in the industry and what’s next for Sovos.

Tell us a bit more about your business and how it started.

In 1979, two visionaries in suburban Massachusetts sat at a kitchen table and brainstormed how to apply technology to the challenge of calculating sales tax rates. Shortly thereafter, Sovos, as it is known today, was established.
Today, Sovos is a global provider of tax, compliance and trust solutions and services that helps businesses identify, determine and report on every tax transaction and obligation and is trusted by more than 100,000 companies in 100+ countries.
Our founders were early to identify a need for technology that would help businesses adapt to evolving sales and use tax regulations. In the 1970s and 80s, no one could foresee the e-commerce boom or the acceleration of tax regulations, digitisation and automation ahead. But what we started then has evolved into a critical need for companies of all sizes. Today, there are 19,000 taxing authorities across the globe, creating an average of 14,000 regulatory changes every month. We keep companies ahead of the compliance curve.
In short, we began as a company that was ahead of the curve and correctly identified a need no one else saw. Today, we’re still that forward-thinking company, as the first to identify the need for an ‘always-on’ compliance solution to meet the government move to always-on transactions.

How has the business grown since it started and how did you ensure growth?

As the global economy has changed, so has Sovos. Over the past 40+ years, we’ve expanded – in size, geographies and offerings – to address the complexities of modern tax compliance.
We ensured our growth through a multi-pronged approach strategy that stays true to our founders’ foresight. First, we invested heavily in native engineering to keep pace with, or more often, stay ahead of accelerating regulatory changes and businesses’ Digital Transformation. Second, we employed a strategic acquisition strategy to integrate best-in-breed technologies from across the globe. Third, we invested in our people, most notably by building a global network of tax experts in data and legal requirements.
Our solution today supports all indirect taxes; taxes like sales and use taxes, VAT and excise taxes that are applied within the stream of commerce as goods are manufactured, distributed, transferred and sold at or, in the case of services, provided. As business operations increasingly became more global and governments increased their reliance on indirect tax revenues, we grew to not just bridge the gap, but to enable companies to stay ahead of the compliance curve.

What challenges are companies currently facing when it comes to tax and compliance?

Compliance changes can be sudden, relentless and consequential. Because of this, three of the biggest challenges facing companies today are risk, cost and lack of insights.
The risk posed by not meeting compliance obligations can range from a disruptive, time and resource intensive audit to financial penalties and even criminal proceedings, causing both reputational and performance damage.
In the pursuit of meeting rapidly changing and widely varying tax rates and regulations, many businesses have responded to each change by investing in a stand-alone solution, resulting in a patchwork of hardware and software that doesn’t scale, may be quickly outdated and puts a drain on resources.
As the pace of government-driven regulatory changes continues to accelerate – and more tax authorities gain access to companies’ transactional data in real-time – businesses are also being challenged to gain the same level of insight as the government has into their compliance obligations and even better, to be able to gain predictive insights to spot transaction anomalies, errors and outliers in the data.

How important is technology like Sovos’ for companies?

Tax authorities across the globe have doubled down on their use of technology in recent years. They have become adept at using it to ensure they are collecting all revenue legally owed, identify irregularities in reporting and identify fraud. The pace of mandate changes, new tax rules and regulations is not expected to slow – Europe is a key example of that, with ViDA spurring numerous proposed VAT mandates. So, companies have a critical need for technology that allows them to orchestrate, manage and analyse their tax obligations.
Just as enterprise resource planning (ERP), customer relationship management (CRM) and human capital management (HCM) have all become holistic, cloud-based platform solutions that unlock tremendous business value, an always-on compliance platform like the Sovos Compliance Cloud, will do the same for tax and compliance.

Does your solution work for companies of all sizes?

Yes. The Sovos Compliance Cloud can be customised and scaled to meet the needs of companies of all sizes, from SMBs to multinational corporations.

What is your company’s vision and goal?

By helping businesses identify, determine and report on every tax transaction and obligation globally and gain predictive insights to stay ahead of the compliance curve, Sovos is working to transform compliance from a functional necessity into a force for business growth.
What trends are affecting your industry at the moment and where do you see the most innovation?
Like many industries, the advances in Generative Artificial Intelligence (GenAI) have many significant use cases for tax technology and compliance management. The companies that embrace it can realise extraordinary business value. GenAI can be used to study past performance to predict future regulations and generate scenarios using those changes to assess potential business outcomes. Companies will benefit from this increased ability to anticipate – and prepare for changes before they are ever announced.
In addition to AI and the promise it holds, features such as cloud native software, intelligent automation, API integrations with existing ERPs or other existing systems are enabling a more streamlined, digitised and insights-rich finance function.

What has your career looked like so far?

Over more than 20 years in the enterprise software and technology industry, I’ve held a variety of leadership and executive roles across the enterprise – in sales, product marketing, business operations and corporate strategy. I came to Sovos almost eight years ago after successfully positioning the Latin American company, Invoiceware International, for acquisition in 2016. Since then, I have helped drive our acquisition and integration, with 15 more strategic deals across 11 countries, significantly expanding Sovos’ global footprint and market share.
I’ve always believed that for an organisation to be successful, it must commit to and invest in the three strategic anchors of business: people, practices and products. Sovos is a notable example of that.

What’s next for Sovos?

Our focus is on the Sovos Compliance Cloud and ensuring we always provide customers with the most complete, scalable and secure solution to fit their needs. We are currently introducing an enhanced Connector Marketplace, which accelerates the ability of businesses to plug into a unified compliance solution, one that works with their existing ERPs and other enterprise financial systems without significant development cycles or costly infrastructure deployments.

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