GST: An Opportunity In Disguise For Business Transformation
GST is finally becoming a reality from July 1. It has been already touted as India’s most disruptive tax reform yet, if not the biggest in terms of impact. India will operate as a single market, which is a big deal in many ways. All considerations granted, GST is set to transform the way business happens in India.
GST beyond Taxation
It is common knowledge that the main objective of GST is to minimize the complexity of indirect taxes throughout value chain, thus reducing the cascading effect of variety of taxes on the pricing that reaches the consumers of goods and services. For the last few months, government departments, tax agencies and businesses of all sizes have been working on GST readiness of their processes and systems in accounting, taxation, billing, credit, cash flow, and all directly relevant reporting and compliance structures. There is a mandate built into this ready-ness. There’s no choice. One must adapt. And one would hope that all the concerned are ready for it when GST kicks in from July 1.
However, GST will impact organizations and business ecosystem beyond taxation, financial planning and reporting.
One would be able to go beyond the constraints introduced by the previous cascaded and non-uniform tax regime and make decisions driven by business propositions. Sounds straightforward, but once the compliance and reporting requirements are done and dusted with, the sourcing decisions would have to start changing beyond tactical and that’s where enterprises would have to be ready. All this means that sourcing decisions will have a long-term impact.
There would also be the opportunity to rationalize pricing across geographies and pass on the benefits to end-consumers. Today’s open economy is very competitive, and businesses will have the opportunity to get consistent with their pricing across the board. As the tax constraints get out of the way, there would be pressures on the backend systems to be ready for changes beyond tax calculations and towards getting proactively ready for more streamlined pricing mechanisms.
However, sourcing and pricing rationalization are still to an extent recognizable as direct impact of GST. There are indirect impact areas that can be a double edged sword.
GST as a potent catalyst for competitive threat
We’re living in times of digital ecosystems and multisided business platforms, enabled by the access and reach of various participants of a particular industry. Uber, Airbnb, Amazon have even become cliché as an example of much prevalent digital ecosystem approach. Value Chain is fast giving way to Value Web, where all participants - suppliers, partners, manufactures, resellers, financial services providers, and customers - connect in ways not possible erstwhile. GST, in this context, adds another ingredient to the mix to create a perfect storm of single market economy, digitalization and fast changing consumer behavior.
This trend is bound to gain acceleration and reach in GST regime - with a level playing field and a simpler business ecosystem where two entities can go ahead and perform business transaction as part of a broader value web more smoothly. A business operating in a local territory today can potentially face competition from anywhere across India. Any business that can understand the advantages associated with this resulting unified regime in a digital world can leverage it to penetrate in hitherto untouched markets.
How do you turn the table on GST to create opportunities?
It’s straightforward; and not.
This fast-evolving business model requires you to have your processes and systems ready. Your organization needs to prepare “to connect, orchestrate, and interoperate”.
It’s not a stretch of imagination. It’s a direct implication of changes in value chain. And why would value chain alter? The way the goods flow outward and the money flows inward in a traditional value chain - which was further constrained by variety of tax regulations - is bound to get optimized in the new regime and the resulting supply chain scenarios. And, it’s not just about supply chain and logistics. It is about business processes that encompass end-to-end lifecycle of Order-to-Cash, Procure-to-Pay, and Record-to-Report. It’s one thing to say that systems and processes would change when they have to, and altogether another to say that processes need to be nimble in order to change before they have to.
Your business processes would need to be nimble in order to adapt to this incoming value web phenomenon.
Easier said than done?
Now, even if enterprises recognize this opportunity, it’s easier said than done. In this case, the opportunity presents itself in the form of a more urgent imperative, and that is - to be GST-ready.
But how do enterprises make it happen beyond minimum requirements of GST-readiness and become more holistically ready?
First and foremost, obviously, is to acknowledge the change of guard and actively look for areas of potential improvements. Many of these areas of improvements could still be a marginal incremental effort over and above the fundamental necessary steps towards GST-readiness. Many of those might be already planned and to some extent, executed. However, a process level opportunity can only be addressed with a process mindset first. It would be required for organizations to elevate this transformation from functional and department level (finance, accounting, taxation, billing & sourcing), and look at end-to-end business processes.
Developing such a mindset and looking at holistic improvements in business models would be a necessity. A business process platform also eventually helps in developing that process level nimbleness. The first step, however, would be to recognize the threat (or opportunity) hidden in the garb of GST. The operational countdown is on for all the same, however, the long-term onus for your business is on you.
[Disclaimer: The views expressed in this article are solely those of the authors and do not necessarily represent or reflect the views of Trivone Media Network's or that of CXOToday's.]
- Interivew Desk Helps HR Leaders Outsource Interview Process
- PayPal To Acquire Swift Financial For Lending Biz Expansion
- India Can Use Technology To Fight Against Corruption
- The Anatomy Of The CFO Of Tomorrow
- Citrix Appoints Makarand Joshi As India Country Head
- Can SAP Leonardo Help CIOs Digitize Operations?
- The Speedy Journey To A Mobile Enterprise
- Six Focus Areas For Business Success
- We Are Consistently First To Market: Ixia President
- Six Marketing Basics For SME Success