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Government data mandates are here: IT decision-makers must act now or pay the price later

Government data mandates are here: IT decision-makers must act now or pay the price later

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Government data mandates are being implemented across the globe. Eric Lefebvre, CTO at Sovos, examines what this means for IT decision-makers and teams, as well as how best to prepare for data mandates.

IT spending is on the rise again. After a lull during the first part of the pandemic, many organizations have restarted the rollout of flagship IT initiatives. According to a Gartner forecast, IT budgets bounced back in 2021 and have continued to gain momentum in 2022, with global IT spending projected to total US$4.5 trillion – up 3% year-on-year.

However, the specter of yet more global economic uncertainty now looms over multinational organizations – forcing IT decision-makers to make tough calls on which technologies and regulations to prioritize. As they flesh out strategic plans, many are considering the potential impact of incoming government data mandates for the first time.

Eric Lefebvre, CTO at Sovos

For the uninitiated – government data mandates make e-invoicing mandatory for businesses. Their remit and how they’re implemented varies by jurisdiction. But the benefits – reducing tax evasion, boosting business efficiency and providing up-to-the-minute economic data to inform government decision-making – are the same everywhere.

We’re seeing the implementation of government mandates driving the collection of transactional data across almost every region. They’ve been common in Latin America for decades and are now becoming prevalent in Asia, the Middle East and Europe too – with Poland, France and potentially Germany all with new mandates on the horizon.

And that’s not the end of the story. Once implemented mandates often continue to evolve. The scope of the mandate expands to apply to more companies of a smaller size and the granular data required may need to be captured for other flows putting additional pressure on systems in the IT landscape.

‘This sounds like a problem for the finance team’ I hear you remark. Yes and no. Although finance and accounting teams will no doubt shoulder most of the burden of adapting to data mandates and e-invoicing requirements, it’s IT that will need to play a key role in procuring and implementing digital solutions to enable compliance.

There’s no escape from government data mandates

This isn’t a passing trend. Instead, it’s a new reality for both IT and finance leaders – since tracking and ensuring compliance goes far beyond the capability of periodic manual processes. With the implementation of data mandates and e-invoicing, regulators become directly involved in organizations’ data stack – dictating how data should be captured and presented, as well as examining transactions in real-time. The big question for any business when the government is in the middle of your supply chain, is how does your technology need to evolve? Because in these countries where real-time data mandates are a reality, the government is now a third partner in all your transactions.

Unlike other IT projects, organizations don’t have the luxury of deciding when to implement or upgrade protocols. What’s more, as authorities fine-tune their approach, we can expect frequent and substantial changes to data mandates and enforcement procedures.

The impact of non-compliance with data mandates can be severe – ranging from hefty fines to enforced operational shutdowns. Given the potential economic and reputational ramifications, it’s clear that all functions – including IT – will need to work together.

Forewarned is forearmed

As more countries roll out government data and e-invoicing mandates, IT teams must ensure the right resources and tools are in place. This means working closely with leadership, compliance, legal, product development and other teams to establish the following four points:

Geography: What are the current and expected e-invoicing mandates for the countries in which we operate? Will our expansion plans affect this? And how can we stay ahead of any planned changes? It’s worth noting that compliance becomes more complex with each region you cover, as there’s currently no standardized framework for data mandates – even within trade blocs like the EU.

Product offering: How many different products and services do we sell? Is this likely to increase or decrease and will this remain consistent across all markets?

Tech stack: What new technology solutions will we need to support government data mandates and e-invoicing? What level of IT support is needed to manage these? Will this impact IT’s ability to meet other obligations? How will we meet all security and privacy standards?

Vendors: Is implementing a variety of different technology solutions from smaller, regionalized vendors the right choice for us? Or would it be more effective to work with one multi-regional or global partner, unifying all compliance obligations and providing economies of scale that can grow with us as we expand into new markets?

For IT teams, gathering the above information is crucial to understanding how to approach government data mandates. The sooner these conversations happen, the better. Those who don’t act risk getting caught out by unexpected regulatory changes which can take significant time and resources to prepare for.

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