On-demand best practices series

Integrating Transaction Taxes with Your Finance Applications:

Lenovo Case Study
Despite the challenges of
to enterprise global deployments. This white paper highlights the integration of Lenovos centralized global tax solution with its business systems, and explains how one of the most innovative manufacturers of personal computing technology is now able to transform its global finance operations by leveraging enterprise transaction tax management solutions. Lenovo is transforming its finance operations by using the Sabrix Application Suite and Sabrix Integration for SAP to automate tax decisions, as well as limit the time its IT department has to be involved in programming when changes in tax rules and rates occur.
A Global Business with Global Challenges When Lenovo acquired IBMs Personal Computing Division in 2005, it became a true global business, with strong consumer and emerging market leadership and an efficient supply chain. Today, the companys sales order and manufacturing processes are distributed around the world, with principal operations in Morrisville, NC, Beijing, China, Paris, and Singapore, and manufacturing facilities in China, India, Poland and Mexico. Lenovos new global presence means new opportunities

maintaining compliance with crossborder tax requirements and determining sales and use tax, goods and services taxes (GST), and valueadded taxes (VAT), its still possible to take control over your companys tax strategies. Lenovo, one of the worlds largest manufacturers of personal computers, overcame the logistic and geographic challenges in consolidating its corporate tax processes to achieve global alignment of its tax strategies with business processes. Of course, implementing a global tax solution when operational downtime isnt an option takes diligent planning and a phased approach

for growth, more agile manufacturing -- and more complex taxes. The challenge was to streamline and integrate the companys transaction tax processes with its finance applications on a global basis.
Integrating Sabrix with SAP Lenovo uses SAP as its enterprise resource planning (ERP) system, but required a best-of-breed solution to automate the determination, calculation and recording of U.S. sales tax and use tax and international value added taxes. Although SAP can calculate standard tax rates, there were other global tax compliance challenges, such as constantly changing tax rates and rules across multiple countries. We were looking to extend the tax determination power of SAP, says Dennis Culin, Director of Business Transformation at Lenovo. We wanted to use a simple system, a single set of rules that the tax department could control -- not IT and not the end user -- to make sure that our tax liability was accurate. Lenovo selected the Sabrix Application Suite, which interfaces with SAP via Sabrix Integration for SAP to centralize tax determination and provide a single compliance database for U.S. and international transaction taxes. We need to make sure our tax-

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dennis culin Director of Business Transformation, Lenovo

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For more information, email sales@sabrix.com, or call 1-866-4-SABRIX or 925-543-0110.

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ability is calculated correctly the first Whenever we take a quote or make an Lenovos operational headquarters in time, without having to recalculate or order, SAP CRM will make a tax call to Singapore served as the proving ground fix things on the back end, says Culin. Sabrix to make sure weve put the corfor the Sabrix solution. Now that weve We also wanted to avoid or at least limit rect value on the quote or order. In most completed what we call our global soluhuman intervention with the tax deterof the countries where we do business, tion design, weve configured Sabrix so mination. The user should not have to were also implementing complete ethat our transaction tax processes are make a determination on taxability by commerce capabilities, and were doing extremely well defined. Going forward, going through and picking a tax code. sales quotes, orders and invoices in that deploying the solution to the rest of the We needed a system that countries in which we do would make that determibusiness will be much easination based on predefined er, and well be able to take rules established by our tax more of a cookie-cutter department. approach -- only localizing Lenovos transactional as required. and master data is always Lenovo will soon be interfaced from SAP to rolling out the Sabrix Sabrix, which means that Application Suite to its tax decisions are made by manufacturing facilities in Sabrix, but the master data Mexico, Poland and Brazil. and related mapping tables Then well continue on our remain within the ERP next steps and deploy in dennis culin, system. We wanted all the the Americas and EMEA, director of business transformation, source data to be in SAP, says Culin. Basically, were Lenovo and then transmitted over moving a $16 billion comto Sabrix, explains Culin. pany onto its own business This way, the calculations can be made, environment as well. And again, the call systems, and weve had to do that with stored in the audit database, and then the is being made to Sabrix anytime a translimited downtime to make sure that our logistics records are sent back to SAP and action is changed or saved. customer needs were being met while we stored there. In addition to tracking input and were deploying our strategic software. The Sabrix Integration for SAP interoutput taxes, import and export, and face supports tax calls from the Sales & revenue charges, Lenovo is using custom New Thinking for a New World Distribution (SD), Materials Management capabilities within Sabrix to automaticalLenovos slogan, new world, new (MM) and Financials (FI) modules of ly determine transactional environmenthinking, is a perfect way to sum up SAP. We use generic input and output tal handling fees required by customs the companys approach to transaction tax codes that are not rate specific to call authorities, saving additional administra- taxes, says Culin. Were trying our best Sabrix, says Culin. We use two tax codes tive time. to bring new thinking to this new digital -- one for purchases and one for sales -world, so were working with partners and everything transfers over into Sabrix, A Finance Transformation like Sabrix to collaborate globally and to so that we can make sure that the decision Lenovo is now using Sabrix at its oper- deliver value by combining the strengths is always made there. ations in China, Singapore, India and of multiple cultures and embracing Sabrix holds all necessary tax rates Canada, and is in the process of going emerging markets, he concludes. and exemptions and automatically deterlive throughout the Asia/Pacific region. mines address jurisdiction for vendors, The majority of activity in our tax To view a complete replay of this customers, cost centers and plants. work is controlled by our tax department Business Finance/Sabrix Webcast, go to We also link to SAP CRM to do our within Sabrix -- its not controlled or http://bfmag.com/webcast/consolidatingsales quotes and invoices, says Culin. touched by SAP, Culin reiterates. corporate-tax-policies-0701

We wanted a single set of rules that the tax department

could control not it and not the end user to make sure that our tax liability was accurate.

For more information on this webcast, email: sales@sabrix.com, or call 1-866-4-SABRIX or 925-543-0110.