Exclusive Interview with Sanjay Parthasarathy, Chief Product Officer, Avalara

The challenges in tax compliance are diverse given the complexity it entails. Many good and established companies find themselves at sixes and seven when it comes to filing tax returns. Tax compliance technology has been playing a critical role in bringing a major shift to this perspective. Avalara, a tax compliance technology company, is forging ahead to simplify the tax compliance landscape. With AI/ML-enabled automated solutions, AvaTax turns out to be a coming-of-age technology in integrating tax compliance with business operations. Analytics Insight has engaged with Sanjay Parthasarathy, chief product officer, Avalara.

1. Kindly brief us about the company, its specialization, and the services that your company offers.

Avalara is a tax compliance technology company. In operation since 2004, Avalara has been a pioneer in developing advanced technology to change how businesses think about and manage tax compliance.

Every business has tax compliance requirements for what it buys and sells. Compliance is complicated for businesses for numerous reasons – taxes vary by jurisdiction and tax rules are changing constantly. Still, many businesses are using spreadsheets to manage their tax compliance obligations.

Avalara provides automated cloud-based solutions for every step of a business's tax compliance journey to help simplify compliance and get tax right.

2. Please brief us about the products/services/solutions you provide to your customers and how they get value out of it.

Avalara's Global Compliance Platform provides solutions to serve a range of tax types across regions, segments, and industries. Within our solution offerings, Avalara has applications across six key areas of compliance, including tax calculations, tax returns preparation and filing, compliance document management, business licensing and registrations, fiscal representation, and tax insights.

Our customers get value from our suite of compliance automation solutions in several ways, including:

• More accurate tax determinations and decisions – Avalara's applications and solutions are powered by a vast database of tax content, and rules to increase the accuracy of tax determination. To give some idea of the size and scope of Avalara's database, we have content for more than 900,000 tax rules. Avalara's database is maintained by a team of tax content professionals, as well as the application of AI and machine learning so that customers don't have to stay on top of changing tax compliance rules.
• Ease of access to tax compliance automation – With more than 1,200 signed partner integrations into every type of business system, from ERPs and point-of-sale systems to e-commerce and marketplace platforms, our customers can easily automate their tax compliance functions within the systems they're already using. Avalara also offers robust compliance APIs and low-code software development tools to allow customers and partners to build custom compliance integrations and workflows into their businesses. Avalara also has robust API offerings that allow businesses to create new integrations with Avalara or build compliance into their own experiences.

3. What are the key trends driving the growth in Big Data analytics/AI/Machine Learning?

• Automating everything – The rise of digital transformation across businesses and industries is putting a greater emphasis on automation with AI/ML to power automated solutions. Eventually, many of the processes and systems that are being automated today will become autonomous, with the ability to self-regulate and self-heal.
• Turning data into business outcomes – AI and ML have reached a level of maturity that is prompting many to look beyond the algorithms and explore how the associated data can be used to inform business decisions and outcomes. AI is being applied in numerous ways to help businesses make sense of the massive amounts of structured and unstructured data they have. For example, AI can be applied to sales technology to automatically generate useful insights about customers and prospects to help salespeople better understand and sell to customers. At Avalara, we're using AI and ML to map billions of products around the world and connect specific products to tax codes for improved tax compliance.
• Combating algorithm bias – Sometimes AI runs on limited training datasets, which can introduce preferences or exclude data and create biases. Flawed data sampling that over-or underrepresents groups in training data can also introduce bias. Bias within AI algorithms is widespread, but people and companies are taking steps to combat it on a large scale.
• Building human oversight into AI/ML – Tied to combatting bias is the push to build human oversight into AI and ML. Human oversight of AI and ML is essential because the technologies are only as good as the data they are trained upon. While most are still trying to figure out how to build human oversight at scale, this trend will have a significant impact on the growth of these technologies moving forward.

4. What does your technology and business roadmap look like for the rest of the years?

Avalara's product vision is guided by three principles – to make compliance simple, global, and worry-free. In recent years, we've invested heavily in our six application clouds to deliver innovative products that automate nearly every step of the tax compliance journey. For the rest of the years, our product priorities are focused on the development of our APIs and enhancing our "SUPER" customer experience.

In March, we announced the launch of a new low-code studio to help developers easily build integrations between Avalara's compliance platform and business applications, and two new APIs for sales tax returns and e-invoicing. To offer flexibility and control to developers, Avalara is pursuing a headless compliance approach that decouples the front-end presentation layer of a compliance experience from the back-end compliance functionality. With new and future APIs for compliance, software developers can more quickly and easily build complete compliance workflows into business applications.

In addition to making more of our technology available via APIs, we're also working to enhance our customer experience to ensure it is "SUPER" – Simplified, Unified, Personalized, Empathetic, and Resilient. By applying technology and automation to the customer experience, we're creating a simple and guided experience for our products.

• The industry is seeing a rising importance of business and technology enablers like virtualization, convergence, and cloud. How do you see these emerging technologies impact your business sector?

5. The industry is seeing a rising importance of business and technology enablers like virtualization, convergence, and cloud. How do you see these emerging technologies impact your business sector?

Avalara sits at the intersection of commerce and compliance – both of which have rapidly evolved in recent years. Commerce is happening around the clock as consumers and businesses engage in transactions across multiple sales channels. As such, compliance has had to evolve to keep up with the always-on nature of commerce. With all this rapid change, one emerging technology that is impacting our industry is multi-cloud.

Because transactions are happening across multiple channels and geographies, businesses are using any number of cloud platforms to power their businesses. For Avalara to automate tax for businesses, we must be able to run our applications across several cloud platforms. To this end, a containerized system architecture makes it easier to support multi-cloud.

6. Could you highlight your company's recent innovations in the AI/ML/Analytics space?

In May, we announced an enhanced product for exemption certificate management to help small-to-medium-sized businesses simplify the management of exemption certificate collection and compliance management. Avalara Exemption Certificate Management Pro uses AI and optical character recognition (OCR) to automatically scan compliance documents for data and certificate validation, leading to increased accuracy, as well as time and cost savings.

In 2020, we announced an AI-based tax classification tool for our flagship tax calculation product, AvaTax. The tool allows AvaTax customers to quickly and efficiently classify their products or services to aid in taxability determinations for their U.S. domestic product catalogs.

To complement the AI tax classification tool, we are also automating the extraction of product attributes, which are necessary to accurately calculate tax codes for very large product catalogs.