Silver Bullet or not... XBRL is here
I have been following the trends in XML standardization with more than a bit of passing interest, especially as a number of organizations -- including our clients – continue to adopt standards for data interchange, including financial reporting and management.
Case in point is the Securities and Exchange Commission’s (SEC) announcement to invest $54 million to transform the agency’s 1980s-vintage public company disclosure system, that comes as a shot in the arm to organizations looking to bring further standardization to financial reporting. SEC’s release states “By moving to interactive data using the XBRL computer language, the SEC will be joining the FDIC, the Federal Reserve, and the Comptroller of the Currency, which already require banks to use it.”
Interestingly, although the move towards XBRL is going to be a technology focused initiative -- especially for organizations with more archaic IT systems -- business leaders are also taking note. In the Feb 2007 issue of Harvard Business Review featuring “Breakthrough Ideas for 2007,” the authors focus on talking up the trend, stating “Here Comes XBRL” [HBR says that the list is free to read for all of February]
What does this mean to us? Watch out for lot more business and tech leaders asking about XBRL (remember what SoX did to IT compliance?)
Bloggers are upbeat about the trend:
“I am a huge proponent of standards-based systems, including standardized computer languages. XBRL will be just one more standard that resilient enterprises will put in their kit.” writes Enterprise Resilience Management Blog
Tech analyst Tom Foremski blogs about the HBR analysis stating “I also found #2, #9, #10, #11 and #14 fascinating.”
Of course, a note of caution to all techies and managers looking to jump on to the XBRL bandwagon….The authors of the HBR article themselves temper some moderation stating “by significantly reducing the amount of effort needed to change and integrate business reporting systems, XBRL will make digesting acquisitions, shedding businesses, reorganizing, and adding new products and business units far less difficult. All this undoubtedly sounds too good to be true to managers who are rightfully jaded after decades of false promises that the next IT silver bullet is (this time, really!) just around the corner.”
To this, I can almost hear my Architect colleagues murmur: is XBRL yet another Snake Oil Applied (SOA)?
While one can debate over the pace of adoption of XBRL, Infosys is certainly eating its own cooking, as the adage goes [Infosys participates in SEC's XBRL Voluntary Financial Reporting Program]: "Infosys is to be commended for its participation in the SEC's XBRL Voluntary Financial Reporting Program. The XBRL format enables investors to more effectively consume and analyze information in financial reports, providing enhanced report transparency and greater clarity in communications." said Mike Willis, Founding Chairman, XBRL International and Partner, PricewaterhouseCoopers
Footnote: For those curious about XBRL, check out further reading:
XBRL - Extensible Business Reporting Language: A royalty-free, open specification to describe financial information for public and private companies and other organizations.
Wikipedia: XBRL (eXtensible Business Reporting Language) is an emerging XML-based standard
