XBRL Offers Faster Route To Intelligence

Extensible business reporting language and a growing list of XBRL-enabled tools and applications promise to help big companies skip the demanding data-normalizing and -cleansing steps.
Big banks, brokerages and consumer packaged goods companies put millions of dollars and months of effort into normalizing, cleansing and analyzing competitive data as quarterly and annual corporate earnings reports are released. Extensible business reporting language (XBRL) and a growing list of XBRL-enabled tools and applications now promise to help big companies skip the demanding normalizing and cleansing steps. Smaller companies, meanwhile, may be able to afford analyses that were formerly cost prohibitive.

XBRL is an XML-based format for financial reporting that provides a computer-readable way to tag more than 2,000 financial data points such as cost, assets, net profit and other values. The SEC has recommended XBRL for reporting, but has held off on a mandate — a move widely viewed as inevitable. In the meantime, data aggregator Edgar Online is converting data reported to the SEC to XBRL, normalizing more than 1,000 data points on at least 12,000 companies.

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Tools and solutions that can make use of XBRL are multiplying. In June, Business Objects and Ipedo announced a joint technology partnership with Edgar Online to deliver XBRL-enabled BI capabilities. Ipedo's XQuery- and SQL-enabled XIP 4.0 information integration engine is used to bring XBRL data, from Edgar Online's Web-based I-Metrix service, as well as internal corporate data into the Business Objects XI platform. From there, corporate users can perform apples-to-apples comparisons of their own productivity or expenditures on R&D, marketing and sales against data on competitors. Financial analysts and banks could quickly compare companies across industry sectors, slicing and dicing new data as soon as it's available online.

These types of analyses aren't new, but "it has always been a huge, painful and expensive process of getting data into a data warehouse," says director of product marketing at Business Objects James Thomas. "Now it's going to take a day to a week instead of weeks or months. Companies can jump to the analysis rather than dealing with data management issues."

XBRL is also making waves in the government sector according to Brian Hankin of PricewaterhouseCooper's (PwC) Federal Practice in Washington, D.C. "There's a huge mandate to use XML as part of the eGov initiative," he says. "When the government needs to communicate financial information with other entities around the world, it will extend XBRL taxonomies to reflect data in Federal GAAP reporting standards. I think we'll see pilots and implementations in the next two years and significant integrations within five years."

PWC used Ipedo's information integration engine and an XBRL processor from Fujitsu to help the Toronto Stock Exchange publish its annual report in the XML-based format, Hankin says. Other emerging tools and applications supporting XBRL include Microsoft's FRx financial reporting application, Rivet Software's Dragon Tag add-in for Microsoft Word and Excel, processors from Blast Radius and Hitachi, and an information integration server from UBmatrix.