14 November 2012

Laughing at the High Priests

The Wall Street Journal article on November 13th (Companies Grow Weary of XBRL) contains a lovely line:

"When Cyprus asked a panel of corporate controllers at the conference whether they were getting any value out of XBRL, the hotel ballroom full of corporate finance professionals erupted into laughter." 

In context, Nick Cyprus is the controller and chief accounting officer at General Motors, and this was at the FEI (Financial Executives International) conference in New York this week.

I do not know if the High Priests of the Cult of XBRL were in the room. They usually are. These were just the right venues to peddle the tired old promises that XBRL would achieve everything from faster, better internal communication, more efficient external reporting, faster closes, and a host of other benefits - most of which could be achieved simply by actually effectively implementing the already existing ERP systems. But it is long past time High Priests heard the message - no more bullshit about how XBRL will save my business! As I have said in previous posts, the only winners from XBRL so far (in the US filing implementation) are the SEC (so we are told again and again), the consultants, and Indian outsource providers.

There were options for the SEC, options that would have cost far less and that would have had a negligible impact on American public companies. These options were not taken.

When I chaired the XBRL US Steering Committee in 2005/2006, I had a meeting at the SEC discussing what it would cost to build the XBRL US GAAP taxonomy. My response, based on the detailed planning document provided to me by the XBRL US Taxonomy Working Group, said $4.5 million.

I gave that number, thinking "too high, we're dead".

The response I got was "Dan, we're the government. We really cannot solve $4 million problems. If you'd said $400 million, we might be able to do something." All tongue in cheek, of course.

Yet, how prophetic.

Because now the SEC does have a $400 million problem that they can solve. Let's hope they have heard what they need to hear from business.

As for the High Priests of the Cult of XBRL - I'm afraid they will never hear the laughter - even when it is no longer behind their backs.

20 April 2012

The Future of XBRL

I've been watching the rise of "big data" and have seen analytic tools that are simply mind-blowing. Tools that do not care about the format or content or meta-structure of data, yet can perform analysis across massive datasets, with speed and ease. It has made me think hard about the future of XBRL. 

XBRL has come a long way, from its humble roots to a self-fantasised future of business reporting. Unfortunately, XBRL has, through its life, performed a sort of inverted Moore's Law - doubling in complexity as it doubles in self-proclaimed benefit.

In 2000 someone said that XBRL would be fully implemented 'within a couple of years'. Sadly though, an idea that is a fast approaching it's 15th birthday is now looking like the old dame of an idea - still lingering at the dinner parties, still hoping that the limelight will finally shine on her, still dreaming of the red carpet.

The good news for the old dame is that she has a great future, just as do all those wonderful old black and white films that she was in when she was young, alluring, sexy and oh so much 'the future'.

Her future now is as the example of perfection, to be studied and emulated, even though the 'real world' has long passed her by.

XBRL's place in the future is in the universities, as a tool that can be used to teach students about the fundamentals of business and financial reporting. In an age when we are becoming disconnected from the inner components of the world around us, it is important to have educational tools that require the student to dig deeper than the superficial concepts, and into the nitty gritty of actually constructing financial statements, and the analysis of those financial statements.

The beauty of XBRL for accounting education is that is molds both accounting standards and 'almost' programming. The deconstruction of individual 'facts' and the need to effectively and fully define the 'fact'. XBRL documents are logic puzzles as much as anything else, and the process of construction (and use) of these logic puzzles provides a playful way of learning and exploring financial and business reporting.

But just like the dame's days as the beautiful young star of every screen are well past, so are XBRL's days of being the future of business reporting and analysis.

Maybe it is time for the dame to be a little more graceful, recognize that there are new stars, new methods, and new media. Maybe its time for the old dame to put her skills to use helping ready a new generation of stars.

The alternative is to continue to flash the same old jewelry, the same low cut dress, while continuing to expect the call. The call that will not come.