XBRL US Labs, the research arm of the XBRL US consortium, recently released a tool to show how data reported in eXtensible Business Reporting Language can be compiled within minutes of being posted on EDGAR and then presented in a way that makes analysis simple and visually interesting.
The XBRL US ‘gadget’ allows users to quickly analyze large amounts of company-reported data by standard industrial classification (SIC) code, across different periods and using different concepts such as assets or revenues.
And while the tool is far from perfect and easily criticized by those who see it as little more than a colorful pie chart that falls short of the promised revolution that XBRL was meant to bring to financial reporting, it nonetheless has substantial merit in that it shows that there genuinely is a point to the whole XBRL exercise.
XBRL best when invisible
The beauty of what XBRL US has developed is that there is no angle-bracket in sight, nor is there any mention of tags or tuples or dimensions, or any of the other esoteric XBRL terms that are currently the bane of so many financial reporting professionals’ lives.
The XBRL that fuels the interactive analysis in the pie-chart has been completely hidden from the end-user. If the tool were presented to somebody who had never heard of XBRL, they would never know what underlying technology is making it work. And more to the point, it would probably never even occur to them to ask.
The tool is an excellent (albeit primitive) example of XBRL technology in action at the level of an operational end-user. The underlying technology is certainly complex, but the tool, without being simplistic, is simplicity itself. Moreover, it is intuitive and interactive, customizable and updated almost in real-time. In short, this is the way forward.
While most in the corporate community are currently focused on XBRL as a compliance obligation, the tool shows how mountains of data can be turned into meaningful information by automatically extracting XBRL elements to stand independently from the traditional ‘whole’ of the quarterly or annual reports where they originate.
In a world where transparency is the name of the game but where there is arguably too much disclosure and not enough information, it is time for IR departments to include XBRL when they look at new ways of engaging with their constituencies, and to see its value as an evolutionary vehicle for making interactive, pertinent and digestible “nuggets” of contextually–rich information available to stakeholders.
But it’s not just investors who stand to benefit. Industry observers expect that all reporting and accounting software will include XBRL as an output format within three to four years. With the big ERP vendors such as SAP finally showing a more active interest in integrating the technology into their enterprise-level performance management suites, XBRL will undoubtedly become increasingly embedded into companies’ in-house reporting processes, as opposed to being an extra layer “bolted-on” after the financial close, or an outsourced project that needs to be managed.
When this happens, companies will have tagged XBRL data at their disposal in-house as they will be creating it themselves right at the start of the business information supply chain. If you’ve got quality raw materials on-hand, what a waste not to utilize them innovatively.