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Day: April 26, 2005 (Page 1 of 2)

XBRL Conference – Tuesday Morning – Market Maturity

XBRL is a business standard. The immediate users include financial executives, accountants, analysts, and financial regulators, as well as investors of all sizes. All the suits and ties in the audience fit the picture of this user community–this sure does not look like the same crowd that I see at web publishing conferences.

But, scratch the surface, and there is a lot that’s the same. The audience at this conference is mostly people who are building things. They are early adopters and vendors and integrators serving early adopters.

One of the most interesting talks in the first set of the Tuesday morning sessions came from Peter Derby, whose job is to make the SEC more effective and efficient. His title is Managing Executive for Operations and Management, Office the Chairman, US. Securities and Exchange Commission.

The SEC would like to be able to review the substance of a much greater number of financial reports with greater accuracy and greater reliability. Receiving the filings in the form of tagged data has obvious appeal.  So, last year the SEC put out a request for comment on a proposal to invite companies to make voluntary submissions of data in XBRL format. The voluntary program went live in March of this year.

And so far the SEC has received (drum roll …) THREE voluntary filings.

Gosh. That many!

To be fair, companies have been covered up with meeting Sarbanes-Oxley 404 requirements, which are sure not voluntary.  That could be one reason for the slow response rate to date. But Derby thinks there could be other reasons–and other problems for the XBRL community to solve …

  • Not enough off-the-shelf tools:Derby’s view is that, at the moment, XBRL is just too hard. There are not enough tools for preparers to use, and there are not enough analytical and presentation tools for information users. There are too many people still looking at tags.
  • Not enough internal use:One artifact of the way that XBRL has been driven by regulators is that much of the early activity has been focused at the end of the process: after a company produces its financial statements the old way, THEN they are broken into pieces and marked up in XBRL. Derby notes that these leaves out most of the potential financial benefit of the process. He suggests that the XBRL community needs to start making the case for use earlier in the process, when the XBRL might serve internal processes.
  • Too much focus on boiling the ocean:  Derby said that he recognizes, of course, that XBRL is an international standard, and so needs to address a host of difficult problems as you move across accounting standards and practices. But, in his view some of this time would be better spent by focusing on pragmatic issues such as making XBRL easier for humans to read, and on change management.

In my view, Derby’s first two points are on the money. I am less in agreement with the last one. Particularly with a lot of the XBRL activity happening within the European Union, I think that getting the internationalization right is critical.  And … human readability? I thought we were going to focus on tools.

In speaking privately with Derby after his presentation, I asked him about the purpose of the voluntary program. His answer was that the SEC simply needs to find out what they could do with XBRL submissions. Further, he feels that this initiative must be largely market-driven, not regulator driven. His hope is that, perhaps over a period of three years, the SEC will begin to see enough volume in submissions to permit some real economies and new approaches to using and analyzing the financial filings.

Derby’s presentation was followed by Otmar Winzig, Vice president of investor relations for Software AG and Member of the Board of DIRK (German Investor Relations Association). After hearing about Derby’s three voluntary submissions, Winzig was suddenly feeling much better about his pilot program of 8 companies, scheduled to expand this year to 25.

Winzig made an interesting argument for small and mid-cap companies to get behind XBRL–disintermediation.  As the investor relations head at a mid-cap company, he recognizes that one of his big problems is getting analyst coverage.  He argues that 90% of the 10,000 companies traded on European stock exchanges are virtually unknown to investors. As a result, these companies are almost completely dependent on sell-side analysts to get the word out about the company’s performance–even when results are outstanding.

Winzig sees a possibility that broad adoption of XBRL, coupled with tools that allow investors to make direct use of XBRL, would allow small and mid-cap companies to take their good stories directly to investors, and, in the process, to become more independent of analysts who are also interest driven market participants.

All of this should be pretty familiar to readers who have watched SGML or XML market development — or, for that matter, almost any new market. The market needs more applications to grow, and the market is not big enough to attract substantial investment and application development. Put another way, it is precisely the kind of market where entering early with a relatively modest investment can produce a nice return.

 

XBRL – An Exciting Early Market

I am writing at the end of day 1 of the 11th International XBRL conference in Boston. Over the course of the day I have seen a lot and learned a lot–which I will share with you in a moment.

But I wanted to start with this end of the day perspective: this is a really exciting area of activity. If I were starting a small XML company today, this market would be at the top of my list. It is an EARLY market–no question about it. It is the kind of conference where the vendors still feel obliged to show you the actual markup — early, early. But there is energy and opportunity here that is missing in many of the more mature areas that we cover for the Gilbane Report. This is an exciting place with a lot of problems yet to solve.

At the moment, the activity is being driven primarily by regulatory requirements–most importantly, European regulatory requirements. (Think in terms of all the members of the EU now wanting to find ways to transparently share information across what once were many different accounting standards and sets of national regulations.) The good thing about regulatory requirements is that they can open opportunities for small, innovative firms. I am seeing that happening here.

Apart from the regulatory requirements, consider that, as of today, financial analysts begin the job of understanding a company’s financial statements by cutting and pasting data either from an HTML version of the financial statements–or a PDF one–into spreadsheets.  That’s nuts. It can’t last.  There has to be a better way. XBRL is that better way. At the end of the day, there are many users other than regulators who want this stuff.

There are plenty of problems here too. As I dig into my notes from today’s sessions in more detail–in subsequent Blog entries–I will share some of what I see. But I didn’t want to dive into the critical viewpoint stuff without first saying that this is one hot area.  I am looking forward to day 2.

RealObjects Releases XHTML/XML Editor edit-on Pro 4.2

RealObjects released version 4.2 of the WYSIWYG XHTML/XML editor edit-on Pro. The editor complements web-based Content Management, Knowledge Management, and e-Learning systems and streamlines the process of in-browser Web authoring across platforms without installation of client-side software. The major improvements are the enhanced table functionality and WebDAV support. The most important features of the current release include the support of nested tables, an improved table selection and the interactive resizing of table, cell and row widths using the mouse. Additionally it is now possible to automatically save and restore the user preferences on the client and to upload documents, images, hyperlinks and multimedia objects via WebDAV. Having a valid software maintenance subscription, RealObjects edit-on Pro customers can upgrade to version 4.2 free of charge. http://www.realobjects.com/

Tridion launches Intelligent Forms

Tridion announced the launch of Tridion WebForms, a software tool for creating, updating and rapidly deploying online forms. This new product has been specifically developed to exploit the power of online Web forms and help businesses move towards relational communications – intelligent, targeted and accurate communication with online audiences. Tridion WebForms improves the way companies are able to communicate with their audiences by allowing web editors to concentrate on just the forms they want to deliver. As business rules and presentation are already defined, the need for support and intervention from the IT department is reduced. It is also possible to integrate WebForms with back-office systems, automated email responders and CRM systems. Any changes that have to be made to an online form after the initial rollout can be instantly made by the Web editor without having to involve their IT resource. Existing customers using Tridion’s content management products to publish and manage their web content can integrate Tridion WebForms easily – the immediate benefit being able to re-use all existing layout definition, from page templates to component templates. Content management functions including roles and permissions, versioning, workflow, multimedia searches, and scheduling, can all be reused. http://www.tridion.com

GlobalSCAPE Releases PureCMS 4 Web Content Management Software

GlobalSCAPE announced the new release of its product PureCMS, a Web content management software application that is designed to help organizations manage information changes to their website(s). PureCMS V.4 lets non-technical team members create, change and approve Web content, while ensuring that technical team members have control over its access, structure and workflow. PureCMS is Web-based. Common tasks include creating new pages, editing content, approving proposed content for publication, or scheduling publishing for a later time. A free 30-day trial of PureCMS 4 for Windows 98/ME/NT/2000/2003/XP is available immediately. PureCMS has a list price of $395 per user, per URL. Multi-user/multi-site discounts, upgrade pricing for existing customers and volume discounts are offered. http://www.globalscape.com

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