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Workshare Introduces Partner Program

Workshare introduced its Integrity Partner Program for Systems integrators, valued added resellers, corporate resellers and other partners. Workshare’s suite of products for Microsoft Office includes Workshare Professional for secure document compliance, Workshare Protect for policy- enforced document security and Workshare DeltaView for document verification. Workshare products work seamlessly with email systems such as Microsoft Outlook, Lotus Notes and Novell GroupWise. Workshare products integrate closely with Microsoft SharePoint and document management systems from Hummingbird, Interwoven and Documentum. Workshare is a Microsoft Worldwide Gold-Certified Partner. Through the Integrity Partner Program, Workshare lets resellers extend their product, consulting and service offerings to include essential Document Security solutions to a market potential of 200 million Microsoft Office System business users globally. http://www.workshare.com

TikiWiki Content Management System (“Sirius”) Version 1.9.0 Released

The TikiWiki Content Management System “Sirius” Version 1.9.0 has been released, and is now available for download at SourceForge.net. Tiki is a massive full-featured, widely deployed and actively developed web application. Before proceeding to upgrade to 1.9.0, you should make a backup of your site. If you run a high-volume site, consider running a test site in parallel as there have been reports of increased sql queries. Similarly, if you run a site and are concerned by security, you may want to wait for 1.9.1. As with any open source software, 1.9.0 is provided as is. It is the results of over a year of development by over a hundred volunteers. Tiki 1.9 introduces over 400 new features & enhancements, options, modifications & bugfixes. The next versions 1.9.1, 1.9.2 will focus on stabilizing and bug fixes found after 1.9.0 release. Please report any bugs (and if possible the solution) to http://dev.tikiwiki.org/

Convera Releases RetrievalWare 8.1

Convera Corporation announced immediate general availability of version 8.1 of the company’s RetrievalWare search software platform. RetrievalWare 8.1 is the culmination of over three years of development efforts aimed at offering measurable improvements and enhancements to the RetrievalWare platform. The new features of RetrievalWare 8.1 are tailored for both the commercial and government market segments: RetrievalWare Knowledge Discovery and Information Retrieval capabilities available through Web Services and Java APIs to comply with .NET and J2EE as well as Service Oriented Architectures (SOA’s); Semantic Indexing, Categorization, Classification, Profiling and Alerts, Search, Entity Extraction and Folder services all utilizing a single unified index; Unified index enables the above services to be combined in any order programmatically to support a broad array of Discovery and Text mining applications; Language Detection, Encoding Detection, Conversion, and UTF-8 Ready Language Processors; 14 Language Processors, including Arabic, Chinese, Japanese, for Natural Language Processing; Pluggable cartridge architecture for semantic resources; Over 60 pre-supplied Domain-Specific Taxonomies and Classifications; 23 taxonomies in 9 different languages; 8 General and Cross-Lingual Semantic Cartridges; 22 Domain-Specific Semantic Cartridges; Convera Knowledge Workbench V3.0 to create, manage, tailor, benchmark and extend Taxonomys and Semantic resources; A newly architected Spider 2.0 for Intranet and Internet web content; and support for JBoss or WebLogic Application servers at the API level. http://www.convera.com

Tarari Launches XML RAX 4 Content Processor

Tarari, Inc. announced the general availability of its fourth-generation release of the company’s XML RAX Content Processor (RAX 4). RAX 4, an in-silicon and software implementation of Random Access XML, now includes full, integrated support for the complex features of XML Schema and special SOAP message validation at 10,000 and greater validations per second. Tarari also announced Software RAX, a full RAX implementation in software that provides a software failover capability in the event of hardware failure, or that can be used on entry-level systems that need RAX acceleration. RAX 4 incorporates Tarari’s silicon “Grammar Processor”. OEMs, ISVs and corporate developers interested in evaluating the Tarari XML RAX 4 Content Processor should purchase the Tarari XML/Web Services Development Kit, which is available immediately and consists of a Tarari XML RAX 4 Content Processor on a Grand Prix series PCI-X card, Random Access XML Agents, Cryptographic Agents, the add-on PubSub module, Software RAX, and API documentation. The price for the kit is $4,995.

Progress Software to Acquire EasyAsk

Progress Software Corporation (PSC) and EasyAsk, Inc. jointly announced an agreement by which PSC will acquire substantially all of the assets of EasyAsk in an all cash transaction for a purchase price of approximately $9.2 million, net of cash acquired. Upon close of the transaction, EasyAsk will become a separate operating unit of PSC. EasyAsk provides an embedded natural language question/answer capability that allows non-technical users to ask ordinary English questions about the information created and maintained by business applications, and provides search, navigation and merchandising functions on the web sites of retailers and manufacturers. EasyAsk’s commerce solutions benefit both Business-to-Consumer (B2C) web sites and Business-to-Business (B2B) sites. Present and future EasyAsk eCommerce customers will benefit from the resources of Progress Software. The transaction is expected to close within fifteen days. http://www.easyask.com, http://www.progress.com

My Favorite Presentation

The 11th International XBRL Conference–the happening thing at the Westin in Boston for the past two days–was full of first-rate presentations. But I did have a favorite. It was by Elmer Huh, Executive Director, Global Valuation Services at Morgan Stanley. Huh’s job is to look behind and beyond the numbers that companies present in their income statements and balance sheets to assess their REAL state of financial health. Putting his job in terms of used cars, he is professionally trained to look beyond that fresh coat of paint and new chrome to see the rust, body filler, and worn engine that is underneath. He showed the conference audience how they might use XBRL to do this with spectacular effect on a good number of companies.

To understand the full import of what Huh is saying, it helps to understand something about accounting. It is something that you have probably suspected all along:  Accounting is not about THE TRUTH. (See? You knew that …)

I am not suggesting that anybody is being dishonest. Further, for a great many things that are reported under Generally Accepted Accounting Principles (GAAP), what you see is pretty close to what anyone would judge to be the real state of affairs.

But there are a couple of areas where GAAP is in a state of flux, and
where–for historical reasons–accountants have decided that it is OK for
companies to report numbers that are substantially smaller than the actual liabilities that a company might really have.

One of these areas has to do with reporting on pension liabilities. It wasn’t long ago that companies did not report on these liabilities at all — they simply recognized pension-related expense as they incurred it. But, as future problems in dealing with pensions became more obviously important, it became clear that it was important to reflect SOME of this pension liability on a company’s balance sheet.

But is was also clear that if companies suddenly reflected ALL of this liability, all at once, a great many companies would suddenly go from looking like they were healthy to looking really burdened with liabilities. So, the accounting standard setters decided to create a kind of compromise, where companies must recognize some of this pension liability, but not all of it, all at once. The rules for pension accounting are, frankly, a kludge. They are an attempt to balance a number of concerns by using some arbitrary cut off points and special boundary conditions. The result is that the relationship between pension liability reported on the balance sheet and real liability is slippery, at best.

A second area where the rules of financial reporting can result in some strange distortions is with regard to accounting for operating leases.  If you work the numbers right, you can effectively buy something expensive, like an airplane, but not have it show up on your balance sheet. To which a good CFO says, “Cool.” All the advantages of productive assets and none of the unpleasant downside of having to report increased debt.

Elmer Huh focused in on these two areas of potential distortion in his analysis.  He showed graphs of debt to asset ratios using the reported numbers for companies — and then showed the ratios figuring in operating lease obligations and pension obligations.  The differences were dramatic and had powerful explanatory value when applied to a number of companies that “look” healthy but which are actually having trouble. It was a great, entertaining presentation.

But it was also a good presentation because it said something true and important about XBRL. The reason that Huh could do what he did is that most of the information you need to see the real picture is, by law, disclosed in the notes to the financial statements rather than in the actual balance sheet or income statement. The information that Huh was using was, for the most part, already there in the financial report, but presented in a way that makes it hard to find and use.

In this case, the power of XBRL is in its ability to break free of the standard accounting constraints to recast facts and relationships to see things in new ways. To that, I say “Cool.”

By the way, this same power to free content from presentation, and to rearrange it and present it in new ways, is the flip side of the headache that I described in an earlier posting this evening, about assurance.

The Matter of Assurance

One of the interesting things about the XBRL application space is the way that it takes some of the problems that have been around since the birth of SGML and XML and brings them into sharp focus. One of the “foundation” ideas behind XML — and, before that, SGML — is that the tagged file is the reference object–its the part you keep–and the printed output is, well … just output. You can always make another one of those. The idea, as everyone knows, that you save the document in one form, and then publish and deliver in many forms.

Now, suppose that what you are saving–in XBRL–is your firm’s financial statements.  Here is the question: When the auditors show up to offer their opinion as to whether your financials fairly represent the state of your company, which form of financials do they offer their opinion on?  The XBRL?  Or some kind of printed version?

It’s an important question. It is also something of a trick question. If you don’t answer “the XBRL version,” then it is pretty clear that XBRL is not really the version that matters. Oops.  So much for plans to really
submit financial statements in XBRL to the SEC on anything but a test basis … Right? But, if you DO answer “XBRL,” you quickly come face-to-face with the fact that nobody has any clear idea of just how you would do that.

What would auditing an XBRL financial statement mean?  Having accountants read through the actual XBRL?  Probably not, huh? So, they are dealing with something derived from the XBRL? How do they know that this output fairly represents the actual XBRL? How do they know that there isn’t something in the XBRL that isn’t showing up in the rendition that they are reviewing?

And … just what is the “XBRL document?”  The result of  XBRL that you can see does not come from just one thing. The representation that you see on the page draws from many linked files and uses processing capabilities scattered across other linked files. So, an audit couldn’t really look just at a single file — the opinion also depends on all the other stuff that is linked in that makes sense of the particular XBRL instance document.

I’m not arguing that this is not a solvable problem.  But I can say that it is not a SOLVED problem at the moment, and can also say that the solving of it is going to take some time and some serious effort.

In the meantime, what will happen in the real world is that auditors will express an opinion on financials that will be represented in PDF or HTML, and then someone will take those PDF or HTML pages and convert them to XBRL.

That’s fine — the XBRL is WAY more useful than the PDF or HTML — but is also an obviously flawed approach:

  • The XBRL is just a translation of the “real” financials.  We are left with the question of whether it is really right and whether there were errors in translation.
  • More fundamentally, the XBRL is not the official, normative document. It is, instead, some kind of shadow form of the real thing. That seems like a pretty poor basis for legally binding data interchange.  Someone, someday, needs to be able to provide a professional opinion about the XBRL, itself, as a fair representation that does not contain material misstatement.

Don’t get me wrong … this is not some kind of “fatal flaw” in the XBRL story.  But it is a real problem, and a really good illustration of kind of difficult problem that emerges, 20 years down the road, as we continue to pursue the SGML and XML ideal of separating content from presentation. As we have found again and again, the semantics depend on both content and presentation. Audited financials are just an extremely demanding application that underscores that point.

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.

 

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