Related Topics:
			Business Research: Business, Finance, Workforce Vendor Research: 170 Systems, Edgar Online, Epicor, Hitachi America, Infor – Extensity/Systems Union, Intacct, Lawson, Microsoft, NetSuite, Oracle, Sage, SAP, UBmatrix
			Printer friendly version Email this article Send feedback to editor

Summary
Recently, as a way to make it easier for investors to access and analyze financial information, the United States Securities and Exchange Commission (SEC) mandated that public companies submit their filings in an "interactive" format using eXtensible Business Reporting Language (XBRL). To meet this requirement, companies can outsource the tagging process to their financial printer, but we believe over the long run finance departments will find that it makes more sense to do it themselves. Infor has added XBRL tagging capabilities with its PM Office Plus, which we think offers companies a good initial way to address this mandate.

Assessment
Infor offers XBRL tagging capabilities in its recently introduced Infor PM Office Plus. The new product works with the existing PM 10, Business Edition and the less expensive Business Edition FR. PM Office Plus is intended for companies that are required to submit filings to third parties and regulatory agencies. Although it is specifically designed to work with PM 10's financial consolidation system as well as Infor's Open SOA Business Information Services, it also can access most other data sources through an Open Database Connectivity (ODBC) connector. The software uses Rivet Software's open source version of Dragon Tag, which does not offer support from Rivet. (Rivet also has decided to forgo any further development on its part of the open source code since, like the story of the Little Red Hen, it was doing all the work.) We believe the open source code is adequate as a starting point, but as companies generate (and generate repeatedly) longer and more complex XBRL-tagged statements, they probably will want to have and will be willing to pay for a system that will provide more automation features.

We believe companies that offer financial consolidation software must build XBRL tagging capability into their systems to respond to the expanding demand to provide external financial reports that use it. The SEC recently finalized its timetable for implementing interactive data capabilities in public companies' filings with the agency. For years, banks in many countries have had to file certain data with regulators (for example, the Federal Deposit Insurance Corp.'s Call Report in the United States), and other countries have mandated that publicly traded companies file their financial statement data. Now the sheer number of companies that fall under the SEC's oversight - as well as the breadth of the information that companies will need to file - makes the SEC's move a pivotal event, which we expect other entities eventually to follow.

Moreover, we expect use of XBRL to build momentum into the next decade. That it lowers the costs of regulation and improves the effectiveness of oversight and enforcement makes it attractive to governments. Australia, for example, plans to use XBRL to streamline filing of business data with government entities. The ultimate goal will be to have companies file only one XBRL-enabled electronic form containing all of the required data. In that case, government agencies and tax authorities would collect whatever subset of this information they need from a central repository, rather than requiring a company to file multiple forms. XBRL also can be useful for business-to-business communication and managing the presentation of data for internal reporting. Once data is tagged, people can create their own versions of reports and analysis automatically; this could eliminate problems of data consistency that occur when people pass spreadsheets around.

Market Impact
We expect XBRL tagging soon to become a must-have capability in financial consolidation and reporting systems because of the spread of XBRL tagging mandates worldwide. Companies that must file with the SEC now will have an additional burden to bear in their close-to-report cycle. Finance departments will have to adapt their post-period-end processes to be able to handle this increased workload within the filing deadlines. Ventana Research recommends that if they haven't already, public companies should begin investigating ways to automate some or all of the processes associated with filing XBRL-tagged reports. All of the major vendors of financial software (including IBM/Cognos, Oracle/Hyperion and SAP/Business Objects/OutlookSoft) have (or will have) tagging capabilities as part of their systems. We also expect that companies increasingly will want to use XBRL to tag their own internal reports to make it easier to maintain data integrity (that is, one version of the truth).

Recommendation
Companies already using Infor PM that are required to file financial statements with the SEC should evaluate Office Plus. The SEC's timetable gives companies extended filing deadlines and limited liability for errors in order to make the XBRL mandate a bit less onerous. Nonetheless, it's important for them to build competence in the use of XBRL tags in two areas. The first is as creators of external and internal reports, and the other is as users of the XBRL-tagged information available from the SEC and other sources, which can provide a richer set of data about competitors' and suppliers' performance as well as market trends.