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ANALYSIS
March 2, 2009
Sagging Index no longer reflects what’s going on in the market, some say, Replacements? Google it, to start.
March 2, 2009
Downward price spiral will actually boost the cost of capital for most companies. CFOS, take note.
March 2, 2009
The latest bailout at AIG could be a preview of how the president will deal with Wall Street.
March 2, 2009
No corporate defaults. Big debt offerings. Percolating CP issuance. Things may be looking up in the capital markets.
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October 12, 2008 12:01 AM ET
Bloomberg
LIKELY BENEFICIARIES SAP CEO Henning Kagermann and Business Objects CEO John Schwarz.
(NOTE: To see a list of XBRL vendors and consultants, CLICK HERE) Why the confusion? For starters, no one is sure whether most companies will use a no-frills (in-house) or full-service (outsourced) approach to tagging financial reports with metadata. The early adopters seem to be split on which way to go. What’s more, the SEC has yet to officially mandate filing financial reports in an XBRL format, and voluntary adoption of the data-tagging technology remains slow. No matter. Software vendors and corporate consultants, a bunch that knows a thing or two about wringing dollars from regulatory changes, are betting business will pick up. Right now, XBRL specialists are split into three groups. Full-service providers offer XBRL tagging, reviewing and correcting of financial statements. Other outside consulting firms specialize in tweaking internal systems so that they can handle XBRL. And software publishers market programs and hosted solutions that allow companies to do XBRL tagging themselves. Dave Kasabian, research director of AMR Research, said vendors will probably see the real uptick in activity a year from now, when the SEC is expected to finalize interactive data requirements. But under the agency’s proposed timetable, the 500 or so largest companies must begin formatting their financial statements in XBRL for fiscal periods ending on or after Dec. 15. It’s likely that big enterprise resource software vendors like SAP and Oracle will get the bulk of the work, as the companies look for assistance in starting to use XBRL software programs. “Most of the larger companies already have these types of solutions in place, so they are looking to their preferred vendor to solve this for them,” said Mr. Kasabian. SAP offers XBRL capability in its SAP Business Planning and Consolidation software, as well as its BusinessObjects Financial Consolidation application. For existing customers, there’s no increase in licensing or maintenance fees for accessing the XBLR features in the programs. Clients will pay more, though, for additional consulting to develop new uses for interactive data. “We are not just looking at XBRL as a requirement for filing financial statements but we are looking at it as an opportunity to leverage it to enhance the performance management framework of our client’s business,” said James Fisher, senior director for enterprise performance management at Business Objects, a unit of SAP. Similarly, Oracle has already upgraded its E-Business Suite Financials, Hyperion Enterprise Management and PeopleSoft Enterprise Financial Management applications to produce financial statements automatically in XBRL format. Other companies, like R.R. Donnelley and Bowne, which print and prepare financial statements, will also see an immediate benefit from XBRL tagging because they have a built-in client base. Many companies will choose to use a service provider like Donnelley or Bowne to get through their first filing in a timely manner, and then seek a more permanent solution to comply. Donnelley’s vice president of marketing, David Anderman, said the company currently produces about 50% of all the SEC filings that are formatted in XBRL. Donnelley is poised to profit initially off tagged financial data, Mr. Anderman said, but he doesn’t see XBRL services turning into a core part of the business. “For the next two or three years as more companies are required to do this and as more companies come on board, there will still be popularity among the full-service models,” he said. “But eventually companies will probably take the stuff in-house and do the tagging themselves.” That’s why over the long run, companies that sell downloadable software or low-cost filing services over the Internet could be the big winners in the XBRL space. Many small companies are likely to pursue those options to rein in deployment costs for XBRL rollouts, which Mr. Anderman reckons could run as high as $40,000 for big companies. Chris Wright, a managing director at Protiviti, a risk advisory firm that also provides XBRL services, said all the reports he’s seen from early adopters indicate that instructions on the downloadable software were clear enough that the companies “were able to use internal technology people to implement XBRL without significant outside assistance.” Michelle Savage, vice president of communications for XBRL US, a consortium of companies that promotes the adoption of XBRL technology, expects that most major ERP and financial reporting software vendors will enhance their products so that whenever companies create data sets internally, they will automatically be done in XBRL format. That, along with increasing use of the off-the-shelf software offerings, could see XBRL-centric vendors eventually offering a host of interactive data products. “The other market for software companies is all of the ancillary tools and products for analytics and report writing,” said Ms. Savage. “There is a whole world of business intelligence products that could open up once XBRL is fully implemented.” But Mr. Kasabian of AMR cautions that a broader market for the technology won’t really open up until a better business case for XBRL is made. “CFOs are looking at this as a compliance requirement, versus something that is going to add additional value to what they do.” FW
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