There are a few different ways of defining XBRL data that are being used in an effort to convey its unique features and benefits, such as Interactive Data, Intelligent Data, and Smart Data. They are all accurate and useful, because they communicate the idea that, once business data is standardized and appropriate semantics are embedded with it, it becomes capable of bringing value and benefits to its users on its own, without relying on the “processing logic” built into proprietary software applications that provide access to it. Data becomes, indeed, all those things: interactive, intelligent, and smart. However, in my opinion these definitions fail to communicate a key part of the XBRL value proposition: the extraordinary process benefits that it enables for its users. In this perspective, my favorite definition for XBRL data is Sustainable Data. This definition derives from the consideration that in any type of organization – Government, corporate, not-for-profit sector – processes related to business data are, well, unsustainable. Not all of them of course: accounting software, ERP applications, operational systems and other components of each organization’s information system are designed to support day-to-day operations, and are generally successful in that respect. Nevertheless, when it comes to the activities that are performed on “after the fact” business data stored in one (or more) of the systems mentioned above, proprietary software applications have many shortcomings, typically due to their rigidity and to the fact that their data is not easily accessible and interchangeable. These activities generally fall into one of two categories:
- Aggregation/summarization of detailed, granular data into end reports for internal or external reporting purposes;
- Data validation/analysis/business intelligence.
The shortcomings of proprietary software in these areas typically translate into manual, resource intensive and error-prone processes put in place by an organization in order to overcome them. When one of my clients ask, “Where can I use XBRL in my organization?” I frequently answer with another question, “Is there an activity in your organization currently supported with a spreadsheet that is updated manually on a regular basis?” XBRL is well known for its use in regulatory reporting requirements, such as the Securities and Exchange Commission mandate in the United States, or the HM Revenues and Customs mandate in the United Kingdom, and many others. In that space, definitions like Interactive Data and Intelligent Data fit perfectly the bill – financial statements or tax returns expressed in XBRL are indeed interactive, and “intelligent”. However, XBRL is designed for the full support and integration of the Business Reporting Supply Chain (BRSC).
In other words, XBRL is designed not only to represent financial reports at the end of the BRSC, but also the underlying detail from which those end reports are derived, and the relationships (rules of aggregation/summarization) between the two layers. It is designed to support all the processes that act on business data at each step along the BRSC, and not only the consumption of a report at its end. The fulfillment of the value proposition of XBRL comes when business data standardization happens at the beginning of the BRSC. This is achieved by using the XBRL Global Ledger Framework (XBRL GL) to standardize detailed/granular business data and to map it to XBRL taxonomies that support end reports. End reporting XBRL taxonomies can be publicly available taxonomies like the US GAAP Taxonomy, a Standard Business Reporting taxonomy, or the IFRS taxonomy, or custom-designed taxonomies that support the internal requirements of one specific organization.
When this happens, as I demonstrated publicly many times, converting source data to XBRL becomes a straightforward process that business people can easily understand and perform. Also, they can then open the standardized data in, say, Microsoft Excel – base version with no XBRL specific add-ons – and with just a few clicks of the mouse do something meaningful with it, such as creating end reports from detailed data, reconcile them, drill down to the underlying detail, and more. If on the other end an XBRL and XBRL GL aware software is used, the results are understandably even better – and XBRL and XBRL GL aware software is generic, which means that it can be used for very different reporting and analytical purposes and by organizations in different sectors, industries and jurisdictions, without changing one line of code. Therefore, XBRL and XBRL GL aware software is inexpensive because it is highly re-usable, and it does not require the replacement or re-engineering of existing software to be used – it actually integrates with the existing applications, and makes the organization’s information system work better as a whole. It also addresses the shortcomings of traditional software applications described earlier by providing an automated, flexible and easy to deploy alternative to manual activities performed on business data. The standardization of business data using XBRL and XBRL GL delivers data that supports important activities like reporting, auditing, data monitoring and business intelligence efficiently and inexpensively, and that enables the replacement of inefficient and costly processes with standardized and automated ones – in other words, it delivers Sustainable Data.