Description
This white paper provides an overview of the benefits and uses of the new XML standard for business reporting, eXtensible Business Reporting Language (XBRL).
WHI TE PA PER
Understanding the XML Standard for
Business Reporting and Finance
XBRL
3
XBRL: Understanding the XML standard
Executive Summary 4
What is XBRL? 5
Who benefits? 5
What XBRL is NOT 6
What kinds of issues does XBRL seek to resolve? 6
What Needs to Be In Place? 7
Uses and Applications 8
Case Studies 8
Credit risk management 8
Internal and external reporting 8
Business intelligence (BI) 9
Portfolio support and market data providers 9
Transaction Cost Analysis (TCA) 9
Software and Financial Industry Leaders
XBRL Technology Overview 10
Software AG’s Role 12
Conclusion 13
Resource Recommendations for Further Inquiry 13
Softw are A G
D ecem ber 2002
CONTENTS
Partner to Deliver XBRL Solutions 10
for Business Reporting 4
XBRL:
Understanding the
XML Standard for
Business Reporting
and Finance
This white paper provides an
overview of the benefits and uses of
the new XML standard for business
reporting, eXtensible Business
Reporting Language (XBRL). It also
offers a more detailed review of the
implementation and technology
issues that need to be considered
when structuring an XBRL strategy
as well as case studies for specific
industries.
The material discussed will be of
particular interest to investment and
finance industry professionals; gov-
ernment, trade and regulatory pro-
fessionals; finance specialists in cor-
porations; IT directors and software
developers.
Executive Summary
Without a standard for exchanging
data, the financial community has
been consistently frustrated by inef-
ficient reporting processes. Cur-
rently, financial data is passed
around in a variety of non-inter-
changeable formats – HTML,
Microsoft Excel documents, text
files, and Adobe Acrobat files. While
useful for editing, these formats
offer no advantage over paper pho-
tocopies when it comes to sharing
data between applications and users
on different computing platforms.
So far, attempts at integrating data
for financial and business reporting
applications have proven frustrating.
Remarkably, 56% of integration per-
formed in the banking industry has
been accomplished by hard coding
or changing actual applications
rather than abiding by existing stan-
dards. Those efforts have tripled the
total cost of ownership for financial
software solutions.
XBRL is a widely accepted data stan-
dard that solves this dilemma and
enables the exchange of uniform
financial information between com-
puter systems, software applications
and people. It is based on XML
(eXtensible Markup Language) and
is supported worldwide by most
major accounting firms, trade organ-
izations, software vendors, financial
institutions, investors and govern-
ments.
XBRL "tags” data with standardized
descriptions that enable other appli-
cations to understand the meaning
and context of specific information
within financial documents. The
result is that data is entered cleanly
once and then understood consis-
tently and accurately thereafter.
There is no need to re-key informa-
tion or make guesses as to what a
specific number might represent.
It sounds simple, but it represents a
quantum leap for financial applica-
tions and the people who use them.
The technology is ideal for Web-
enabled applications and everyone
who gathers financial information
over the Internet.
Currently, banks, investment firms,
credit companies and such regula-
tory bodies as governments and
trade associations have the most to
gain from adopting XBRL. However,
any organization with financial
reporting responsibilities can benefit
immensely from XBRL. Specific case
studies that address XBRL usage for
credit risk management, internal and
external reporting, portfolio support
and market data providers, business
intelligence tools, and Transaction
Cost Analysis (TCA) are included in
the latter portion of this white paper.
Even though XBRL is in the early
phases of adoption, the competitive
advantages that come with estab-
lishing XBRL and XML capabilities
are clear. The world’s leading gov-
ernments, financial institutions,
accounting firms and corporations
are already leveraging the standard
to gain impressive returns on invest-
ment with both internal and external
applications.
4
Client
Fina ncia l
Da ta Controller Ma nua l Input Stora ge
Ana lyst,
Consulta nt
Client Centra l Stora ge
Tra ditiona l: A lot of ma nua l w ork
W ith XBRL: Properly defined a nd rea dy for business a utoma tion
XBRL
Fina ncia l
Da ta
Ana lyst,
Consulta nt, Controller
Fig. 1: The Financial R eporting Process.
It should also be noted that the past
decade has seen a significant trend
toward sophisticated business
reporting. Large- , medium- and
small-sized companies and organiza-
tions have been able to take advan-
tage of low-cost computing power
and software to track and analyze all
kinds of business activity. Compa-
nies everywhere are beginning to
understand in great detail how HR,
marketing, knowledge-management
systems, R&D, organizational struc-
tures and information architectures
affect their business. Numerous soft-
ware packages allow organizations
to analyze every facet of business
operations and their impacts on
finance.
So, while this white paper is prima-
rily focused on XBRL, it is important
to keep the larger XML perspective
in mind and understand that many
applications will be using XBRL-
enabled finance applications to
translate indirect costs and value to
the bottom line.
What is XBRL?
XBRL is a data description language
that enables the exchange of under-
standable, uniform business infor-
mation. It is based on XML and per-
mits the automatic exchange and
reliable extraction of financial infor-
mation across all software formats
and technologies, including the
Internet (Fig. 2).
XBRL allows organizations to struc-
ture information with tags. For
example, when a piece of data is
tagged as “revenue,” then XBRL-
enabled applications know that it
adheres to a strict definition of rev-
enue and can use it accordingly. The
integrity of the information is
ensured by standards that have
already been widely accepted. In
addition, XBRL provides broader
contextual information about spe-
cific data content within financial
documents. For example, when a
particular sum of money is specified
within a report, XBRL tags may iden-
tify that data as "cash” or "accounts
receivable.” It can also indicate
timeframes for particular pieces of
information, like year-to-date sales.
With XBRL, an organization, an indi-
vidual or another software applica-
tion can easily generate various out-
put formats and reports based on a
single set of data.
Who benefits?
XBRL benefits all users of the finan-
cial information supply chain: public
and private companies, the account-
ing profession, governments, regu-
lators, analysts, the investment com-
munity, capital markets and lenders,
as well as key third parties such as
software developers and data aggre-
gators.
5
XBRL Benefits
• Creates more confidence in data
through limiting the risk of erro-
neous data entry since all
reports are automatically gener-
ated from one single informa-
tion source
• Minimizes costs by allowing eas-
ier, more automatic composition
and processing of reports to dif-
ferent clients
Business
Opera tions
Interna l
Fina ncia l
Repor ting
Externa l
Fina ncia l
Repor ting
Investment
a nd Lending
Ana ysis
Compa nies
Fina ncia l
Publisher
a nd Da ta
Aggrega tors
Investors
Tra ding
Pa r tners
Ma na gement
Accounta nts
Auditors Regula tors
Softw a re Vendors
XBRL for Business
Event Repor ting
XBRL for Audit
Schedules
XBRL for
Ta x Filings
Processes
Pa r ticipa nts
XBRL for G/ L Journa l
Entr y Repor ting
XBRL for Fina ncia l
Sta tements
XBRL for Regula tor y
Filings
XBRL Working Model: Dedicated “filters” suppor ting different processes
• Accelerates financial decision-
making by institutions such as
banks and rating services
• Improves the process of publish-
ing analyst and investor reports
• Information consumers have
unprecedented access, compari-
son and analysis capabilities
Fig. 2: The B usiness Inform ation Supply C hain.
6
What XBRL is NOT
XBRL is not a new accounting stan-
dard, and it does not require any
changes to existing accounting stan-
dards. CFOs still control disclosure,
but XBRL allows more effective
communication of what is disclosed
and makes the information more
manageable. It is not a new transac-
tion protocol. It is merely a standard
for formatting complex, structured
business data like statements and
general ledgers. XBRL is not a
replacement for previously estab-
lished data interchange standards
like EDI. Rather, XBRL enhances
existing standards by providing
extended consistency.
What kinds of
issues does XBRL
seek to resolve?
The commonly practiced methods
for financial reporting and analysis
tend to be manual, time-consuming
and costly. Without consistent nam-
ing and rigid data descriptor frame-
works, the accuracy and integrity of
financial information has become a
serious concern. Communication
with investors becomes ineffective,
financial statements are created inef-
ficiently, and reporting and analysis
suffer.
BUSINESS ISSUES
From a high-level business perspec-
tive, ineffective communication with
outside users creates a number of
problems. Financial reports that are
difficult to interpret, analyze and
compare can give investors the per-
ception of risk, for example.
Investors may go elsewhere, to
unreliable sources, for financial
information.
Errors can occur at any step in the
manual financial data aggregation
process. Every time an auditor, tax
preparer, regulator, analyst or
investor re-enters information for
his or her own purposes, the proba-
bility of error increases. Those
errors can wreak havoc with the
organization.
There are certainly several com-
pelling cases for taking XBRL seri-
ously at the C level. Automatic com-
position and processing of reports
to different stakeholders minimizes
costs significantly by eliminating
time and labor spent manually
entering and rechecking informa-
tion. Internal information systems
can be integrated more quickly and
cost effectively with standardized
data formats. The process of pub-
lishing analyst reports for banks and
rating services is also faster and
more cost effective. Thus, busi-
nesses can receive funding quickly
and efficiently.
XBRL helps businesses analyze their
financial results with much greater
ease and efficiency. It enables busi-
nesses to concentrate on issues like
forecasting and modeling rather
than data entry and process tasks.
From a C-level perspective, this is
really what financial reporting is all
about – running a tighter ship,
becoming more competitive and
finding creative ways to improve
business.
XBRL AND WEB SERVICES
XBRL is ideal for use in seamlessly
integrated Web services. Web serv-
ices are Web-based applications or
software components that interact
with other Web applications. Since
Web services are based on the XML
open standard, they can use XBRL
easily. They essentially "talk” to
each other, sharing data and calling
routines as necessary. This means
that Web services are an ideal archi-
tectural approach to automating
business processes across internal
or external business boundaries – by
using Internet technologies.
XBRL provides efficient, validated
transmission of information
between Web services. Error detec-
tion, which is built into the XBRL
specification, occurs at the source of
the data, rather than at the receiving
party. The data’s accuracy and origin
is traceable to one absolute point
within the information chain.
Data Integration Dilemmas
• Document formats such as
PDFs, Excel documents and text
files are about as useful as hard
copies.
• One-dimensional Web page data
cannot be automatically linked
to supporting details, such as
journal entries.
• Spreadsheet data is often
delayed, truncated and inaccu-
rate.
XBRL Advantage
• "Live” information.
• Underlying linkages are pre-
served in XBRL.
• References are preserved.
• Different style sheets and "con-
trols” can sort, expand, collapse
and graph information.
• Companies classify each item to
exact specifications.
• Items reach institutional
investors with no delay and no
conversion errors.
What Needs to
Be In Place
If architected properly, XBRL plat-
forms provide a clean middle tier
where financial data can be organ-
ized and utilized by a variety of
other applications. By XBRL plat-
forms, we mean a server or data-
base that stores and organizes XBRL-
enabled information so that it can be
effectively delivered to other appli-
cations and document formats.
(See Figures 3 and 4 below.)
With the right architecture, a central-
ized XBRL repository handles infor-
mation from a variety of sources
and distributes it intelligently and
efficiently to applications and serv-
ices that are XBRL-enabled.
The crucial success factor in any
XBRL solution is the capability to
convert and route financial informa-
tion derived from existing systems
without impacting them. Non-XBRL
data needs to be converted so that
XBRL-enabled applications can uti-
lize the information. This is the layer
where products like XML servers
and integration solutions are impor-
tant. The best solutions ensure that
XBRL-tagged data is kept separate
from RDBMS functionality, keeping
the underlying data pristine.
Several other pieces of the puzzle
need to be in place before an end-
to-end XBRL solution is complete:
• Taxonomies must be developed
and approved for specific indus-
tries and geopolitical areas. Coun-
tries, for instance, need to agree
on accounting principles that are
supported by XBRL.
• General ledger accounting soft-
ware vendors need to XBRL-
enable their products.
• Accounting professionals need to
provide XBRL documents as part
of their audit procedures.
With a general ledger application for
example, the user could export
data as XBRL, selecting the appro-
priate taxonomy according to
Generally Accepted Accounting Prin-
ciples, like US-GAAP, German AP,
UK GAAP, IAS (International
Accounting Standard) and so on.
Read more about taxonomies on
page 10.
Once an XBRL document exists, it
can be used in any software pro-
gram that supports XBRL. Between
applications, this import/export func-
tion can be automated and transpar-
ent to the user.
7
Problems that XBRL/XML solve:
• As open standards, XBRL and
XML allow users to use one
technology for a variety of appli-
cations without being held
hostage by one software com-
pany.
• XML-coded data in search-
engine databases allows users
to clearly specify the exact defi-
nition and context of their terms.
• Common standards simplify
application integration.
• XML automatically codes
instructions for each output for-
mat (Web, CD-ROM, printer,
mobile device etc.).
Opera tiona l
Da ta Store
+
C of A
Repor t
Repor t
Repor t
+
+
GL
+
+
Text
Text
Text
+
+
+
Sta tement
on Web
Sta tement
in PDF
Sta tement
in Print
Regula tor y
Filings
Credit
Applica tion
EDGAR
Ba nks
1 0 -K
Text
?
Toda y: Tor tuous Informa tion Supply Cha in
Other Sources
of Informa tion
The Informa tion Supply Cha in w ith XBRL
Accounting
System
Ta x Returns
Regula tor y
Filings
Web Site
Printed
Fina ncia ls
Ba nk
Filings
XBRL
Fig. 3: Typical, inefficient financial architecture.
Fig. 4: XB R L: handles m ultiple outputs from m ultiple data sources.
8
Uses and
Applications
The primary goal of XBRL is to
reduce the cost of information,
accelerate its flow, increase its use-
fulness and globalize its form and
content.
All participants within the financial
supply chain can easily interpret and
use XBRL documents. XBRL brings
greater flexibility to investment and
credit professionals working with
XML-enabled applications, financial
data warehouses and analytical
tools. The standard lends itself to
business process automation, where
integrated business rules utilize the
same data. Investors are able to ana-
lyze information without retyping
data and compare different compa-
nies based on commonly accepted
data formats. Regulators can define
specific taxonomies that describe
information and use standard XML
and Internet technologies to receive
and process that information.
By dramatically improving the speed
with which data is compiled and
prepared, the organizational costs
required to prepare, exchange, store
and publish electronic documents
are greatly reduced.
Case Studies
CREDIT RISK MANAGEMENT
The banking industry has many dis-
tinct opportunities to leverage XBRL
and numerous ways to gain effi-
ciency. When processing loans, for
example, banks often take 11 to 20
days before they can make an in-
formed decision about the credit-
worthiness of a client. In most cases,
90 percent of their time is spent on
mechanics, like verifying docu-
ments, reviewing numbers manually
and double-checking work.
With XBRL, 10 percent of the time is
spent on mechanics. The remaining
90 percent can be used at the bank’s
discretion. They can either use the
new time savings as a competitive
advantage by providing speedy loan
approvals, or they can use the time
to conduct more rigorous risk analy-
sis. Either way, the amount of time
spent on "zero-value” tasks like
gathering information and keying it
are eliminated.
For fast-track approvals, a small
business might provide a bank with
their financial information in XBRL
and receive a loan approval in cou-
ple of minutes instead of a couple of
weeks. A similar process would
occur for credit approval and lines of
credit (Fig. 5).
The use of XBRL in credit-risk-solu-
tion algorithms from noted account-
ing and rating companies would cer-
tainly speed processing for all kinds
of credit analysis.
INTERNAL AND EXTERNAL
REPORTING
Multinational corporations with hun-
dreds of subsidiaries are another
obvious beneficiary of XBRL stan-
dards. Despite the attempts of many
organizations to develop "account-
ing manuals” and issue directives
for compliance, subsidiaries
inevitably deliver information in a
myriad of forms and formats. Analy-
sis applications vary from entity to
entity, and even if a standard soft-
ware package is used, output for-
mats commonly vary. Massive
efforts to validate, normalize, correct
and consolidate information must
take place before information can be
reported with any clarity.
The effects of these practices spill
over into the realm of external
reporting. The inefficiency and inac-
curacy involved in gathering finan-
cial information on a large scale
inevitably spreads to every stake-
holder involved.
Fina ncia l
Da ta
4 . XBRL-ta gged da ta
is ma pped into
ba nk’s COA*
2 . Client da ta is
conver ted into
XBRL
How XBRL w ill Work
XBRL
Tra nsla tor
XBRL
Tra nsla tor
3 . XBRL informa tion
flow s freely a cross
the Internet
Client COA*
to IAS
Ta xonomy
Ba nk’s
COA*
Sta nda rd
fina ncia l
a na lyst
tools
5 . XBRL da ta is up-
loa ded to the
system of record
XBRL
Repositor y
1 . Ba nk client
* COA: Cha r t of Accounts,
cla ssifica tion system of
fina ncia l positioning
Common
XBRL
Voca bula r y
Fig. 5: Persistent and consistent financial inform ation
for reliable statem ents.
9
The financial industry, tax agencies,
national banks and governments
spend an inordinate amount of time
dealing with regulatory filings that
have been generated from convo-
luted processes. Reporting forms
and rules are not integrated, and
data is handled manually at every
stage in the process. The processes
are not designed for timely, sophisti-
cated analysis. As the reporting
moves further away from the corpo-
ration, it becomes much less reli-
able. In the end, investors are left
with suspect information and the
corporation may miss the opportu-
nity to develop capital investment in
line with its performance and needs.
These problems are not relegated to
large corporations, either. Govern-
ment agencies and departments of
all kinds run into the same situa-
tions, as do banks, investment firms
and non-profit organizations.
Organizations such as governments,
banks, investment firms and market
data providers that depend on infor-
mation feeds from corporations are
in the unenviable position of receiv-
ing inaccurate information from com-
panies. Their job begins with infor-
mation that has already been through
all kinds of error-prone processes.
XBRL provides for streamlined inter-
nal and external reporting processes,
because the initial financial data that
is passed around from application to
application never changes. There is
no chance for error from re-keying,
and accuracy is consistently vali-
dated at every hand-off.
From an internal reporting perspec-
tive, data used in XBRL format is
live and highly accurate, so report-
ing processes can be much less
rigid. Instead of being locked into a
quarterly scenario where data is
compiled and verified in a mad rush
at the end of the quarter, users can
examine live data on a day-to-day
basis and have confidence that the
figures are accurate and complete.
With XBRL documents, it is also
much easier to compare financial
results against other data, like his-
torical performance, competitive re-
sults and benchmarks for future goals.
BUSINESS INTELLIGENCE
Business intelligence, business per-
formance management and decision
support tools stand to gain increased
usage, performance and exposure
with the adoption of the XBRL stan-
dard. With live, accurate information
pulsing through the veins of a com-
pany, executives and managers
across the organization have exten-
sive opportunities to examine their
performance and operations. Analy-
sis, modeling, forecasting and, of
course, rapid reporting are greatly
enhanced with XBRL.
PORTFOLIO SUPPORT AND
MARKET DATA PROVIDERS
For all the reasons cited above, port-
folio support and market data become
much more accurate and much more
efficiently collected. Banks are also
market data providers. Many banks
develop their own "ticker plants” in
house, so there are ample opportu-
nities to develop XBRL integration
solutions for them.
TRANSACTION COST ANALYSIS
(TCA)
Institutions that deal with massive
amounts of trading volume, like
banks, brokers and data providers,
are constantly examining their trans-
action costs and searching for ways
to lower them. TCA solution providers,
such as some banks, offer ways to
increase execution transparency,
manage assets more effectively and
grease the financial information sup-
ply chain.
Banks, for instance, have to deal
with approximately 400 different
mechanisms for completing transac-
tions. The effort to reduce the com-
plexity of these processes is de-
scribed by the term "straight-through
processing” (STP). All parties are
interested in attaining STP, which is
one of the inherent benefits of XML
and XBRL.
10
Software and
Financial Industry
Leaders Partner
to Deliver XBRL
Solutions
Partnerships between technology
companies and financial industry
leaders have already produced
viable XBRL solutions. See
www.xbrl.org for a listing of part-
ners and descriptions of their proj-
ects. The following is a short list of
solutions that already exist or are in
development:
• Reporting and analysis solutions
for multiple organization-wide
uses, as well as for investing pur-
poses.
• Investment comparisons/investor
analysis products.
• Forecasting and planning applica-
tions.
• EDGAR and other governmental
filing solutions.
• Web services for a variety of
applications that cater to con-
sumers, corporations, govern-
ments and investment firms.
• Existing systems such as ERP,
business intelligence, business
performance management, and
enterprise-wide reporting and
analysis software are incorporat-
ing XBRL.
XBRL Technology
Overview
The beauty of XBRL is that the tech-
nology required to XBRL-enable
data resides in the middle of the IT
infrastructure. Organizations still uti-
lize their existing infrastructure, such
as back-end relational databases and
front-end applications like Excel.
XBRL is recognized as an investment
or an enhancement that provides
skill protection throughout the IT
organization rather than a replace-
ment solution that requires re-engi-
neering of systems and retraining of
users.
The following overview presents the
key components to successful XBRL
implementations and the open
source technologies that support
them. Remember, XBRL is a stan-
dard, not software. So, the “technol-
ogy” required to launch an XBRL ini-
tiative is composed of structured
agreements and software that
understands those structures.
TAXONOMIES
Taxonomies provide the rules for
defining XBRL tags. Generally
Accepted Accounting Principles
(GAAP) is a taxonomy, for example.
It defines agreements about the con-
tent and structure of various reports
created and maintained by organiza-
tions such as AICPA, the Interna-
tional Accounting Standards Board,
regulators or individual companies.
Yet XBRL taxonomies do not stop
there. Taxonomies can also include
private company aspects that refer
to and correspond to specific data
structures and business rules within
a singular organization. In either
case, taxonomy establishes agree-
ment between different parties
within a company, industry or geo-
graphic area as to the tagging and
contextual usage of specific data
items. It should be noted that the
standards an organization chooses
to enforce can pertain to anything.
The BRL stands for Business Report-
ing Language, so additional meas-
urements such as productivity, risk
and spend management indicators
can also be easily accounted for.
XBRL DOCUMENT
An XBRL document contains actual
business reporting figures, their con-
text and any relevant linkages. The
XBRL data within these documents
are defined by taxonomies. "XBRL-
aware” applications can use and
view the raw XML data which
resides in XBRL documents.
XML SCHEMA
Even understandable application-
specific tags within XML documents
make sense only if they are known
to all the users who are likely to
need them. This is the case when
user groups agree on certain docu-
ment types. They can do so using
DTDs (Document Type Definitions) –
or XML schema definitions – docu-
ment schemas that specify the valid
tags and the valid structure of a doc-
ument class. Even then, well-formed
XML documents can still cope with
unknown tags: they are automati-
cally identified as such and left unre-
solved, whereby the possibility of
incorrect interpretation is excluded.
The architecture is thus very flexible
and has been designed bearing in
mind that those users and applica-
tions that have access to all informa-
tion need to be served as well. And
since the definitions are entered in
plain text, not using cryptic control
characters, XML documents remain
readable by people. Regardless of
the author’s particular DTD or XML
schema, all XML-coded documents
can be processed, saved and distrib-
uted.
11
Error checking or validity checking is
built into XML documents through
their Schemas. When you send an
XML document to another party or
application, you also send along the
document’s Schema. This defines
how the document will be used and
interpreted.
In other words, XML Schemas
define documents in a language that
pertains to their particular usage.
Each Schema is specific to the needs
of the particular industry or usage.
XSL, XSLT, AND XPATH
The layout of an XML document is
not defined in the document itself or
in its Schema. It is one of the funda-
mental principles of XML that con-
tent should be absolutely separate
from presentation. How a document
is represented is defined in a style-
sheet that is created with eXtensible
Stylesheet Language (XSL) or possi-
bly with Cascading Style Sheets.
One document can also have several
different XSL stylesheets, resulting
in different document presentations.
XSL likewise supports a variety of
output media, such as screen dis-
play, printouts etc. In addition, XSL
enables XML documents to be trans-
lated into HTML documents. Thus,
terminal devices that understand
HTML but not XML can be sup-
ported as well. XSL specifies how
XML documents can be transformed
for display.
An XML document can be trans-
formed via multiple XSL files for dis-
play on the Web, on a mobile phone,
PDA or into a format for storage.
XML documents can be transformed
into a variety of formats in order to
be utilized by end-user applications.
These formats include HTML for use
in browsers, PDF for use in Adobe
Acrobat, RTF for text, SVG for ren-
dering graphics, and so forth. XML
can also be transformed into other
XML documents.
An eXtensible Stylesheet Language
Transformations (XSLT) file is
applied to an XML document in
order to transform it. An XSLT
processor is also utilized. XSLT files
consist of templates that specify
how each node of the source XML
document should appear in the des-
tination document. XSLT is an XML-
based language whose syntax and
semantics are defined by a W3C
specification.
XSLT uses the XML Path Language
(XPath) to perform queries on an
XML document in order to specify a
particular part of the document.
XML ADVANTAGES OVER RELA-
TIONAL DATA STRUCTURES
XML is designed for Internet Proto-
col (IP). In contrast, the binary for-
mats and proprietary mechanisms of
relational and object-oriented data
prevent them from being easily
accessible over the Internet. In many
cases, gateway software and addi-
tional mechanisms are required to
access these formats over the Inter-
net – and it is usually through a sin-
gular transport protocol, such as
HTTP only (no e-mail or FTP, for
instance). However, with an XML
server and the right integration
tools, non-native XML data can be
"staged” in a layer between the
RDBMS and XML applications and
services.
Established vendors such as Soft-
ware AG provide native XML data-
bases that integrate both XML and
non-XML data. This provides an
extensible "XML view” on all
needed information, without chang-
ing the data structure (or data
access layers) over and over again.
In contrast, relational database ven-
dors are developing schemas for
converting data to XML within the
RDBMS, a daunting task.
So, ideally, XBRL-enabled solutions
will be built on an XML server plat-
form that performs all the necessary
integration, conversion, translation
and routing between the database
and application layers.
12
Software AG’s Role
Software AG is one of the primary
drivers of XBRL and XML technolo-
gies. We make the industry’s leading
XML server, Tamino, and the Soft-
ware AG Suite for XBRL helps com-
panies build XBRL solutions from
existing IT investments. Hundreds of
worldwide customers are already
using our XML core technology to
process and store XML documents.
Simply put, Software AG provides
the tools and services necessary to
analyze, transform, route and store
XML information – the key to the
entire information exchange infra-
structure (Fig. 6).
The Software AG Suite for XBRL
delivers the methodology and prac-
tical tools for implementing and sus-
taining XBRL initiatives. Project
management, business and techni-
cal consulting, implementation sup-
port and tools and training are all
part of the Software AG program.
Software AG’s methodologies are
designed to solve special issues
within the financial information sup-
ply chain, like credit risk manage-
ment, internal-external reporting
and regulatory filings. Our solutions
provide a smooth transition to native
XBRL without jeopardizing or affect-
ing current business operations. The
suite for XBRL is based on W3C
XML standards and offers an open
framework for plugging in custom
components and other third-party
solutions.
Software AG’s Suite for XBRL sup-
ports the automation of:
• Non-XML conversion to XML
using parsers (for text, PDF, MS
Word, print files, etc.)
• XML data transformation to XBRL
format using XSLT
• Data extraction using adapters
(RDBMS, SAP, Oracle Financials
and others)
• XBRL data encryption/decryption
and digital signatures using XML
Signature and XML encryption
technology
• Validation of XBRL using tax-
onomies and specific business
rules
• Storage of XBRL instances and all
related XML documents such as
linkbases and stylesheets using
Tamino XML Server
• Retrieval of XBRL instances for
dynamic publishing (transforming
XBRL with XSLT to other formats)
• WebDAV for collaborating on
financial data
• Web services (SOAP) for front-
end financial analysis (e.g., Excel)
and validation of XBRL instances
A global Software AG XML/XBRL
Competence Center has been estab-
lished to provide state-of-the-art
competence. The primary goal of
the Competence Center is to transfer
knowledge to participating organiza-
tions, offer support for XML/ XBRL
solutions and continue to build upon
the success of the standards.
XML standards have already
demonstrated significant ROI for
numerous technical and business
applications. XBRL is simply a busi-
ness extension of the XML standard.
Investment returns within the finan-
cial community are already begin-
ning to materialize from simple
implementations.
Client A
ERP System
Client B
ERP System
XBRL
Ada pter
Client C
Corpora te / Ba nk
Suite for
XBRL
“Sta nda rd” repor ts,
text, other forma ts
XBRL Documents
XBRL Documents
Fina ncia l
repor t
(print)
Ma nua l
input
HTML
XBRL
Form
Forma t
Conver ter
XBRL
XBRL Documents
Firew a ll
ERP System
Fig. 6: An extensible architecture: all kinds of formats can be embedded into the XBRL system
Conclusion
With this analysis in mind, what is
the next step for IT managers whose
organizations wish to explore XBRL
further? For starters, you can investi-
gate your financial and ERP software
applications to find out if they are
XBRL-enabled. Also, check with ven-
dors to see if plans are going for-
ward for future versions that will
include support for XBRL docu-
ments. Then, begin to survey inter-
nal business processes and identify
which business reporting areas
might benefit from XBRL. Extend the
survey to include external processes
and key partners, and then start to
consider pilot programs for XBRL-
enabling key processes within your
organization.
Of course, plan on adding to your
XBRL background by reading up on
the latest developments. We have
compiled a list of resources below.
Resource Recom-
mendations for
Further Inquiry
• www.xbrl.org
•http://web.bryant.edu/~xbrl/
index.html
• www.zapthink.com
• www.softwareag.com
•http://www.microsoft.com/
msft/xbrlinfo.htm
•http://www.ey.com/global/
content.nsf/International/Issues_
&_Perspectives_-_Web-Enabled_
Business_Reporting
• www.ey.com -- Search for term
"XBRL”
• www.pwcglobal.com -- Search for
term "XBRL”
Additional information on Software AG’s
XBRL offering can be obtained at
your local Software AG subsidiary
or via e-mail at:
[email protected]
13
14
Softwa re AG
Corpora te Hea dqua r ters
Uhlandstraße 12
64297 Darmstadt/Germany
Tel: +49-61 51-92-0
Fax: +49-61 51-92-11 91
www.softwareag.com X
B
R
L
/
W
P
1
E
0
1
0
3
0
0
1
For more information on EntireX Integration Server:http://www.softwareag.com/entirex
For hands-on experience:http://www.softwareag.com/entirex/download
For more information on Tamino XML Server:http://www.softwareag.com/tamino
Tamino Community:http://www.softwareag.com/developer
To download the XML Starter Kit:http://www.xmlstarterkit.com
Copyright @ Software AG and/or its suppliers, Uhlandstraße 12, 64297 Darmstadt, Germany.
All rights reserved.
Software AG and/or all Software AG products are either trademarks or registered trademarks
of Software AG. Other products and company names mentioned herein may be the
trademarks of their respective owners.
doc_999534085.pdf
This white paper provides an overview of the benefits and uses of the new XML standard for business reporting, eXtensible Business Reporting Language (XBRL).
WHI TE PA PER
Understanding the XML Standard for
Business Reporting and Finance
XBRL
3
XBRL: Understanding the XML standard
Executive Summary 4
What is XBRL? 5
Who benefits? 5
What XBRL is NOT 6
What kinds of issues does XBRL seek to resolve? 6
What Needs to Be In Place? 7
Uses and Applications 8
Case Studies 8
Credit risk management 8
Internal and external reporting 8
Business intelligence (BI) 9
Portfolio support and market data providers 9
Transaction Cost Analysis (TCA) 9
Software and Financial Industry Leaders
XBRL Technology Overview 10
Software AG’s Role 12
Conclusion 13
Resource Recommendations for Further Inquiry 13
Softw are A G
D ecem ber 2002
CONTENTS
Partner to Deliver XBRL Solutions 10
for Business Reporting 4
XBRL:
Understanding the
XML Standard for
Business Reporting
and Finance
This white paper provides an
overview of the benefits and uses of
the new XML standard for business
reporting, eXtensible Business
Reporting Language (XBRL). It also
offers a more detailed review of the
implementation and technology
issues that need to be considered
when structuring an XBRL strategy
as well as case studies for specific
industries.
The material discussed will be of
particular interest to investment and
finance industry professionals; gov-
ernment, trade and regulatory pro-
fessionals; finance specialists in cor-
porations; IT directors and software
developers.
Executive Summary
Without a standard for exchanging
data, the financial community has
been consistently frustrated by inef-
ficient reporting processes. Cur-
rently, financial data is passed
around in a variety of non-inter-
changeable formats – HTML,
Microsoft Excel documents, text
files, and Adobe Acrobat files. While
useful for editing, these formats
offer no advantage over paper pho-
tocopies when it comes to sharing
data between applications and users
on different computing platforms.
So far, attempts at integrating data
for financial and business reporting
applications have proven frustrating.
Remarkably, 56% of integration per-
formed in the banking industry has
been accomplished by hard coding
or changing actual applications
rather than abiding by existing stan-
dards. Those efforts have tripled the
total cost of ownership for financial
software solutions.
XBRL is a widely accepted data stan-
dard that solves this dilemma and
enables the exchange of uniform
financial information between com-
puter systems, software applications
and people. It is based on XML
(eXtensible Markup Language) and
is supported worldwide by most
major accounting firms, trade organ-
izations, software vendors, financial
institutions, investors and govern-
ments.
XBRL "tags” data with standardized
descriptions that enable other appli-
cations to understand the meaning
and context of specific information
within financial documents. The
result is that data is entered cleanly
once and then understood consis-
tently and accurately thereafter.
There is no need to re-key informa-
tion or make guesses as to what a
specific number might represent.
It sounds simple, but it represents a
quantum leap for financial applica-
tions and the people who use them.
The technology is ideal for Web-
enabled applications and everyone
who gathers financial information
over the Internet.
Currently, banks, investment firms,
credit companies and such regula-
tory bodies as governments and
trade associations have the most to
gain from adopting XBRL. However,
any organization with financial
reporting responsibilities can benefit
immensely from XBRL. Specific case
studies that address XBRL usage for
credit risk management, internal and
external reporting, portfolio support
and market data providers, business
intelligence tools, and Transaction
Cost Analysis (TCA) are included in
the latter portion of this white paper.
Even though XBRL is in the early
phases of adoption, the competitive
advantages that come with estab-
lishing XBRL and XML capabilities
are clear. The world’s leading gov-
ernments, financial institutions,
accounting firms and corporations
are already leveraging the standard
to gain impressive returns on invest-
ment with both internal and external
applications.
4
Client
Fina ncia l
Da ta Controller Ma nua l Input Stora ge
Ana lyst,
Consulta nt
Client Centra l Stora ge
Tra ditiona l: A lot of ma nua l w ork
W ith XBRL: Properly defined a nd rea dy for business a utoma tion
XBRL
Fina ncia l
Da ta
Ana lyst,
Consulta nt, Controller
Fig. 1: The Financial R eporting Process.
It should also be noted that the past
decade has seen a significant trend
toward sophisticated business
reporting. Large- , medium- and
small-sized companies and organiza-
tions have been able to take advan-
tage of low-cost computing power
and software to track and analyze all
kinds of business activity. Compa-
nies everywhere are beginning to
understand in great detail how HR,
marketing, knowledge-management
systems, R&D, organizational struc-
tures and information architectures
affect their business. Numerous soft-
ware packages allow organizations
to analyze every facet of business
operations and their impacts on
finance.
So, while this white paper is prima-
rily focused on XBRL, it is important
to keep the larger XML perspective
in mind and understand that many
applications will be using XBRL-
enabled finance applications to
translate indirect costs and value to
the bottom line.
What is XBRL?
XBRL is a data description language
that enables the exchange of under-
standable, uniform business infor-
mation. It is based on XML and per-
mits the automatic exchange and
reliable extraction of financial infor-
mation across all software formats
and technologies, including the
Internet (Fig. 2).
XBRL allows organizations to struc-
ture information with tags. For
example, when a piece of data is
tagged as “revenue,” then XBRL-
enabled applications know that it
adheres to a strict definition of rev-
enue and can use it accordingly. The
integrity of the information is
ensured by standards that have
already been widely accepted. In
addition, XBRL provides broader
contextual information about spe-
cific data content within financial
documents. For example, when a
particular sum of money is specified
within a report, XBRL tags may iden-
tify that data as "cash” or "accounts
receivable.” It can also indicate
timeframes for particular pieces of
information, like year-to-date sales.
With XBRL, an organization, an indi-
vidual or another software applica-
tion can easily generate various out-
put formats and reports based on a
single set of data.
Who benefits?
XBRL benefits all users of the finan-
cial information supply chain: public
and private companies, the account-
ing profession, governments, regu-
lators, analysts, the investment com-
munity, capital markets and lenders,
as well as key third parties such as
software developers and data aggre-
gators.
5
XBRL Benefits
• Creates more confidence in data
through limiting the risk of erro-
neous data entry since all
reports are automatically gener-
ated from one single informa-
tion source
• Minimizes costs by allowing eas-
ier, more automatic composition
and processing of reports to dif-
ferent clients
Business
Opera tions
Interna l
Fina ncia l
Repor ting
Externa l
Fina ncia l
Repor ting
Investment
a nd Lending
Ana ysis
Compa nies
Fina ncia l
Publisher
a nd Da ta
Aggrega tors
Investors
Tra ding
Pa r tners
Ma na gement
Accounta nts
Auditors Regula tors
Softw a re Vendors
XBRL for Business
Event Repor ting
XBRL for Audit
Schedules
XBRL for
Ta x Filings
Processes
Pa r ticipa nts
XBRL for G/ L Journa l
Entr y Repor ting
XBRL for Fina ncia l
Sta tements
XBRL for Regula tor y
Filings
XBRL Working Model: Dedicated “filters” suppor ting different processes
• Accelerates financial decision-
making by institutions such as
banks and rating services
• Improves the process of publish-
ing analyst and investor reports
• Information consumers have
unprecedented access, compari-
son and analysis capabilities
Fig. 2: The B usiness Inform ation Supply C hain.
6
What XBRL is NOT
XBRL is not a new accounting stan-
dard, and it does not require any
changes to existing accounting stan-
dards. CFOs still control disclosure,
but XBRL allows more effective
communication of what is disclosed
and makes the information more
manageable. It is not a new transac-
tion protocol. It is merely a standard
for formatting complex, structured
business data like statements and
general ledgers. XBRL is not a
replacement for previously estab-
lished data interchange standards
like EDI. Rather, XBRL enhances
existing standards by providing
extended consistency.
What kinds of
issues does XBRL
seek to resolve?
The commonly practiced methods
for financial reporting and analysis
tend to be manual, time-consuming
and costly. Without consistent nam-
ing and rigid data descriptor frame-
works, the accuracy and integrity of
financial information has become a
serious concern. Communication
with investors becomes ineffective,
financial statements are created inef-
ficiently, and reporting and analysis
suffer.
BUSINESS ISSUES
From a high-level business perspec-
tive, ineffective communication with
outside users creates a number of
problems. Financial reports that are
difficult to interpret, analyze and
compare can give investors the per-
ception of risk, for example.
Investors may go elsewhere, to
unreliable sources, for financial
information.
Errors can occur at any step in the
manual financial data aggregation
process. Every time an auditor, tax
preparer, regulator, analyst or
investor re-enters information for
his or her own purposes, the proba-
bility of error increases. Those
errors can wreak havoc with the
organization.
There are certainly several com-
pelling cases for taking XBRL seri-
ously at the C level. Automatic com-
position and processing of reports
to different stakeholders minimizes
costs significantly by eliminating
time and labor spent manually
entering and rechecking informa-
tion. Internal information systems
can be integrated more quickly and
cost effectively with standardized
data formats. The process of pub-
lishing analyst reports for banks and
rating services is also faster and
more cost effective. Thus, busi-
nesses can receive funding quickly
and efficiently.
XBRL helps businesses analyze their
financial results with much greater
ease and efficiency. It enables busi-
nesses to concentrate on issues like
forecasting and modeling rather
than data entry and process tasks.
From a C-level perspective, this is
really what financial reporting is all
about – running a tighter ship,
becoming more competitive and
finding creative ways to improve
business.
XBRL AND WEB SERVICES
XBRL is ideal for use in seamlessly
integrated Web services. Web serv-
ices are Web-based applications or
software components that interact
with other Web applications. Since
Web services are based on the XML
open standard, they can use XBRL
easily. They essentially "talk” to
each other, sharing data and calling
routines as necessary. This means
that Web services are an ideal archi-
tectural approach to automating
business processes across internal
or external business boundaries – by
using Internet technologies.
XBRL provides efficient, validated
transmission of information
between Web services. Error detec-
tion, which is built into the XBRL
specification, occurs at the source of
the data, rather than at the receiving
party. The data’s accuracy and origin
is traceable to one absolute point
within the information chain.
Data Integration Dilemmas
• Document formats such as
PDFs, Excel documents and text
files are about as useful as hard
copies.
• One-dimensional Web page data
cannot be automatically linked
to supporting details, such as
journal entries.
• Spreadsheet data is often
delayed, truncated and inaccu-
rate.
XBRL Advantage
• "Live” information.
• Underlying linkages are pre-
served in XBRL.
• References are preserved.
• Different style sheets and "con-
trols” can sort, expand, collapse
and graph information.
• Companies classify each item to
exact specifications.
• Items reach institutional
investors with no delay and no
conversion errors.
What Needs to
Be In Place
If architected properly, XBRL plat-
forms provide a clean middle tier
where financial data can be organ-
ized and utilized by a variety of
other applications. By XBRL plat-
forms, we mean a server or data-
base that stores and organizes XBRL-
enabled information so that it can be
effectively delivered to other appli-
cations and document formats.
(See Figures 3 and 4 below.)
With the right architecture, a central-
ized XBRL repository handles infor-
mation from a variety of sources
and distributes it intelligently and
efficiently to applications and serv-
ices that are XBRL-enabled.
The crucial success factor in any
XBRL solution is the capability to
convert and route financial informa-
tion derived from existing systems
without impacting them. Non-XBRL
data needs to be converted so that
XBRL-enabled applications can uti-
lize the information. This is the layer
where products like XML servers
and integration solutions are impor-
tant. The best solutions ensure that
XBRL-tagged data is kept separate
from RDBMS functionality, keeping
the underlying data pristine.
Several other pieces of the puzzle
need to be in place before an end-
to-end XBRL solution is complete:
• Taxonomies must be developed
and approved for specific indus-
tries and geopolitical areas. Coun-
tries, for instance, need to agree
on accounting principles that are
supported by XBRL.
• General ledger accounting soft-
ware vendors need to XBRL-
enable their products.
• Accounting professionals need to
provide XBRL documents as part
of their audit procedures.
With a general ledger application for
example, the user could export
data as XBRL, selecting the appro-
priate taxonomy according to
Generally Accepted Accounting Prin-
ciples, like US-GAAP, German AP,
UK GAAP, IAS (International
Accounting Standard) and so on.
Read more about taxonomies on
page 10.
Once an XBRL document exists, it
can be used in any software pro-
gram that supports XBRL. Between
applications, this import/export func-
tion can be automated and transpar-
ent to the user.
7
Problems that XBRL/XML solve:
• As open standards, XBRL and
XML allow users to use one
technology for a variety of appli-
cations without being held
hostage by one software com-
pany.
• XML-coded data in search-
engine databases allows users
to clearly specify the exact defi-
nition and context of their terms.
• Common standards simplify
application integration.
• XML automatically codes
instructions for each output for-
mat (Web, CD-ROM, printer,
mobile device etc.).
Opera tiona l
Da ta Store
+
C of A
Repor t
Repor t
Repor t
+
+
GL
+
+
Text
Text
Text
+
+
+
Sta tement
on Web
Sta tement
in PDF
Sta tement
in Print
Regula tor y
Filings
Credit
Applica tion
EDGAR
Ba nks
1 0 -K
Text
?
Toda y: Tor tuous Informa tion Supply Cha in
Other Sources
of Informa tion
The Informa tion Supply Cha in w ith XBRL
Accounting
System
Ta x Returns
Regula tor y
Filings
Web Site
Printed
Fina ncia ls
Ba nk
Filings
XBRL
Fig. 3: Typical, inefficient financial architecture.
Fig. 4: XB R L: handles m ultiple outputs from m ultiple data sources.
8
Uses and
Applications
The primary goal of XBRL is to
reduce the cost of information,
accelerate its flow, increase its use-
fulness and globalize its form and
content.
All participants within the financial
supply chain can easily interpret and
use XBRL documents. XBRL brings
greater flexibility to investment and
credit professionals working with
XML-enabled applications, financial
data warehouses and analytical
tools. The standard lends itself to
business process automation, where
integrated business rules utilize the
same data. Investors are able to ana-
lyze information without retyping
data and compare different compa-
nies based on commonly accepted
data formats. Regulators can define
specific taxonomies that describe
information and use standard XML
and Internet technologies to receive
and process that information.
By dramatically improving the speed
with which data is compiled and
prepared, the organizational costs
required to prepare, exchange, store
and publish electronic documents
are greatly reduced.
Case Studies
CREDIT RISK MANAGEMENT
The banking industry has many dis-
tinct opportunities to leverage XBRL
and numerous ways to gain effi-
ciency. When processing loans, for
example, banks often take 11 to 20
days before they can make an in-
formed decision about the credit-
worthiness of a client. In most cases,
90 percent of their time is spent on
mechanics, like verifying docu-
ments, reviewing numbers manually
and double-checking work.
With XBRL, 10 percent of the time is
spent on mechanics. The remaining
90 percent can be used at the bank’s
discretion. They can either use the
new time savings as a competitive
advantage by providing speedy loan
approvals, or they can use the time
to conduct more rigorous risk analy-
sis. Either way, the amount of time
spent on "zero-value” tasks like
gathering information and keying it
are eliminated.
For fast-track approvals, a small
business might provide a bank with
their financial information in XBRL
and receive a loan approval in cou-
ple of minutes instead of a couple of
weeks. A similar process would
occur for credit approval and lines of
credit (Fig. 5).
The use of XBRL in credit-risk-solu-
tion algorithms from noted account-
ing and rating companies would cer-
tainly speed processing for all kinds
of credit analysis.
INTERNAL AND EXTERNAL
REPORTING
Multinational corporations with hun-
dreds of subsidiaries are another
obvious beneficiary of XBRL stan-
dards. Despite the attempts of many
organizations to develop "account-
ing manuals” and issue directives
for compliance, subsidiaries
inevitably deliver information in a
myriad of forms and formats. Analy-
sis applications vary from entity to
entity, and even if a standard soft-
ware package is used, output for-
mats commonly vary. Massive
efforts to validate, normalize, correct
and consolidate information must
take place before information can be
reported with any clarity.
The effects of these practices spill
over into the realm of external
reporting. The inefficiency and inac-
curacy involved in gathering finan-
cial information on a large scale
inevitably spreads to every stake-
holder involved.
Fina ncia l
Da ta
4 . XBRL-ta gged da ta
is ma pped into
ba nk’s COA*
2 . Client da ta is
conver ted into
XBRL
How XBRL w ill Work
XBRL
Tra nsla tor
XBRL
Tra nsla tor
3 . XBRL informa tion
flow s freely a cross
the Internet
Client COA*
to IAS
Ta xonomy
Ba nk’s
COA*
Sta nda rd
fina ncia l
a na lyst
tools
5 . XBRL da ta is up-
loa ded to the
system of record
XBRL
Repositor y
1 . Ba nk client
* COA: Cha r t of Accounts,
cla ssifica tion system of
fina ncia l positioning
Common
XBRL
Voca bula r y
Fig. 5: Persistent and consistent financial inform ation
for reliable statem ents.
9
The financial industry, tax agencies,
national banks and governments
spend an inordinate amount of time
dealing with regulatory filings that
have been generated from convo-
luted processes. Reporting forms
and rules are not integrated, and
data is handled manually at every
stage in the process. The processes
are not designed for timely, sophisti-
cated analysis. As the reporting
moves further away from the corpo-
ration, it becomes much less reli-
able. In the end, investors are left
with suspect information and the
corporation may miss the opportu-
nity to develop capital investment in
line with its performance and needs.
These problems are not relegated to
large corporations, either. Govern-
ment agencies and departments of
all kinds run into the same situa-
tions, as do banks, investment firms
and non-profit organizations.
Organizations such as governments,
banks, investment firms and market
data providers that depend on infor-
mation feeds from corporations are
in the unenviable position of receiv-
ing inaccurate information from com-
panies. Their job begins with infor-
mation that has already been through
all kinds of error-prone processes.
XBRL provides for streamlined inter-
nal and external reporting processes,
because the initial financial data that
is passed around from application to
application never changes. There is
no chance for error from re-keying,
and accuracy is consistently vali-
dated at every hand-off.
From an internal reporting perspec-
tive, data used in XBRL format is
live and highly accurate, so report-
ing processes can be much less
rigid. Instead of being locked into a
quarterly scenario where data is
compiled and verified in a mad rush
at the end of the quarter, users can
examine live data on a day-to-day
basis and have confidence that the
figures are accurate and complete.
With XBRL documents, it is also
much easier to compare financial
results against other data, like his-
torical performance, competitive re-
sults and benchmarks for future goals.
BUSINESS INTELLIGENCE
Business intelligence, business per-
formance management and decision
support tools stand to gain increased
usage, performance and exposure
with the adoption of the XBRL stan-
dard. With live, accurate information
pulsing through the veins of a com-
pany, executives and managers
across the organization have exten-
sive opportunities to examine their
performance and operations. Analy-
sis, modeling, forecasting and, of
course, rapid reporting are greatly
enhanced with XBRL.
PORTFOLIO SUPPORT AND
MARKET DATA PROVIDERS
For all the reasons cited above, port-
folio support and market data become
much more accurate and much more
efficiently collected. Banks are also
market data providers. Many banks
develop their own "ticker plants” in
house, so there are ample opportu-
nities to develop XBRL integration
solutions for them.
TRANSACTION COST ANALYSIS
(TCA)
Institutions that deal with massive
amounts of trading volume, like
banks, brokers and data providers,
are constantly examining their trans-
action costs and searching for ways
to lower them. TCA solution providers,
such as some banks, offer ways to
increase execution transparency,
manage assets more effectively and
grease the financial information sup-
ply chain.
Banks, for instance, have to deal
with approximately 400 different
mechanisms for completing transac-
tions. The effort to reduce the com-
plexity of these processes is de-
scribed by the term "straight-through
processing” (STP). All parties are
interested in attaining STP, which is
one of the inherent benefits of XML
and XBRL.
10
Software and
Financial Industry
Leaders Partner
to Deliver XBRL
Solutions
Partnerships between technology
companies and financial industry
leaders have already produced
viable XBRL solutions. See
www.xbrl.org for a listing of part-
ners and descriptions of their proj-
ects. The following is a short list of
solutions that already exist or are in
development:
• Reporting and analysis solutions
for multiple organization-wide
uses, as well as for investing pur-
poses.
• Investment comparisons/investor
analysis products.
• Forecasting and planning applica-
tions.
• EDGAR and other governmental
filing solutions.
• Web services for a variety of
applications that cater to con-
sumers, corporations, govern-
ments and investment firms.
• Existing systems such as ERP,
business intelligence, business
performance management, and
enterprise-wide reporting and
analysis software are incorporat-
ing XBRL.
XBRL Technology
Overview
The beauty of XBRL is that the tech-
nology required to XBRL-enable
data resides in the middle of the IT
infrastructure. Organizations still uti-
lize their existing infrastructure, such
as back-end relational databases and
front-end applications like Excel.
XBRL is recognized as an investment
or an enhancement that provides
skill protection throughout the IT
organization rather than a replace-
ment solution that requires re-engi-
neering of systems and retraining of
users.
The following overview presents the
key components to successful XBRL
implementations and the open
source technologies that support
them. Remember, XBRL is a stan-
dard, not software. So, the “technol-
ogy” required to launch an XBRL ini-
tiative is composed of structured
agreements and software that
understands those structures.
TAXONOMIES
Taxonomies provide the rules for
defining XBRL tags. Generally
Accepted Accounting Principles
(GAAP) is a taxonomy, for example.
It defines agreements about the con-
tent and structure of various reports
created and maintained by organiza-
tions such as AICPA, the Interna-
tional Accounting Standards Board,
regulators or individual companies.
Yet XBRL taxonomies do not stop
there. Taxonomies can also include
private company aspects that refer
to and correspond to specific data
structures and business rules within
a singular organization. In either
case, taxonomy establishes agree-
ment between different parties
within a company, industry or geo-
graphic area as to the tagging and
contextual usage of specific data
items. It should be noted that the
standards an organization chooses
to enforce can pertain to anything.
The BRL stands for Business Report-
ing Language, so additional meas-
urements such as productivity, risk
and spend management indicators
can also be easily accounted for.
XBRL DOCUMENT
An XBRL document contains actual
business reporting figures, their con-
text and any relevant linkages. The
XBRL data within these documents
are defined by taxonomies. "XBRL-
aware” applications can use and
view the raw XML data which
resides in XBRL documents.
XML SCHEMA
Even understandable application-
specific tags within XML documents
make sense only if they are known
to all the users who are likely to
need them. This is the case when
user groups agree on certain docu-
ment types. They can do so using
DTDs (Document Type Definitions) –
or XML schema definitions – docu-
ment schemas that specify the valid
tags and the valid structure of a doc-
ument class. Even then, well-formed
XML documents can still cope with
unknown tags: they are automati-
cally identified as such and left unre-
solved, whereby the possibility of
incorrect interpretation is excluded.
The architecture is thus very flexible
and has been designed bearing in
mind that those users and applica-
tions that have access to all informa-
tion need to be served as well. And
since the definitions are entered in
plain text, not using cryptic control
characters, XML documents remain
readable by people. Regardless of
the author’s particular DTD or XML
schema, all XML-coded documents
can be processed, saved and distrib-
uted.
11
Error checking or validity checking is
built into XML documents through
their Schemas. When you send an
XML document to another party or
application, you also send along the
document’s Schema. This defines
how the document will be used and
interpreted.
In other words, XML Schemas
define documents in a language that
pertains to their particular usage.
Each Schema is specific to the needs
of the particular industry or usage.
XSL, XSLT, AND XPATH
The layout of an XML document is
not defined in the document itself or
in its Schema. It is one of the funda-
mental principles of XML that con-
tent should be absolutely separate
from presentation. How a document
is represented is defined in a style-
sheet that is created with eXtensible
Stylesheet Language (XSL) or possi-
bly with Cascading Style Sheets.
One document can also have several
different XSL stylesheets, resulting
in different document presentations.
XSL likewise supports a variety of
output media, such as screen dis-
play, printouts etc. In addition, XSL
enables XML documents to be trans-
lated into HTML documents. Thus,
terminal devices that understand
HTML but not XML can be sup-
ported as well. XSL specifies how
XML documents can be transformed
for display.
An XML document can be trans-
formed via multiple XSL files for dis-
play on the Web, on a mobile phone,
PDA or into a format for storage.
XML documents can be transformed
into a variety of formats in order to
be utilized by end-user applications.
These formats include HTML for use
in browsers, PDF for use in Adobe
Acrobat, RTF for text, SVG for ren-
dering graphics, and so forth. XML
can also be transformed into other
XML documents.
An eXtensible Stylesheet Language
Transformations (XSLT) file is
applied to an XML document in
order to transform it. An XSLT
processor is also utilized. XSLT files
consist of templates that specify
how each node of the source XML
document should appear in the des-
tination document. XSLT is an XML-
based language whose syntax and
semantics are defined by a W3C
specification.
XSLT uses the XML Path Language
(XPath) to perform queries on an
XML document in order to specify a
particular part of the document.
XML ADVANTAGES OVER RELA-
TIONAL DATA STRUCTURES
XML is designed for Internet Proto-
col (IP). In contrast, the binary for-
mats and proprietary mechanisms of
relational and object-oriented data
prevent them from being easily
accessible over the Internet. In many
cases, gateway software and addi-
tional mechanisms are required to
access these formats over the Inter-
net – and it is usually through a sin-
gular transport protocol, such as
HTTP only (no e-mail or FTP, for
instance). However, with an XML
server and the right integration
tools, non-native XML data can be
"staged” in a layer between the
RDBMS and XML applications and
services.
Established vendors such as Soft-
ware AG provide native XML data-
bases that integrate both XML and
non-XML data. This provides an
extensible "XML view” on all
needed information, without chang-
ing the data structure (or data
access layers) over and over again.
In contrast, relational database ven-
dors are developing schemas for
converting data to XML within the
RDBMS, a daunting task.
So, ideally, XBRL-enabled solutions
will be built on an XML server plat-
form that performs all the necessary
integration, conversion, translation
and routing between the database
and application layers.
12
Software AG’s Role
Software AG is one of the primary
drivers of XBRL and XML technolo-
gies. We make the industry’s leading
XML server, Tamino, and the Soft-
ware AG Suite for XBRL helps com-
panies build XBRL solutions from
existing IT investments. Hundreds of
worldwide customers are already
using our XML core technology to
process and store XML documents.
Simply put, Software AG provides
the tools and services necessary to
analyze, transform, route and store
XML information – the key to the
entire information exchange infra-
structure (Fig. 6).
The Software AG Suite for XBRL
delivers the methodology and prac-
tical tools for implementing and sus-
taining XBRL initiatives. Project
management, business and techni-
cal consulting, implementation sup-
port and tools and training are all
part of the Software AG program.
Software AG’s methodologies are
designed to solve special issues
within the financial information sup-
ply chain, like credit risk manage-
ment, internal-external reporting
and regulatory filings. Our solutions
provide a smooth transition to native
XBRL without jeopardizing or affect-
ing current business operations. The
suite for XBRL is based on W3C
XML standards and offers an open
framework for plugging in custom
components and other third-party
solutions.
Software AG’s Suite for XBRL sup-
ports the automation of:
• Non-XML conversion to XML
using parsers (for text, PDF, MS
Word, print files, etc.)
• XML data transformation to XBRL
format using XSLT
• Data extraction using adapters
(RDBMS, SAP, Oracle Financials
and others)
• XBRL data encryption/decryption
and digital signatures using XML
Signature and XML encryption
technology
• Validation of XBRL using tax-
onomies and specific business
rules
• Storage of XBRL instances and all
related XML documents such as
linkbases and stylesheets using
Tamino XML Server
• Retrieval of XBRL instances for
dynamic publishing (transforming
XBRL with XSLT to other formats)
• WebDAV for collaborating on
financial data
• Web services (SOAP) for front-
end financial analysis (e.g., Excel)
and validation of XBRL instances
A global Software AG XML/XBRL
Competence Center has been estab-
lished to provide state-of-the-art
competence. The primary goal of
the Competence Center is to transfer
knowledge to participating organiza-
tions, offer support for XML/ XBRL
solutions and continue to build upon
the success of the standards.
XML standards have already
demonstrated significant ROI for
numerous technical and business
applications. XBRL is simply a busi-
ness extension of the XML standard.
Investment returns within the finan-
cial community are already begin-
ning to materialize from simple
implementations.
Client A
ERP System
Client B
ERP System
XBRL
Ada pter
Client C
Corpora te / Ba nk
Suite for
XBRL
“Sta nda rd” repor ts,
text, other forma ts
XBRL Documents
XBRL Documents
Fina ncia l
repor t
(print)
Ma nua l
input
HTML
XBRL
Form
Forma t
Conver ter
XBRL
XBRL Documents
Firew a ll
ERP System
Fig. 6: An extensible architecture: all kinds of formats can be embedded into the XBRL system
Conclusion
With this analysis in mind, what is
the next step for IT managers whose
organizations wish to explore XBRL
further? For starters, you can investi-
gate your financial and ERP software
applications to find out if they are
XBRL-enabled. Also, check with ven-
dors to see if plans are going for-
ward for future versions that will
include support for XBRL docu-
ments. Then, begin to survey inter-
nal business processes and identify
which business reporting areas
might benefit from XBRL. Extend the
survey to include external processes
and key partners, and then start to
consider pilot programs for XBRL-
enabling key processes within your
organization.
Of course, plan on adding to your
XBRL background by reading up on
the latest developments. We have
compiled a list of resources below.
Resource Recom-
mendations for
Further Inquiry
• www.xbrl.org
•http://web.bryant.edu/~xbrl/
index.html
• www.zapthink.com
• www.softwareag.com
•http://www.microsoft.com/
msft/xbrlinfo.htm
•http://www.ey.com/global/
content.nsf/International/Issues_
&_Perspectives_-_Web-Enabled_
Business_Reporting
• www.ey.com -- Search for term
"XBRL”
• www.pwcglobal.com -- Search for
term "XBRL”
Additional information on Software AG’s
XBRL offering can be obtained at
your local Software AG subsidiary
or via e-mail at:
[email protected]
13
14
Softwa re AG
Corpora te Hea dqua r ters
Uhlandstraße 12
64297 Darmstadt/Germany
Tel: +49-61 51-92-0
Fax: +49-61 51-92-11 91
www.softwareag.com X
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For hands-on experience:http://www.softwareag.com/entirex/download
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Tamino Community:http://www.softwareag.com/developer
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