Darren Peterson VP of Product Marketing EDGAR Online

In today’s market, compliance regulations have forced companies across all industries to collect, store and share business data. In response, thousands of organizations have adopted the eXtensible Business Reporting Language (XBRL) to standardize the way in which data is expressed. And while a growing list of regulatory bodies such as the Securities and Exchange Commission (SEC), the Federal Deposit Insurance Corp. (FDIC) and central banks around the world have adopted XBRL-based reporting, not all companies have put that data to good use.

The efficiency, accuracy and transparency that comes with the XBRL mandate represents significant opportunities for businesses. The power behind this software standard is in the adaptability of its data model and self-validating and portability characteristics, offering organizations a way to create, validate, collect, manage and analyze data. As the volume of big data continues to grow, so does the challenge that companies face in leveraging that information for greater business value.

Every department within an organization – from legal, sales and marketing, to accounts receivable and finance – can benefit from this information. The sales team can examine data to determine which prospects have the most money to spend. The legal team can analyze disclosure filings to see how other companies manage processes, and then tweak their own procedures to incorporate the best practices of other organizations. The list goes on. When all of this business intelligence is combined, it provides executive teams and boards with valuable insight to make better, more informed business decisions.
 
Currently with budgets continuing to tighten, organizations are seeking cost-effective tools and models that give each business function access to data that can be mined to gain a competitive advantage in the marketplace.

Making the case for wider enterprise access to XBRL data 
With a format such as XBRL, the value comes from both the taxonomy of the data and from the content the data conveys. A standard like XBRL creates value because users can easily exchange data between organizations and evaluate the context and organization of the information, helping users to interpret the data to answer mission-critical questions such as:

• What are the risks associated with specific decisions and future actions?
• How are competitors investing and spending their capital?
• How financially sound are the companies within the supply chain?
• Who is investing within similar firms in the industry?
• What disclosure processes do others in this industry follow?

Beyond finance, business users can take XBRL data from any number of companies, find their primary financial statements, and use that data to make more informed business decisions. With the initial compliance regulations over the XBRL mandate now met, organizations are beginning to understand the true value of producing data using an open software standard.

Business users who want to convince the corner office about the real payoff of XBRL can call on the following points to make their arguments:

Data on its own is worthless. If you can’t analyze it, you can’t act on it. Data by itself isn’t that important or useful. There is always someone out there who can collect it; but how do you use and analyze it? It’s not just the content, but the story the content tells that matters. If you’re not giving your decision-makers keys to data-based stories, you’re wasting the investment the company made in the data in the first place.

With the right analytical tools, business users can get what they need from the data, rather than just what the data source wants people to see. Depending on your business goals, your analytical interests might be different from those of the companies that submitted the original data. Make sure your stakeholders have a tool capable of fulfilling the specific research needs of your organization.  Look for solutions that allow users to compare and contrast numerous firms, allow for simple and complex modeling and link back to the SEC source document.

Big data is a big issue in the market today, but the real challenge comes from structured versus unstructured data. When teams access both in a meaningful way, better decisions are made. Everyone around you may be talking about big data, but this isn’t the most likely source of trouble you’ll find when it comes to extracting value from the numbers. You’re more likely to face difficulty in analyzing structured versus unstructured data; this includes customer data, financial filings, employee information and operations data. The right technology can solve problems by helping key department players analyze massive amounts of mixed data to make strategic decisions.

There is no obvious “Google of the financial world.” Enterprises must innovate internally if they are to stay ahead of the information curve. When it comes time to learn how to properly analyze the massive stores of business data at their fingertips, professionals in non-financial departments might ask, “Why can’t I just Google this?” The answer is, “Because there is not a Google-equivalent in the market data world.” How many answers are there to the question, “What was Microsoft’s total revenue for 2011?” The answer of course is one.  Try asking Google this question. It returns nearly 3 million potential answers.

Whether your company has a big budget or a small one, it must comply with tightening regulations. To reap the benefits of these rules, a companywide commitment to data analysis is critical. Regardless of your size, financial data is a part of your regulatory and competitive landscape and companies of all sizes face a tremendous challenge. Although you think you may not have the resources to devote to financial analysis, you need to report to your stakeholders and satisfy regulatory requirements. Businesses can now opt for complete packages that deliver disclosure management, XBRL capabilities and data analytics all in one.

While the XBRL mandate might initially have felt burdensome to some companies, today it should be viewed as an opportunity to level the playing field. Everyone has the same information, in the same format, with the same possibility to extract business value. Some  companies are even making XBRL their internal data format so that they can access great quantities of information in applications, such as Excel, inside of their databases and end-user tools.

Analytics are essential in terms of corporate responsibility. Analytical tools help companies meet their responsibilities to understand where they fit into the market and convey that to the board and shareholders. They need the answers to the questions they will be asked. “You look a lot like Company B. How are you different?”“How is your market segment performing?” “What makes your company the most desirable investment choice?”Such tools help chief financial officers (CFOs) identify anomalies so they can proactively answer questions.

Financial data can fuel better legal decisions. Business data has value to those working in the legal department. They can use it to more easily audit compliance with accounting and disclosure rules and to research and create disclosure processes within the company.

Sales and marketing teams can mine data to make more informed campaign decisions and close more deals. From a sales and marketing perspective, analysis of the data can help team members identify the most promising prospects. Additionally, sales and marketing users can read the data to inform the way they market and sell the company to particular investors. Who is buying companies that look like yours? If your top customers left, where did they go?

Let’s consider a more specific example. Imagine that your company is operating in Michigan, and you want to expand into Indiana. Your sales and marketing teams conduct a search to find information about the Fortune 1000 companies in Indiana that you decide to target. Your team could easily locate the data, available in XBRL databases, and insert it into Excel to build richer, more accurate models that would serve as the foundation for a more successful expansion strategy.

There is value in the data for professionals working in accounts receivable. The greatest risk to high-growth organizations is due to the speed of expansion. Businesses fail when their account receivables grow, but the funds don’t come in quickly enough. When cash flow is neglected, enterprises fold.

With access to data analytics tools, accountants gain insight that could prevent account receivable problems and avoid balance sheet trouble. For example, users in this department can analyze business data to determine which vendors and customers are low on cash. With that information accounts receivable can then determine what that means for the company and escalate concerns to the executive suite.

The real business value in the data mandate
Companies that have been compelled to invest in XBRL data should now look at the business opportunity before them. What’s the real business value of this standard? What benefit will your company see if you only make it halfway down the road to XBRL adoption? XBRL allows organizations to build knowledge-driven systems and more easily provide semantic analytics using information from a wide array of sources. Confining that opportunity to the finance department is a mistake.

Beyond the CFO’s suite, this data offers departmental decision-makers timely information that can be used to make both automated and human business decisions. Today, enterprises spend significant amounts of time and money combining, transforming and making sense of data. This software standard allows organizations to shift the focus from data manipulation and preparation to information analysis. The technical benefits of the XBRL standard pale when they are compared to the potentially vast business benefits.