Written by Bob Schneider    Posted October 9, 2006

There are two varieties of interactive data. One is XBRL for Financial Reporting (XBRL-FR), which is used to express the summary information found in financial statements and has only a limited amount of detail.

The other is XBRL-GL, which was designed to represent any data item that that can be reported through a general ledger. XBRL-GL can detail data and documents, including accounting entries, trial balances, payroll info, receivables and payables, inventories, statistical indicators, and more. It can bring together data from disparate operational, reporting, and accounting systems and consolidate it through Web Services, high bandwidth networks, and petabyte storage systems. It is therefore ideal for system integration, consolidation, data migration, and data archiving.

In the interactive data world, most of the focus thus far has been on XBRL-FR; but within the organization, XBRL-GL will be of much greater relevance. Traditional management accounting, with its emphasis on the allocation of costs among company functions, tends to erect walls between departments that create information silos. The adoption of XBRL-GL can break down the barriers in function-based organizations and enable data integration. As the emphasis of management accounting shifts to the analysis of business processes and workflows throughout the organization, the role of cost accountants is being transformed. Rather than focus on cost allocation, the emphasis will be on analyzing the firm’s business processes to ensure the timely flow of quality information necessary for effective operations.

Moreover, XBRL-GL is one of the pillars of Next-Generation Architecture which, coupled with Web Services and Service-Oriented Architecture (SOA), allows data to perform multiple business reporting tasks, both within and outside the organization. Potentially, anyone will be able to access, edit, and validate data wherever it resides and from whatever application it came from.

Can ERP systems, as they are now constituted, offer similar results? ERP is essentially a closed system that does not work well in this kind of distributed environment where data from different systems serves users both within and outside the entity. Even in high-level ERP systems, there tends to be “spreadsheet sprawl” and other operational tools that require manual integration. XBRL, in contrast, integrates information systems to serve both internal and external users.

It should be emphasized that XBRL is simply a data standard, and thus interactive data itself is not a replacement for the infrastructure of ERP systems. But XBRL can be used successfully both in conjunction with ERP and as a means for implementing ERP alternatives.

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