Bob Schneider is a Partner in 
Wilson So is the Director of Hitachi Consulting Corporation XBRL Cuts Costs by Enhancing Supply Chain Processes
Written by Mike Willis Posted October 14th, 2006
Mike Willis served as the Founding Chairman of XBRL International. He is a partner with PricewaterhouseCoopers and has more than 24 years of accounting experience.
One day, while discussing shareholder communications with a client, I proposed they consider reporting in a new Internet language format for their annual and quarterly reports. My initial argument was that this new language would increase the visibility of their reports and therefore was good for shareholders. Management countered that they mailed their reports to all shareholders and were not convinced of the transparency argument. As a result, I asked “how much does it cost to print and mail all of your reports to shareholders?” The answer: “$750,000 annually.”
Finally!! A concept that any accountant can understand: cost reduction.
We agreed that publishing company annual and quarterly reports on the company web site in the new language — which, as you may have guessed, was HTML — would save them printing and mailing costs. But that was over 10 years ago. What does that have to do with XBRL The message is the same, except that the impact is more pervasive across a broader range of compliance processes and the cost savings are larger.
XBRL is designed to enhance recurring supply chain processes including access, validation, analysis, and reporting, regardless of whether they occur at the investor, regulator, corporate controller, or corporate operational levels. XBRL provides a software application agnostic platform to describe business information and critical relationships, thereby enabling the information to be more efficiently transferred, managed, validated, analyzed, and reported across the diverse set of software applications used by enterprises and their stakeholders.
How significant are the cost savings that a company might expect? It depends on the current degree of manual controls and interfaces applied to process business information as it moves across, between, and around the disparate applications. You can assess this by looking closely at your own processes to determine the level of:
(1) Manual information access points. Spreadsheet templates are a typical indicator;
(2) Manual validation efforts. Typically the responsibility of the user rather than the preparer, and often occurring at the data warehouse;
(3) Manual analytical and business rules. Often hard-coded within disparate software applications (e.g. a spreadsheet macro) requiring significant resources to manage, audit, and/or change;
(4) Manual compliance quality control assessment processes. Performed repeatedly for each and every report;
(5) Time and resources applied to these process areas.
The benefits realized are a continuation of the cost savings generated by HTML a decade ago — except they are now focused on business information and are thereby more pervasive across the full range of supply chain processes, and not just printing and delivery. To determine if XBRL might be useful to your company, assess your current processes closely for manual interfaces, manual process steps, and manual controls. There may be more opportunity for cost reduction than you think.