Bob Schneider is a Partner in 
Wilson So is the Director of Hitachi America, Ltd. XBRL: A Consultancy Conspiracy?
Written by Bob Schneider Posted on January 11, 2008
A recent CFO.com article titled XBRL Skeptics Abound explores the arguments of XBRL detractors. Among its main themes is that interactive data, in the view of one accountant, is “a consulting product…a product in search of a market being pushed by the people who have an interest in pushing it.”
The introduction of important technologies usually produces both winners and losers. Those who stand to gain naturally tend to become proponents, and those who stand to lose become critics. But the argument that XBRL is primarily the handiwork of a consultancy conspiracy is not convincing. Here’s why:
(1) XBRL.org is a truly global consortium with jurisdictions that range from Canada and South Africa, to Austria and Israel. Some countries where interactive data has made substantial progress China, for example are certainly not those we associate with having large, organized consulting constituencies. The traction XBRL is gaining in so many countries in areas extending from financial reporting to microfinance to sustainability reporting belies the notion of interactive data being merely a creature of powerful consulting interests.
(2) Among XBRL’s supporters are certainly organizations and companies that will benefit monetarily from adoption. But its proponents also include important entities — the IASB, the CFA Institute, the accounting group at Bear Stearns whose voices wouldn’t seem to be modulated by a profit incentive. By the same token, certainly some of the participants in the SEC’s VFP have been companies that stand to gain from interactive data adoption. But VFP filers also include strong backers like United Technologies whose product lines wouldn’t seem to derive any benefit from XBRL adoption.
(3) Consultants are especially enamored of innovations that produce strong, continuing revenue streams for their services. But the evidence thus far indicates that an XBRL mandate would not fit that description. At the SEC’s XBRL roundtable last June, most VFP participants reported moderate initial investments, sharp learning curves, and small incremental costs. Other observers think these expenses may yet prove substantial. Still, at this point an XBRL mandate wouldn’t seem like a particularly lucrative development for the consulting industry.
(4) The argument of “it’s only the consultants who want this thing” is especially powerful when the benefits of a new law, technology, etc. will be delivered to just a small group of recipients. But even if we limit the discussion of XBRL to financial reporting alone (i.e, just XBRL-FR and not XBRL-GL), interactive data addresses the real needs of a wide range of users.
Financial regulators want to become more productive to meet mandates for more frequent analytical reviews of company statements. With the downsizing of equity research budgets, securities analysts are under pressure to follow more companies at reduced cost. Similarly, smaller public companies that are not receiving coverage want to find new, more economical ways to make their investment case to the financial community. And the additional transparency that XBRL offers all investors is now widely perceived as an important societal goal. Interactive data is not a magic potion for all the problems of these users. But it does have substantial potential for numerous beneficiaries.
(5) XBRL is merely one small element of a much greater movement toward enhanced information management. The exponential expansion of data, coupled with the demands on organizations to organize that data for both internal and external needs, compels entities to explore new ways to structure information. This pursuit often entails metadata and XML solutions. In the financial world, XBRL is just one of several XML languages being developed. The impetus toward adopting metadata solutions for information management derives from forces far more powerful than the consulting industry alone.
In short, I think the question of whether XBRL implementation is being primarily driven by the consulting industry is completely legitimate. But it’s clear to me that the answer is No.