Bob Schneider is a Partner in 
Wilson So is the Director of Hitachi Consulting Corporation XBRL: Impressive in the End, but Long and Slow in the Start
Written by Matt Kelly Posted on January 8, 2009
Matt Kelly is editor-in-chief of Compliance Week, a magazine and online newsletter on corporate governance, risk, and compliance. Prior to his role at Compliance Week, Kelly was a reporter and contributor on corporate compliance and technology issues for magazines such as Time, Boston Business Journal, eWeek, and numerous other publications.
Well, after three years of hype and months of irritated anticipation, the XBRL community finally has what it wanted: an order from the U.S. Securities and Exchange Commission that mandates use of XBRL technology in financial statements.
Somehow, though, I suspect the revolution will be neither tagged nor televised.
I applaud the SEC for adopting an idea that’s noble in theory. When I first started paying heed to XBRL in 2005, I dismissed it as a highfalutin IT dream with little real consequence to investors. Three years later, I stood corrected; once XBRL reader software was produced, I could see that it had some mighty attractive features and capability — but it still seemed to have little consequence to investors.
I tend to divide the investor community into two camps: the individuals who shout about stocks on eTrade and track their portfolios on Quicken software, and the professionals who do all manner of secretive analysis before making block purchases. And in three years of reporting about XBRL, I’ve heard nobody in either camp demand that companies start publishing financial data in XBRL. At best they’re enamored of the idea once I explain how XBRL works, but that’s where it begins and ends.
On the corporate side, executives’ attitudes have shifted in the last 12 months from a cynical skepticism to something like a benign curiosity. Now that companies have had several months to study the SEC’s mandate, few say they can’t achieve compliance; they just don’t feel much urgency to do, beyond the SEC telling them to comply. All those sessions at XBRL International conferences touting the wonders of interactive data for internal reporting and operations? Not on anyone’s radar screens, especially in these cost-conscious times. The SEC has mandated XBRL filings, so companies will prepare their reports, stick some XBRL instance documents at the end of their filings, and be done with it.
None of this is to say I expect XBRL to die on the vine. On the contrary, I believe XBRL is a technology with amazing potential. I believe the SEC mandate — phasing in XBRL over three years, with the largest 500 public companies going first — is a prudent approach, and one that large U.S. companies will certainly be able to handle by 2010.
But we’d all do well to remember 1993, when the techno-geeks in Corporate America started chirping that we all needed to create these newfangled things called “websites.” It took 10 years for companies to digest the full potential of websites and stamp them onto the corporate DNA from Day 1. (Lots of companies still haven’t managed that, come to think of it.) We should expect a similar adoption curve here: impressive in the end, but long and slow in the start.