Bob Schneider is a Partner in 
Wilson So is the Director of Hitachi Consulting Corporation XBRL: An Interview with Trevor Pyman
Trevor Pyman is Director and CEO of XBRL Australia Ltd. and an independent consultant to PriceWaterhouseCoopers (PwC). He has been heavily involved in the development of the XBRL taxonomy for Australia’s Standard Business Reporting (SBR) program.
His comments are only his personal views, and do not represent those of the SBR program, PwC, or anyone connected with the SBR program.
1. What is Standard Business Reporting? What role does XBRL play in SBR? Is it possible to have SBR without XBRL, or are the two inextricably woven together?
SBR is a much broader concept of government agencies collaborating to improve business to government reporting. It could theoretically exist without XBRL, but the plain fact is that it could have occurred decades ago if that were the case. XBRL facilitates SBR by removing two significant roadblocks to inter-agency cooperation: (1) the need to agree on terminology between agencies and between business and government; and (2) the need to agree on the classification of things between these parties.
Obtaining agreement between government agencies on anything is a substantial task, so the less such agreements are needed, the greater the chance of success. The use of jargon is a natural human evolution in any economic activity, so it is counterproductive to try to eliminate it. Jargon is created to facilitate understanding, and XBRL taxonomies are likewise engineered to do the same thing. Allowing data concepts to be defined by many different references, each tailored to a specific audience, helps people understand how to use computers to share information. This runs counter to traditional IT thinking that dictates that every concept must be uniquely defined and everyone needs to agree on the definition.
XBRL says that you only need to agree that the concept is uniquely identified (so a computer can deal with it) and the people are free to use whatever human language suits them to describe it.
2. The SBR Conference 2009 included key figures from both the Australia and Netherlands SBR programs, as well as XBRL experts like Mike Willis. Do you foresee the formation of an international organization, perhaps along the lines of XBRL International, to facilitate adoption of Standard Business Reporting?
I would like to see that happen because it makes sense. SBR is a concept that is applicable to many governments and the infrastructure needed to implement it is common.
Little is gained by going it alone and repeatedly reinventing the wheel. Moreover, every new government that takes it on learns from those who went before and does it better, allowing the earlier implementations to evolve as well.
3. SBR implementations are currently being pursued in Netherlands, New Zealand, and Singapore. But the most ambitious adoption, beginning in July 2010, will be in Australia. Led by the Treasury, it will include the Australia Prudential Regulation Authority, the country’s Securities and Investments Commission, Australia’s taxation office, and the state and territory government revenue offices.
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What factors do you see in Australia’s political and business environments that made it particularly hospitable for an SBR implementation on such a broad scale?
Reducing reporting burden is a common theme with governments around the world and has been for a while now. Economic downturns also bring the focus back to costs, and SBR is mostly about reducing cost in an area that adds little to business objectives. Not insignificantly, the Netherlands experience took much of the bravery out of the decision for Australia.
The key in both countries was political will. The endorsement and public support of a key political sponsor is essential. The technology is simple – the politics are highly complex.
4. As expansive as the planned adoption of SBR in Australia is, it is still primarily confined to fiscal and securities regulation functions. Longer term, do you see SBR being adopted by the Australian government and states in diverse areas like housing and law enforcement? What are the roadblocks to more widespread usage in government?
The biggest roadblock to government usage is probably government itself. There is a lot of talk about expanding the SBR approach into other areas, and this makes a lot of common sense – the problems it solves are common to most areas of information exchange. However, there is an enormous investment in the status quo. Many in powerful positions are huge beneficiaries of inefficiency and shifting the mindset is really hard, especially when very few have been exposed to the ways things CAN be done, rather than the ways things are done.
People who advise government have a vested interest in maximizing their time (and chargeable hours) in solving government’s problems, so efficiency and speed are often sacrificed to self interest. Proprietary solutions lock in future revenue streams for the provider that solutions like SBR would otherwise open up to competition through their use of open standards. As a new player, SBR-based solutions have a long way to go to break down long-established and well-financed barriers.
5. In a recent post on this blog, Nils-Bro Müller of XBRL Denmark wrote, even though XBRL’s benefits are well known, "Nobody seems to file in XBRL before it is mandatory to do so." However, SBR adoption in Australia, beginning in July 2010, will be on a voluntary basis. Are you concerned that Australia "will build SBR and no one will come"?
There is serious doubt as to whether SBR will achieve its target implementation rate without a mandate. The software vendors have long been asking for a mandate so they have certainty of a market for the functionality, but the SBR Program has resisted this.
One “problem” is that the reporting burden imposed by government is not that bad. While several hours of wasted time per quarter certainly adds up to a large amount of wasted time across the whole economy, it does not add up to a lot of wasted value. Small business people do not value their own time the way economists and consultants do, so they are unprepared to pay for software that gives them this time back.
Also, the government burden is only part of the reporting cycle in some cases and so automating only a part of the process does not create the efficiencies business is looking for. As soon as a manual step is introduced anywhere in the chain, the bulk of the benefits are lost.
I hope that enough vendors are encouraged to get into the market with XBRL-aware functionality that does more than just convert the existing output into XBRL format. Hopefully they will “see the light” and begin to use XBRL to make the entire process more efficient. Other uses (like online real time loan approvals) can then be offered that do resonate with the marketplace and thus kick off a virtuous cycle of adoption and benefits realization.