Supply Chain Unmet Need

Notes captured from the XBRLShow, interview with Dan Roberts of Grant Thornton and Chair of US XBRL Steering Committee.

Information value chain . . . users of information from inbound receivables clerk to the bank and the auditor and accountant to the investment analyst and the investor – throughout that information value chain we find gaps in the smooth flow of information. . .the aggregation and amalgamation of information, we find re-keying, we find proprietary systems with uncomfortable and opaque interfaces, and generally we find that systems that are designed to serve the needs of all the individuals are optimized for those individuals needs and are therefore disconnected from the sources of information downstream and the systems upstream because they focus on the particular users in the value chain. If the information can be provided in a tagged file, the recipient can decide what they need.

Opportunities for software vendors – Improve quality of rendering, analysis, convert and present XBRL to users in a form that end users can relate to. .

Perspective from users - first adopters will be regulators, we see that around the world.

Regulators understand that they need access to massive amounts of information and data, that they have limited budgets. SEC is looking more and more towards interactive data.

SEC Cox: You should know that every appointment I make will be consistent with this vision of tapping the possibilities of interactive data.

Tagged information will enable regulators to do more for less. Mandate from the markets and from Congress as specified in SOX 408 – puts the onus on the SEC to analyze ALL filers with a frequency of not less than 3 years and all filers with a higher risk (based on 4-5 criteria). We’re now looking at a situation where the SEC is mandated to look at 37-38% of all filers once a year compared to around 18% (at best) at the moment. Cannot achieve the mandate of protecting investors, encouraging capital formation and promoting healthy markets without making a major change in how they operate. Regulators will lead, software vendors will follow, and analysts will follow. ERP will build XBRL into their products. Move to open standards . . . businesses recognize the information value chain advantage that this will give to them.

Lender liquidity example – driven by Basel II, currently outside the US – focused on liquidity and statutory reserves. Banks need to stratify their risk, their lending portfolio into “high, low, medium.” Need to hold different levels of bank reserves depend on the lending portfolio or risk. Risk premium built into the loan based on the age of the information provided. Time the credit systems are risk ranking the company it may be moments to weeks and months to re-key it into their internal systems. Company may have turned a corner on their business in that timeframe. If the company can provide 30-40 data points into an electronic lockbox so that you’re not seeing deep into my systems but you’re seeing important financial information – inventory, HR, pension obligations extracted from ERP/Financial Management Systems and put these numbers into an e-lockbox on a regular weekly basis. Risk inherent in the latency of data virtually disappears. Bank can see how the company is doing in real time. Company wants the bank to take out of the cost of funds to me the inherent risk premium and the company will go to all the major banks that provide credit risk and the banks that take the most advantage ..the best recognition of reduced risk to the bank will be given the business. Bank can populate their risk model now. I want to make the ability to do this to all my corporate customers for my loan portfolios. So it will make funds management more efficient. More capital to work in the right places, less dead reserves.

The gotcha . . non trivial implementation of technology and infrastructure. Hairy, ugly example in the past . . . but getting less hairy and less ugly. Technology has to provide a robust ROI.