XML for business reporting gains momentum
Two years ago I wrote an unflattering report on XBRL (eXtensible Business Reporting Language), an emerging standard that aims to improve the speed, accuracy, and transparency of business and financial reporting. I applauded the goals, as we all should in the wake of Enron and other scandals, but worried about the complexity of the 151-page XBRL specification, its aggressive use of esoteric features of XML, and its reliance on accounting "taxonomies" defined by committees. I've too often seen these kinds of ambitious efforts stumble and give way to simpler approaches. SGML gave way to XML, for example, and while XML itself offers many advanced features, its most successful application -- RSS -- uses none of them. Would XBRL wind up being used mainly by what one wag called a "master race" of consultants and accountants? [Full story at InfoWorld.com]
In last week's podcast, XBRL's inventor, Charlie Hoffman, assured me I'm not the only one to express these concerns. Just this week, for example, when the SEC announced its Request for Proposal for the development of XBRL-based software, Dave Winer echoed them:
Sounds like the SEC is wanting to re-invent RSS?
Although I felt and to some extent still feel that way about XBRL, I have a much more complete understanding of the issues after researching, recording, and editing the podcast. It runs way longer than the others in my series, almost 70 minutes (edited down from 90), but I think the material warrants that lengthy treatment. Charlie Hoffman doesn't want to reinvent RSS, he wants to reinvent accounting, and he speaks as an accountant not an XML geek.
 | << Friday, August 11, 2006 >> |
A conversation with Charlie Hoffman and Brian DeLacey about XBRL
Charlie Hoffman, the director of industry solutions for UBmatrix, is acknowledged as "the father of XBRL" -- the eXtensible Business Reporting Language to which I had a bit of an allergic reaction when I first encountered it a couple of years ago. But when Brian DeLacey, a researcher turned XBRL entrepeneur, suggested that I interview Charlie I jumped at the chance. In this week's podcast the three of us discuss the history of XBRL, its relationship to XML, its goals, its successes, and its challenges.
In next week's InfoWorld column I'll write more about what I learned from this long and fascinating conversation. But in a nutshell, though my criticisms of XBRL's complexity were and are valid -- as Charlie Hoffman admits -- the real story is (as always) much more nuanced. The inherent complexity of accounting standards, the competitive forces at work in the realm of global finance, the regulatory pressure being brought to bear -- these and other factors form the context in which the development of XBRL must be understood.
It's worth noting that while XBRL is a complex beast that makes aggressive use of certain advanced features of XML, Charlie Hoffman isn't (or anyway wasn't originally) an XML geek. He's an accountant who, as you'll hear in this interview, is deeply grounded in the practice of his trade. That makes this story an interesting contrast to the development of many of the web services standards I've studied.
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