Why Built-in vs. bolt-on for XBRL and Disclosure management

As Greg pointed out in his recent An other event, amidst all the technology innovation discussion at sap teched in Vegas, a bunch of more business like folks came together in the cities of New York, Chicago and San Francisco to discuss how companies are solving their XBRL and Financial Reporting compliance problems through a new set of solutions called Disclosure Management. Gartner identifies this as a solution to solve the last mile of finance and states that it can result in 30% cost savings.

In these enlightening session, Mike Willis (Partner PWC, and founding chairman of XBRL) shared some great perspectives from the interactions he had from financial controllers of Fortune 100 companies on how this is being seen as a more ‘Supply Chain’ standardization angle rather than being a basic compliance angle. Essentially the bolt-on approach that is managed through outsourcing this compliance requirement is resulting in difficulty to quickly manage change and lacks an integrated approach to get the financial results reported from single version of truth. He describes this by comparing this to supply chain and brings up the analogy of how bar codes were managed initially only at the stores that did not allow efficiencies, but later bar codes were introduced into shop floors resulting in an integrated and effective supply chain optimization. Most companies are looking at going for a more standardized, integrated ‘built-in’ approach for financial reporting with disclosure management tools that they can manage very effectively.

This is where Mike credits SAP Business Objects Disclosure Management as a very effective and collaborative tool that integrates into the whole financial close process.

The below two pictures would indicate how companies, especially the ones that run SAP, are looking at including this built-in the process rather than looking at it as an additional tagging intiative.

Discussion here is around what is automated and what is typically not.  The last mile is where manual processes are pervasive and in ‘white’ in the below. Add to that tagging via the outsourcing approach leads to increased cost/time. The value proposition for DM and the business case is in building in the tagging process rather than adding it on. 

In the event, we also had the pleasure of listening to Jon Church, Managing Director of Cundus on how some big and large companies such Siemens and GEA have already used Disclosure management solution and built-in the same into their financial reporting and disclosure management process.

This solution is becoming a must have for every finance office as it allows for collaborative collection of financial and non financial results, including getting the same out in XBRL format.

Certainly organizations are moving to built-in approach with Disclosure management solutions to cover last mile of finance.