Jeff Thomson – Vice PresidentInstitute of Management Accountants (IMA)

201-474-1586

A Practitioner’s Perspective: How XBRL Can Enable Decision Analytics

April 27, 2005

“It’s not the strongest of the species that

survive, nor the most intelligent, but the

one most responsive to change” ….

Who Said It ????

A Practitioner’s Lament: Where were you when I needed you ? ?

XBRL-GL Enablement for Decision Analytics

Newbie Perspective: XBRL Issues and Challenges

IMA’s Role in Transforming Business Reporting

AGENDA

A major telecom successfully implemented two major decision support capabilities PRIOR to the height of their popularity: An integrated set of measures for decision support, planning and

control (aka Balanced Scorecard) Data Mining

But, these successes were not sustainable Punch Line: Future Sweet Spot for XBRL-GL ?

A Practitioner’s Lament

A Practitioner’s Lament (cont’d)

Decision Tool Initial Success

Why Not Sustainable

XBRL-GL enablement

Balanced Scorecard, aka, on-line Dashboard

Deployed in 60 days; financial & non- financial measures: customer, people, operational, financial (“EVA, PVA, CVA”).

Cost prohibitive – integrating transaction & summary data from disparate systems (CFO, HR, etc.)

Tagged relational data easier to source and integrate within a “domain”. Filtering/alarm functionality.

Data Mining Identified quality sales force leads by correlating seemingly unrelated transaction and summary detail across databases.

Cost prohibitive – data reprocessed and transformed. HUGE issue – consistent Customer Identification across databases.

Data re-processing and re-keying minimized or eliminated. Consistent Customer tagging across databases enabled (maybe not solved) by XBRL.

XBRL seems to be a “natural” for helping to transform the internal information supply chain (but much work needs to be done):

1. Business Reporting

2. Decision Analytics– Balanced Scorecards/Integrated Performance Mgt– Data Mining– Continuous on-line auditing– Business Activity Monitoring (BAM)– Other web based auditing and modeling capabilities

XBRL – GL Enablement for Decision Analytics

How do you efficiently move detailed information between disparate accounting systems?

How do you deal with different transactional XML standards and efficiently map them to GL systems?

How do you represent the information in back-end accounting in a standardized format for data transfer, archival and audit purposes?

How do you drill down from XBRL reports to the underlying detail?

Problem Statement: Per “Professor” Eric Cohen

XBRL GL, the Journal taxonomy Integrates accounting systems Provides detail later summarized in

Financial reporting Tax Performance

Represents almost anything categorized to "accounts“ Customer and vendor master file information Detail journals Information represented in US, Japanese or European

general ledger packages

To Meet the Need: XBRL-GL

Different Data Dictionaries: Field names, field order

System 1: AccountNo, Amount, Date

System 2: MonetaryAmount, PostDate, AccountNumber

System 3: PostingDate, Account#, Value

System 4: Date, Journal, Account, Amount

Similar Data

Account, Amount, Date

Different Representations for the same concepts in common data field

Journal: PJ, Payroll Journal, Payroll

Date: 12-31-03, 20031231, 12/31/03

Different

Data Formats

CSV

ASCII

WKS

XBRL GL provides platform for agreed-upon and well defined list of concepts –

make sure my “Account” and your “Account” means the same thing (not

bank account or customer account but GL account.)

Based on XML, XBRL GL is order independent; sharing element names

for import/export means that AccountNo, AccountNumberm

Account# and Account will all be express as one common name;

applications will know what to expect inpublishing and consuming data files.

So many external data formats; XML provides a popular and increasing

supported / demanded data format.

Once you have agreed on data field standardization, software applications require agreement on content in many cases. XBRL GL provides enumerated

values to supplement XML data standards to help in this area.

XBRL Spans the “GAP”

AT&T Dashboard

Data mining is a process of determining relationships and correlations across seemingly unrelated data elements (often transaction level), using pattern recognition technologies and advanced statistical methods. Editor’s note: Tagging would help!

According to the MIT Technology Review, Data Mining is one of the top 10 emerging technologies that “will change the world”.

What is Data Mining?

Data Mining is a standards-based, iterative and adaptive process

Sales leads Countering Sports

Terrorism Management

Data Mining is employed in a variety of fields ….

Scour data looking for duplicate

payments, large payments, missing

billable units or payment addresses (to

find ghost vendors or employees), etc.

“Another area to watch related to data mining and BI is XBRL and the impact this will have on financial reporting”… AICPA, Nov/Dec. 2004

Data Mining Applications in Finance

Data Mining Revenues – U.S. Only(Software Licenses and Maintenance $M)

Source: IDC

0

100

200

300

400

500

600

1999 2000 2001 2002 2003

Revenues

Assisting Firms with the ROI of XBRL

Ability to extract and correlate data from underlying feeder systems and G/Ls represents a depth of sophistication that does not exist today Must push the proprietary software vendors Need an overall information architecture/data centric vision

(Finance needs to lead, not follow!)

WHO will lead the adoption of XBRL in the internal information supply chain ? ……….

A Newbie’s Perspective: XBRL Issues and Challenges

The IMA is ….

Leading association for management accountants working in industry.

~ 70K members, with strong international growth. Award winning periodicals (e.g., Strategic Finance) Multi-million dollar investments in marketing, research,

learning systems & conferences Provider of the gold standard advanced certification for

Management Accountants – the CMA. Continuous learning opportunities as you move up the

ladder from finance professional to business partner!!!

IMA’s Role in Transforming Business Reporting and Analytics

Now/On-going….. XBRL visibility at annual IMA conference

(Boston, June 18-22) and future events (e.g., International conference 2006)

Articles in the IMA’s premier publication, Strategic Finance (XBRL editor: Neal Hannon)

IMA Web site – education and training … Press Releases – Position statement, etc. Visit us at www.imanet.org

IMA’s Role in Transforming Business Reporting and Analytics

Longer term/Helping to lead change…..

We believe there is a Crises in the management accounting profession resulting from the overwhelming volume of data and information requests from outside and inside the firm.

CFO must lead the design and development of an integrated performance management process within the internal information supply chain that is timely, efficient, accurate and actionable.

DO YOU AGREE ………………………………….?

IMA’s Role in Transforming Business Reporting and Analytics

Longer term/Helping to lead change…..cont’d

In addition to defining the integrated measures across multiple domains, we need a data centric technology vision enabling production of reporting and decision analytics on a timely and efficient basis AND

We will take a lead role in this space by providing thought leadership, best practices, case studies, training, etc. to help transform the internal information supply chain, enabled by XBRL..…..

………………………… MAKE SENSE????

IMA’s Role in Transforming Business Reporting and Analytics

THANK YOU

Contact information… Jeff Thomson

Email jthomson@imanet.org

Phone 201-474-1586