The Power of Taxonomies by Peter Williams, Deloitte Digital
Introduction
Peter Williams is Partner of Deloitte and CEO of Deloitte Digital. This person is serious digital person, we will listen with great attention. Please welcome Peter Williams.(applause)
Peter Williams:
Ok now, Jason and I have probably been doing XBRL for a long time, but I am chartered accountant, but I was fortunate enough to go onto the web in 1993 and decided this is going it be a lot more fun then being an insolvency practitioner, having done that for 10 years.
This morning as I waking up bleary eyed to catch the plane and looking at my array of black tee shirts that go with my array of jeans and sneakers. I saw this one, and it says game on, it’s from the gaming exhibition that was at the Australian centre for the moving image. And I thought, actually that is the tee shirt for today because, with the release of the SBR Taxonomy I think that software developers have run out of excuses. I think the governments are ready to go, and we web guys know the power of taxonomies, because that is what the internet is based upon. The taxonomy of, here’s how to tag data, and I think the question here is there’s not going to be just one single data base, a web browser does not give a …, if it is right, it reads its own data and I think Jason’s point is absolutely correct, is that this data is available and I will show you some things from a web point of view, where people are taking data particularly form the SEC and starting to run open source models, with how you can use the web now that this data is more easily available.
So I’ll do a recap from 2007, similar to Jason, a bit about our vision and I will talk about how to, I will show you how to overcome the challenge mate of getting private business data, I have built one you can use it if you want, but I really do like that idatapack… cause I got that… idea as well but I haven’t quite launched it like that, but any way that’s cool.
Online accounting and business intelligence and I’ve got a rare video, of two garden variety accountants - even more garden variety then Jason, who have actually taken the taxonomy that’s been released and within a few weeks have learned to do it, and they are not scared of XBRL because they have the weird web guy; we at Deloitte own the largest web development company in Australia so they’re used to weird web people saying terms like HTML, XBRL etc.
So I suppose where we started was, a number of years ago, my colleague Danny McCloud went out and mapped how long it took and the activities involved in preparing financial reports, under what we call ‘data drudgery’.
A lot of the costs was really what I would call the ‘.. around faze’ of “you send me a MYOB file, no that’s the wrong one, oh you didn’t put the sales in, hang on, its the wrong year” all of that sort of stuff. And then we finally get it and then say “don’t do anything over there because we’re going to have to sort all this out, and then you know, cut, paste, move, in.” So that grads, when they say “what training do I need?” I say “I’ll give it to you now - control c control v cut paste, you will be right for the next three years!”.
I think the other point about compliance is that when you actually look at financial reporting and this is the same for any large organisation with large corporates out there, the amount of time really, XBRL slashes time through the whole reporting food chain. The compliance piece is a great bit, and my own view is that it will cut compliance creep because by standardising on definition, every time a new department comes in they won’t actually have to create 55 new forms for small business, they can say look at the data that’s there, take what you want. So a lot of time spent in reviewing, and then the lodgement bit.
So we did a program where, what we did was, and it was interesting because when we looked at what was stopping things happening, effectively three things: the software developers or the most financial management systems couldn’t produce native XBRL data, there was no taxonomy, and even if you could get the XBRL data you couldn’t render it, so slight issues. But given that as, that we’re sort of high tech web guys, I got two of my best software developers - one of whom was a Olympics gold medallist. In physics! Sort of said ‘mate, here you are, you’re good at solving problems sort it!’ And they knocked out a little thing called the XBRL gateway which just allowed us to map a trial balance to a hacked up taxonomy that we got off the IFRS site. That has further been developed by my great friends down there near you through Business Driven Systems, who we work with a lot. And we basically could generate the report. The Software developers, after about three weeks, we could produce our tax return and the financial statements 70 per cent quicker then the accountants, and then we let some accountants go at it, we ran a trial across 57 per cent of accounts and we got to 82 per cent quicker. So we were ready to play, but then the issue for us then became well, there’s no Australian Taxonomy, will we build one, or will we wait? And it’s unlike me but I actually said let’s wait. Because there is no point in us building out a taxonomy and then four or five months later have a taxonomy that did come out come out, so we said “ok, that’s cool, we’ll wait,” and now that it’s here, we’re already using it and it’s working, which is unlike so many other taxonomies that are soon to be released. So well done to Paul and the team!
So when you look at our vision, and what Deloitte Digital’s about is saying that we think the professional services world of, particularly in the accounting side of things, has fairly well escaped unscathed from the change that is the web, and the sort of notion of data standards and taxonomies, but we don’t think it should. That way too much time is spent by accountants, who talk fairly disparagingly about our grads, but they are highly trained, smart people, who end up doing drudgery work.
So we looked at two things and said we want to change the way that we deal with clients we want to deliver for our services digitally, and they found a wacky web guy who was also a charted accountant to do it in me. So we looked at the number one thing, which was; look we don’t think that everyone is going to move off MYOB and Quicken overnight, but that’s cool because we can suck data out of them, map it into our taxonomy and provide into a data warehouse to provide bench marking tools.
The other thing that we launched last week was an online accounting system. Our view is that another issue that accountants have with their clients is that you often have the once a year sort of bring the file, or the file is just a smaller version of a shoe box. Why aren’t our clients not putting the numbers into a system where we both have visibility over it, and we can actually alert, we can watch and if they ring you up and say, ‘hey I am looking at buying a business’ your looking at the numbers not spending three to four weeks trying to get it all right.
So the other thing is alerts, highly visual reporting, you know it’ll be reporting it out to the mobiles, iphones of course because we’re web guys and we always build things for iphones first, and black berries too for all these business types who like that tool which I don’t.
So what does one look like? So we’ve just launched in May, May yeah this month, we are talking to the real state institute and one of the things there is a highly fragmented industry, sort of competitive but in reality it’s that old monologist competition model. And we said look you want your agents to be more profitable, you want to help them as business people. Why don’t we create a little tool, which we did with Business Driven Systems, which will suck data or import data from MYOB and Quicken, map it to a taxonomy and once that is done, monthly KPI reports and bench markers. But it’s also about being able to provide a tool that allows them to slider bars to get what-if analysis.
Now it didn’t really take us that long did it? A few months, we used some components of the XBRL gateway we built, and we launched it out, and had about 30 agents sign up. I think the sort of question is; are people scared of privacy? Well if you anonymise the data you know there is no way of being able to say that’s Ray White in Double Bay and that’s Johnny Magra out in Kings Cross, or where ever Johnny is these days.
But again making the report much more visual because the thing is that my hope is that accountants of today go in the way of scribes before the Gutenberg Press when writing was a skill that only a few people had and reading was something that a few more people had, but you didn’t have a huge amount of people. How do we make information understandable to end users, to business owners who don’t have a accounting background, and let us not make them spend money on data drudgery, lets give them advice to help to understand how to improve there business. And I think that to me, this to me is going to disrupt the accounting profession and I think it’s… high time.
So how do we do it, it looks back, yoat goes in Melbourne. Yeah, we have slightly, sort of confident real eu get your financial performance information each month, the tool that we’ve got actually is a plug in, you download it and plugs into your MYOB or your Quicken, it’s just another file there, once a month we send a reminder: Hey, send us that data, click, and in it comes. Privacy is assured, automates to a taxonomy, it’s all cool. The reports are all available on the web, because we’re web guys and don’t really believe in paper so again, we do think paperless is the thing. There are 51 data fields, 34 of them come in automatically, 8 fields we just validate each month like they might be standards like how many employees, etc. And then we’ve also put in some operational information, to be able to get bench marks on things like sale velocity, difference between listing price and reserve price; you should see how thstate agents! They uploaded it to a portal for a reporting window, one time set up, it takes about 10 minutes to do and you are off and running.
There are some of the key metrics, nothing very massively exciting in there, some graphs and stuff I will get my design guys to make them look a bit better, there’s the cool. Everyone gets excited about the what if - ‘what if I reduced my sales expenses?’ or by being able to say what the bench mark performance is ‘well what would happen to me if I did that? what happens if I get growth?’. Well the beautiful part about this is that we launched this, I think it was the first week of May. I then said to the boys of Business Driven, we have an opportunity to do this for the Chinese motor Vehicle dealer market. We did the prototype a week later and there are now Chinese motor vehicle dealers happily using a system like this. And we’re also now rolling out another one and so our ability, the way that we have designed it, the architecture is we can spurn this time and time again, by changing labels, within a frame work.
It’s all based on the availability of a Taxonomy, the ability to suck data out of a system, don’t worry if it’s XBRL or not, cause we can map it and convert it and we have been doing it for years on the web its called XML, just because we have added a BR into it, it seems to have driven the profession and everyone into boffin land. What annoys me and I have always said that too much time in this debate has been about how long should this string be and should the Taxonomy have 2600 elements or 2702? Who gives a …, how do you use this stuff and how do you apply it?!
Thank you! So what is online accounting about? Again online accounting were does this fit in with XBRL and the vision?
It’s the number one selection requirement we had for our online account package was it would be XBRL native data. So we not only want to be able to have an ability for a book keeper and a business owner to look at the data at the same time, but also the owners and managers of a business to get those, how much cash did the cash hit the bank today, who am I supposed to pay, what debtors said they’d pay that didn’t, that sort of stuff.
Whatever you want, you can have it delivered, on a computer, any where you are, because again rather than installing software systems, which are often limited to the box that they’re on, this is any time, any where, any time of the day or night, we support it 24/7, again our view was that accountants need to start to think about their clients, particular in the small business area – a lot of business owners do their work on a Sunday! They look at their numbers on a Sunday because they are too busy during the week. Or they do it at night, after they’ve put the kids to bed, so how are we going to be available to do that?
From a compliance and regulator point of view the fact that data is also web based, XBRL based we’ll be able to just shoot straight through and do our lodgements from the same system, if banks decide that they want to get regular reporting and you are mad enough you can invite your bank in to have a look at your numbers, you can say what you want them to look at, maybe have the black books that they can look at and the real books over here; but no, we would never condone that! But again the whole motion of the same set of data in one place ability to control, manage, get reports but make it visual. Again when you look at websites, the term we use a lot in the web is cognitive load, cognitive load means, like - you see a sea of excel worksheets numbers it’s like ooohh! I can’t cope! I need to sit down and have to have an herbal infusion, or a gin or something. Yeah, we web guys like those herbal infusions, so that’s alright.
How does it look? So again the sort of notion is that you can do it at a book keeper level, it then adds on to sort of sales purchase order management, invoicing and then stock and inventory control so again our addressable market here is being able to look at particular businesses who are looking to scale up into multi-entity and multi-currencies systems. So perhaps those migrating from a Quicken or a MYOB, or start ups who sort of live in the world of software as a service and have focus on what I call outcomes based computing.
It’s interesting I do a lot of work in bush fire recovery and I say to the guys in the bush fire town that I work in “I’ll set up a blog”. None of them said what’s the business case, what’s the risk, are you going to a security review? They’re like wow! How did you do that?
It’s like you know that village we want to build? Why don’t we use a Wiki and do it on that? What’s a Wiki? Have you ever seen Wikipedia? Nope! Look I’ll show you, here’s a three minute video. Whoa! They all love Wiki now because we were able to build a village with 40 organisations in four weeks after the fires because the government couldn’t get off their butts. But again the sort of notion is.
Or I work on the board of Circus OZ. Circus OZ don’t have a IT guy but they have a better website then most large corporates because they use software as a service model, so the whole notion of the web is why install it when I can just rent it? Give me the outcome, you know it takes you 30 seconds to set a lot of these things up, put you email address and if its free you do not have to pay, it takes you about 2 minutes if you do.
So you can get rocking straight away no hardware, no IT guy, which is good and nobody really worrying about risk and stuff. When people say ‘what about the security on a blog?’ Well Google owns blogger, do you reckon that you have better security people than them? Ahh, no, well shut up then! And let me write my blog!
Again, so they’re visual reports – yipty da!
Ah, now XBRL and tax. The most exciting thing that happened to me this week was I got visited by two of the aforementioned garden variety accountants. And, little did I know that down in the bowels of our mid market practice, that some people had actually been listening a lot more about XBRL and Bevin, my offsider, had shown them how to use our gateway, he’d shown them when the new taxonomy came out and they went off and did some stuff. So here they are:
Start video:
Speaker one: A year ago, and one of the big problems that we have in the tax world is numbers being imported manually, and therefore errors are made etc. So what we decided to do when we heard about XBRL was look at ways of automatically downloading information into the worksheets we want to work with into the tax world, and with that information downloaded we wanted to slice and dice it into various filters and filter it etc, so we could the get right tax results, right queries, right ratios etc.
So Simone over here is my assistant and Simone has done a lot of work basically sitting this up. Do you just want to quickly go through the points Simone?
Speaker two: Yeah, so what we’ve done, we’ve used XBRL, and we imported trial balance into the XBRL gateway and then using that software we bring into our tax return schedules, and then from there we can obviously manipulate data or populate the data through excel to what we want to see.
Speaker one: and we use that, we use that in three main areas; in tax return preparation, in tax accounting provision calculation, which is really important to the audit people, and the third area, which we’re just developing now is the area within capitalisation deductions were it is essentially a balance sheet driven calculation and we can use this stuff to do those calculations either in whole or one part. The one point to be made too, for those that may be listening to me is we don’t for one second purport to say that this will do the whole thing a 100% of the time. We know that there are inputs from tax experts in this case which have to be done, and this would probably save us a day to a day in a half at least, which translates into our costings something in the order of 25% to 33% of our costs to that.
Interviewer: And Simone, how hard did you find learning about XBRL and, did you find that it was a foreign language to you? How did you pick it up?
Speaker two: Ah, yes, it certainly was like a foreign language at the start. It’s a computer language as such, I think once you sit down, its quite easy to follow at the end of the day, its not difficult. I don’t know all the program, but I know enough obviously to produce what we have done. And there are enough instructions out there, and a lot of resources that have helped me work the program.
Interviewer: And just on a personal level what, sort of inspired to take the initiative to do this?
Speaker two: Um, it was an opportunity that was presented to me, and I have always been told working at Deloitte that when an opportunity presents itself, certainly to make the most of it, and that’s exactly what I’m doing.
Interviewer: Yeah, well that’s fantastic, it’s great.
End video.
And so that was, and the reason it was exciting was ‘cause that was one of those, things like Jason was saying, one of those word-of-month things. We didn’t tell them, we sort of told them that the taxonomy was there and they just went and did. And that sort of thing is that being able to drive this though our businesses and pass it on to clients to be able to do stuff cheaper, better and faster, we think this gives us a real opportunity.
Just some sort of stuff to wrap up in XBRL 2.0. I might show you the first slide first, now were do you guys get your information in XBRL? Where do you go? I mean you wake up in the morning, you want your XBRL dose, what do you do? Yeah, but where on the internet, well… that sort of narrows it down! Most of you probably go to goggle! But there’s this sad group of people out there in the world, of which one of them is me, who use twitter to talk about XBRL! So I did a tweet the other day, talking about IFRS and ISAB in the context of XBRL, like that’s going to get a lot of people going, basically we’re not happy with the IFRS taxonomy, putting it in English. But of course there was, ‘Will the SEC be ready for it’s own XBRL’ mandate, a blog that was posted. So these sorts of things, every few hours some tragic XBRLer around the world is posting stuff. So if you want to keep up to date with the latest thing, jump on there. And when, on of those little tours I was doing I heard about Free Risk, and I don’t know if people read the Wired magazine article in March? You guys don’t read Wired?
The web guys! See Han Yan he is a proper hard core regulator transformed into a web guy, he has not just quite got the right thing, but I’ve seen him dancing around the streets of Amsterdam late at night, across those bridges, so yeah he does look like a web guy, and those little brown cafes, I was not suppose to say that, right, sorry.
But this one is called Free Risk, and what the Wired magazine article said was effectively what we can do is like the Wikipedia for accountants. What they said is where regulations fail, what we see with open models is suddenly everyone will be able to become an investment analyst. And I agree whole hearty with that but, what I didn’t realize was that people were already starting to do it.
So this mob called Free Risk, are two web junkies just like me, who have set up an API, it’s little programming tool, and you’re going to start to see this whole world of people sucking in the data, they just pull it straight out of SEC, which is not too hard to do, we did that last year, and then you start getting people to develop their own little models, a bit like Facebook widgets for XBRLers.
So again, I think what we are seeing is a big transformation in terms of not only how we get access to financial data but also what we do with it and actually opening up into a much more open innovation model for financial reporting. So it is something that I am looking forward to and I think that that is it from me.
So conclusion: apply taxonomies in XBRL, it reduces costs, no in fact it’s not reduce, it is slash!! Ok 82 per cent says I am in disruption land, speed cycle times improve accuracy, and even Simone you saw her smiling, you rarely see, she’s just sort of out of grad land, and again, it also allows us to drive new services and we will also see other new things happening out there in the world.
So, thank you for that.
