Enterprises cannot thrive today without two things: information and
technology infrastructure. These items lie at the heart of efficient operations
and management. Cloud-based apps like have changed how organizations
access and use information, but it’s the information within these applications
that arm executives with universal knowledge of markets, competition and
internal stakeholders.

By employing business reporting and data standards across the entire
company, an enterprise can generate actionable information using a foundation
of quality data from a variety of sources. This information can be easily
accessed by various departments to make decisions about marketing, execution,
management, and most importantly, strategic analysis.

Successful market and
competitor comparisons allow executives to determine if there are unrequited
market needs. In leveraging this on-demand information – based on rich and
solid data – companies know when and how to act, rather than merely how to
react to the market.

Important data standards are built on top of a common nomenclature or taxonomy
developed not just by IT, but by businesses themselves. The taxonomy defines
the structure of the data, how much or how little information has to be
reported, and the business rules that describe how the data can be validated, shared
and visually displayed.

The taxonomy tells how information will be presented for
machine and human-readable formats that are easily understood and can be simply
analyzed. The challenge with these taxonomies and data standards lies in the
inherent technical nature of programs and the expertise of the individual
accessing and creating the data. In order to bring value to the data, the
information has to be tagged in such a way that investors, executives and
analysts can use it.

Financial industry leads the way

The financial industry is already demonstrating the value of employing
data standards with the adoption of eXtensible Business Reporting Language
(XBRL). The Securities and Exchange Commission (SEC) requires all public
companies within the U.S. to file quarterly and annual financial reports using
this international business reporting standard. The value of XBRL lies in its
machine-readable reporting format, which details how financial performance and
information must be reported to the SEC and investors. XBRL data is highly enriched
with standardized mark up, and users can access XBRL information via common
desktop applications such as spreadsheets and word processors for competitive
comparisons and for internal governance, risk and compliance purposes.

Beyond just satisfying regulatory requirements, data standards provide
enterprises with the information they need for better decision-making, risk
management, and enhanced investor relations.

For instance, the XBRL data standard results in greater transparency
into company operations for investors – something that investors have begun to
demand recently – and allows organizations to target messages for specific audiences.

For investors and regulators in markets where XBRL is a standard and
competitive market analysis is essential, it is relatively simple to pull in
information from several companies and compare various items such as cash
balances, liquidity, invoices, etc. Internally, executives and board members
can leverage this information to improve company operations, reduce enterprise
risk and enhance overall governance of the organization.

Cloudy skies ahead

Data standards and taxonomies are becoming more widely accepted,
especially with the emergence of big data and as more enterprises deploy and
implement cloud-based solutions. Data standards and taxonomies, including XBRL,
are moving to the cloud platform, as well. Software-as-a-service (SaaS) applications
and cloud platforms are becoming the norm for IT infrastructure, allaying
concerns of data security.

Additionally, vendors are thoroughly educating IT teams and company
executives about security and validation of data standards on cloud platforms
through independent standards-based reports, enterprise references and direct
access to security experts. Previously, business leaders were concerned about
the submission of sensitive financial information over the Internet or via a
cloud; however, industry education and specifically designed security and data
standard validations are reducing these anxieties. There are greater
opportunities now for IT administrators to assist other departments and executives
in selecting the best cloud-based applications for data standards and

How standards affect enterprises

As the SEC and public companies demonstrate their use of XBRL for
financial filings, data standards are driving greater transparency and insight
into the operations of a company. The normalization of detailed and often
complicated data increases efficiencies and reduces the costs and time business
users spend analyzing the information.

A case in point is the Internal Revenue Service (IRS), which
implemented a data standard more than 10 years ago to evaluate how returns are
processed. Using a standard machine-readable format based on a specific
taxonomy that surveys the data to pinpoint when an actual audit is required,
the IRS’ standardization results in savings for the agency and taxpayers.

standards and taxonomies help ensure that the information gathered is valid, complete,
meaningful, and comparable. The taxonomy clearly outlines the rules for how the
data is reported, allowing for compliance with regulatory requirements. Once
the data is submitted to the IRS, the company executives and board members can leverage
this information to drive value-based decision-making and risk management that
will result in overall lower costs.

Efficient company operations and management heavily rely on technologies
like cloud-based solutions and software standards such as XBRL. The combination
allows public companies to share data in a common format between other
companies and regulators like the SEC.

Executives at many firms don’t understand the value that XBRL data can
bring to governance, risk and compliance efforts, and market research
initiatives because of its inherent technical nature. But the value of XBRL
data and formats goes beyond just that of financial data, as other industries have

The healthcare industry is using HL7 as a data standard version, and the
shipping and logistics industry is examining XBRL. Data standards and a common
taxonomy are essential for a specific industry or public companies to manage
their operations and interact with investors. It is the role of the IT
administrator to drive the adoption of these standards within the enterprise.

Carter is the chief technology officer at EDGAR Online, a division of RR
Donnelley, and has more than 20 years of experience in developing enterprise software.