OASIS Universal Business Language (UBL) TC

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    Posted 05-25-2006 00:57
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    Subject: Fw: UBL article


    http://www.vnunet.com/financial-director/analysis/2156747/standard-issue
    
    Standard issue
    
    Large companies are spending millions to harmonise technology
    standards and protocols throughout their organisations, but they
    are still a long way from a truly integrated system
    
    Antony Harrington, Financial Director 25 May 2006
    
    It can be safely said that the panacea of standardisation in the
    technology world is even more of a pipedream than it is in the
    accounting world.
    
    The history of business application development has been one where
    individual vendors went their own way and did their own thing. No
    one spent any time looking over their shoulder wondering how
    competitors were writing code. The aim of the game was for each
    vendor to corral their own stable of users and interoperability of
    systems was nowhere on the agenda.
    
    The cost to business of this individualistic approach to systems
    development has been enormous. Every time a company thinks about
    acquiring another, for example, the acquiring management team and
    its funders have to work out the likely costs of integrating the
    two organisations� IT infrastructure � and in many
    instances, IT incompatibilities can demolish the business case for
    an acquisition.
    
    The problem of incompatible systems also impacts companies who
    want to collaborate by sharing information on their IT
    systems. One thinks here of manufacturers and suppliers in a
    supply chain. Unless they each use the same version of the same
    vendor�s systems, before they can collaborate they first have
    to figure out how to transfer information between their different
    IT systems.
    
    However, if standardisation was simple we would not have the mess
    of incompatible systems we have today, and large organisations
    would not have to spend millions on technology integration
    exercises. Instead, the IT sector would have come up with a
    �nice, simple� standard way for all applications to talk to
    each other and the problem would be solved.
    
    XML standard
    
    In fact, the sector is in the process of solving this problem
    through a standards-based approach. The standard in question is
    XML, or Extensible Markup Language (see box), but agreeing and
    implementing the standard is a laborious and time-consuming
    process and we are not anywhere near the end of it yet.
    
    One of the main thrusts pushing businesses and IT vendors in the
    UK to adopt XML is coming from HM Revenue and Customs. As Dennis
    Keeling, chief executive of the Business Application Software
    Developers� Association says, the government is enthusiastic
    about online filing of company reports for corporation tax
    purposes.
    
    The government is very keen to have all accounts, whether they are
    corporate or individual, filed electronically and it wants the
    numbers in those electronic documents to be machine readable. At a
    stroke, this will cut out the need to re-key and allows all kinds
    of machine-based analysis and checking of accounts to take
    place. The potential savings for the government are enormous.
    
    Lord Carter of Coles recently completed a report for the
    government into the online services of HMRC, where he looked
    closely at XML as the mechanism for enabling online filing. As a
    result, he has recommended that for returns due after 31 March
    2010, all companies should be required to file their company tax
    returns online using XBRL, or Extensible Business Reporting
    Language, an XML-based format for financial reporting.
    
    XBRL is being developed by an international, non-profit consortium
    of approximately 450 organisations and already there are numerous
    implementations. The basic approach is to provide a computer
    readable identifying �tag� for each individual item of
    data. An example would be company net profit, which would have its
    own unique tag. Financial data is transformed into XBRL by
    suitable mapping tools or by appropriate software.
    
    Mixed opinions
    
    But despite the government�s enthusiasm, there are still
    differences of opinion over the benefits that XBRL can bring in
    the business world. Both the Financial Services Authority and the
    US Securities and Exchange Commission embarked on wide-ranging
    XBRL projects. However, while the FSA decided to shelve its plans
    for regulated companies to report using the language due to a lack
    of interest, the SEC is taking a more proactive approach and
    firing ahead at full speed.
    
    As recently as May this year, SEC chairman Christopher Cox put his
    weight behind the reporting language in a speech before the
    Congressional Committee. �Interactive data is a concept that I
    know has been of long-standing interest,� he said. �Bill
    Donaldson, my predecessor at the SEC, also saw the promise of
    interactive data and got the ball rolling by launching our
    internal efforts to investigate the technology.
    
    �Under his watch, we launched the XBRL voluntary filing
    program. I, too, see the promise and potential that this concept
    holds for consumers of financial data, particularly individual
    investors and believe that it will someday soon transform the way
    we as individuals interact with information about our
    investments.�
    
    Although XBRL has been mandated by Lord Carter as the format for
    delivering accounts for corporation tax purposes in future, there
    is a real problem with it. The source of the problem lies in the
    enormous number of ways in which companies can define their chart
    of accounts. As Keeling notes, charts of accounts change
    constantly even within the same company from one year to the next
    and no two charts of accounts are the same. It is one of the
    fundamental reasons why FSA-regulated companies did not
    enthusiastically adopt the standard.
    
    �Unfortunately, those responsible for the XBRL standard have
    chosen to tackle this problem by defining a vast library of
    taxonomies of possible items of charts of accounts. Since
    businesses have to take on the task of mapping their present chart
    of accounts to XBRL tags themselves, it is just too difficult to
    do and the project has stalled. The result is that very few people
    use it for financial reporting,� says Keeling.
    
    Lord Carter has tried to overcome this by suggesting a more
    limited subset of about 100 chart account headings for corporate
    tax filing. Companies House has a project underway where dormant
    companies, can file today using XBRL. The project is going to be
    extended to embrace small companies, which do not need to be
    audited.
    
    It is important to stress that XBRL, as the name suggests, is
    about business reporting and is not designed to be an e-commerce
    transaction-enabling language.
    
    Universal acceptance
    
    There are already several XML variants of electronic commerce
    languages, but thankfully everyone seems to have thrown their
    weight behind what�s known as the Universal Business Language
    (UBL); a standard developed by the US-based Organisation for the
    Advancement of Structured Information Standards (OASIS).
    
    Ken Holman, chief technology officer of the US consultancy Crane
    Softwrights, has been involved with the UBL standard from the
    beginning. �The whole point of UBL is to come up with XML
    document models with which businesses can express their
    transactions,� he says.
    
    UBL has so far described seven key documents, including things
    like an invoice, a sales order and so on. It is then a relatively
    simple matter for accounting and e-business software vendors to
    adapt their applications to recognise and to output UBL-conformant
    and machine-readable documents.
    
    The UBL committee is currently developing version two of the
    standard, which will define around 28 documents, providing a wide
    suite of e-capable and universally compliant documents that will
    enable companies to transact just about any business they want
    on-line.
    
    �There is a real parallel here with HTML,� says
    Holman. �In the web world there were many experts in hypertext
    in the early days who said that HTML was far too unsophisticated
    to express the world�s needs. But the World Wide Web Consortium
    (W3C) standardised a vocabulary for hypertext and it is now the
    standard for the Web. People who have a problem to solve can adapt
    their solutions to a system that is standard and easy to use �
    this is what UBL is going to do too,� he says.
    
    Holman points out that Denmark is the first country to mandate the
    use of UBL. Anyone wishing to send the government an invoice has
    to submit a UBL document. Other countries in Scandinavia are now
    considering taking similar steps.
    
    For Holman, a standard like UBL is an enabler, not a suppressor of
    initiative (one of the common criticisms of standardisation
    efforts is that they dumb down a solution and suppress
    innovation). For Holman there is nothing in UBL that stops an
    accountancy software vendor, for example, from being innovative
    where it counts. But no one wants them to be innovative to the
    extent of trying to reinvent what it is that an invoice does or
    how it should be described to be �machine agnostic�.
    
    And machine agnostic really is the panacea of IT as far as
    business people are concerned. Or, in other words, being allowed
    not to worry about it.
    
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