XBRL Tip: Beware of Long Term Commitments
Consider this blog entry a "public service announcement" for those of you responsible for making decisions on how to handle XBRL filings for your companies. If I were in your shoes, I would definitely NOT be signing any long-term contracts for XBRL software or professional services. In fact, I'll go so far as to say it would be crazy to do so right now. It's a "Lock and Lose" proposition.
The XBRL market today, both for software and services, is still in an emerging stage, with a tremendous amount of volatility. In this embryonic market, there is literally NO ADVANTAGE to making any long-term commitment to an approach to XBRL compliance...and indeed, there is the potential for SIGNIFICANT RISK, both financially and from a business process standpoint, involved in those commitments.
Over the next few years, best practices for XBRL compliance will emerge. The market will determine the winners and losers among current software vendors and service providers. The quality of XBRL technology and services will improve, and new and better learning applications will emerge. The professional services side of XBRL will explode and become commoditized, with hundreds of "experts" competing for business in the outsourced modeling and tagging market. For vendors selling into this current SEC reporting market space, it is natural to try and maximize their revenue potential today. Make no bones about it…the cost of XBRL is going to decline in the coming years.
Because they understand this, our competitors are currently pushing long-term, 2 and 3-year commitments on the market in an attempt to:
- Maximize their overall revenue opportunity
- Stall/delay decision-making on adopting emerging best-practice approaches to XBRL compliance
- Buy time to improve their solutions
Whatever the reason, the fact is from a buyer's perspective, there is simply NO GOOD REASON to make a long-term commitment to an XBRL technology or services relationship today. At WebFilings, we have no long-term commitments. We work with our customers on a quarter-by-quarter basis, earning their business each and every reporting period. Our setup/onboarding time is minimal, and if our External Reporting Solution isn't working for you, it's a simple process to export your data and return to your prior tagging and filing process.