Generating XBRL statements means parsing traditional statements, breaking out each piece of data (year-end earnings, for example) and tagging it according to the SEC's taxonomy. A number of software vendors, including UBMatrix and Rivet Software, have software that converts traditional financial statements into XBRL-formatted ones. While there's not a tremendous immediate benefit to companies in doing this (other than the fact that eventually they'll have to), according to Sunir Kapoor, chief executive officer of UBMatrix, gathering and using such XBRL data could provide fringe benefits down the road. "One of the biggest problems in enterprise computing has been around data – the challenge today is that information is held hostage in applications," he says. "The meaning of a piece of data is defined by the application responsible for its storage; ERP systems have one definition of a customer, CRM applications have another, operational apps with another. XBRL tagged data can be used in any business process in a company and where companies share information with each other, such as supply chains." Having XBRL data can make it easier for applications to share data and updating a data element across multiple applications could potentially become simpler.

Peter Wallison, codirector of American Enterprise Institute's program on financial markets deregulation, predicted this week that the adoption of XBRL for SEC filings (in other words, filing digital reports rather than paper) will have four major effects on Wall Street:

--A new army of freelance research analysts will crop up. Wallison envisions "a vast democratization of the financial advice business – offering advice to ordinary investors for a modest fee." The only reason this hasn't already happened, he says, is that analysts have been unable to produce solid analysis at a reasonable price; XBRL will reduce their costs. "For example, if you want to know the reserves of the oil companies, in today's world you have to download their financial statements, search for the footnote that contains the reserve numbers, download the information and input it into a spreadsheet," he says. "This is at least a day's work, and even then you don't know whether all the companies you are comparing define reserves in the same way. With XBRL, the search can be done in seconds, and you know that the data are truly comparable. The cost savings in resources and time are enormous."

--CFOs will be put under greater pressure to explain financial statements. "Currently, when a company releases its financial reports, the key data are either input by hand into analysts' models or summarized and sold to analysts and others by data aggregators," he says. "In either case the data is not fully analyzed until days or longer after it is released. With XBRL, however, the data released goes instantaneously into analysts' models; they will be able to ask questions in real time, unlocking far more information about companies than is currently available to the markets."

Small companies will gain more analyst coverage and investor interest. "One of the principal obstacles to this today is the high cost of ferreting out the information necessary to understand the financial information of companies, and to compare it to others' data," Willison says. "As this becomes cheaper because of XBRL, analysts and investors will move down market, so to speak, looking for bargains among the smaller companies that have not been getting much attention."

Retail investors will use software to analyze companies themselves. "With useful information readily available, we can expect to see large numbers of amateur retail investors testing out their skills, and eventually offering to others through blogs and other Internet vehicles the models that have proved successful," he says.