Sometimes when we look at things from a different vantage point we see things which we don't see from other vantage points.

In a Business Week article, "The Greatest Innovations of All Time", Larry Keeley points out that most of the greatest inventions of all time were "platforms."  He defines a platform as:

broad capabilities that have the potential to cut across industries, markets, and applications.  Platforms often have some proprietary capabilities at the core, but not always.  Indeed, it is common for platforms to integrate many otherwise ordinary ideas into a whole that is collectively remarkable."

He goes on to say that "A sufficiently advanced technology is indistinguishable from magic."

In his article several platforms are discussed, we will use the example of "limited liability" which is familiar to most business people to help provide a sense for what a platform is.

Corporations and limited liability partnerships provide a means of removing personal risk from an individual which participates within a business venture so the individual will not have to risk everything when if their companies make a mistake.  This platform of "limited liability" has allowed large corporations and partnerships to exist which allow the separation of liability from ownership.  This has allowed large amounts of capital to flow from individuals to companies and ventures, which would take large organizations, to exist.

For more information see: http://www.businessweek.com/innovate/content/feb2007/id20070216_377845.htm

Think about financial reporting, or the "global financial reporting platform".  I think one could argue that is a platform.  Perhaps not one of the top 10 innovations of all time when considering other innovations, but a platform.

Consider what that platform was like in the early 1900s:  paper, pencils, no calculators, no GAAP or no real financial reporting standards really. 

Imagine trying to obtain information about a public company before the invention of the copy machine and the fax machine! 

Or what about what it was like to analyze a company before the advent of the computer, or the electronic spreadsheet, before the Internet.  EDGAR provides a lot of information about public companies, but EDGAR did not always exist.  Nor could it exist without many of the technologies we have today.

Now, consider what the global financial reporting platform might look like if there were one set of financial reporting standards used around the world, rather than each separate country creating their own financial reporting standards.  We are at the twilight of realizing that possibility, many countries have already switched to use International Financial Reporting Standards (IFRS).  And it is looking more and more like the US will adopt IFRS also.  Let's say it does, one set of financial reporting standards used globally.

And what if a computer could "read" this one set of financial reporting standards.  That is what XBRL does, it articulates semantic meaning in a form that a computer can do something with it.  For example, the FDIC articulated their MDRM information in XBRL and software tools can read that metadata (rather than have to parse Word documents, Excel spreadsheets, PDF files which contained the information.

Just being able to read the information is useful enough, but having one set of financial reporting standards to boot...even better.

Consider what a computer might be able to do to help a user leverage this metadata.  Automating disclosure checklists.  Checking computations.  Most financial statements today are created using Microsoft Word.  How can Word help you create a financial statement?  It knows nothing about financial statements.  But what if your financial reporting application COULD understand the reporting rules and help check to be sure you are getting things correct.

And consider what it might be like if users of that financial information could exchange the information between themselves, using different software, and be able to use that information without having to convert from one proprietary information format to another format.  XBRL does that also.  No imports or cut-and-paste which might get the information sort of like you want it, then you fix it up.

What impact would these factors (the use if IFRS globally, the use of XBRL globally) which basically reduce "friction" within the system have on how financial information is created, exchanged, consumed, and otherwise utilized?  Add onto this all the improvements to the Internet and all the other technologies.

Seems to me that IFRS and XBRL will have a significant impact on the global financial reporting platform.