Interview with Mr. Patrick Quinlan President of Rivet Software
Patrick Quinlan is the President of Rivet Software, a Denver, Colorado-based company that is pioneering the future of global financial communications. Patrick comes to Rivet as a business executive with a proven track record of startup development, funding strategies, and capital investment success. He brings experience in the small and emerging business space and is skilled in executing strategic planning, performing market analysis, and guiding new product development. As the CEO of several successful startups and as a consultant, Patrick has helped many companies build and manage effective sales teams, meet revenue goals, and achieve peak performance. He graduated from the University of Kansas and holds an MBA from Regis University.
1. Why is XBRL so superior in technology to its other alternatives?
XBRL is designed for superior flexibility, yet in a standardized format. Since XBRL is based on the well-developed and accepted technology XML, it’s much more accepted by technical and business users.
Open specifications such as XBRL facilitate the ability of many different software packages to produce and exchange documents that work in a number of situations. The interoperability permits organizations to transmit information pretty easily.
2. How do you evaluate progress of XBRL adoption in the USA so far? Is everything ready for the second phase of the SEC’s mandate?
It was a slow start, but since the SEC mandate took place last summer, the “movement” of XBRL has gained great momentum. Mutual Fund Risk/Return tagging will soon follow the corporate financials, and corporate actions reporting in XBRL have generated a lot of discussion and enthusiasm. The SEC, software vendors and accounting firms have all spent a significant amount of energy and effort to actively promote XBRL and to educate organizations about the benefits of XBRL. We have seen a slow shift in corporations’ perceptions of XBRL in the last few months because they are finally seeing the benefits and a competitive advantage when they adopt XBRL for both internal and external reporting.
We don’t believe every company is ready for the 2nd phase of the SEC’s mandate to provide detailed tagged XBRL documents. Detailed tagging is a much more involved process for companies, and will require well-designed software and seasoned professionals to facilitate the tagging, validation and viewing/reviewing process.
First-wave companies have already selected their tagging vendor. Now is the time to ask the tough questions and make sure their selected vendor has a solution in place and is not afraid to demonstrate the software, talk about the process (tagging, reviewing, rendering) and has the expertise to provide the services that corporations will need to successfully complete the detailed tagging.
The second- and third-wave companies should learn from the first 500 companies and pick a vendor wisely as soon as possible. It’s not too early to start planning, even if you are a third-wave company.
3. It seems that the biggest problem for the quick adoption of XBRL is the ignorance of it (there are some who like to say this due to its long learning curve) – do you think that all “stakeholders” (CPAs, CFOs, Financial and Accounting managers…) are aware of the existence of XBRL and that they have to “meet” with XBRL, sooner or later?
We believe stakeholders are finally caught up and have shown some interest in learning more about XBRL – not just the mandate, but also the benefits XBRL can bring. The “XBRL community” needs to do a better job of explaining XBRL in plain, understandable language. XBRL can be complicated, and it’s the job of regulatory agencies, software vendors, and even the academics to simplify the technology so that companies can focus on the benefits rather than the complexity that the technology brings.
4. When we talk about XBRL, we usually talk about external reporting. Do you know some examples of successful implementation of XBRL for internal reporting? Is internal reporting currently postponed in relation to mandating external reporting?
Yes I do. Rivet Software started in 2003 with the vision that standards-based reporting (external and internal) is the future. At that time, XBRL was still in its infancy, and we have seen the promises that XBRL can bring. We believe in the technology, but more importantly, we understand that, in order to leverage the technology effectively, we need to create software applications that are end-user focused and not overly complicated.
We tell our customers that financial transformation is a journey. Today, most companies start with the “compliance” aspect because that’s what they have to do. However, the journey will continue on to better “control” and effective “communication” of their financial information – if the appropriate technology and intelligent implementation was selected.
We have a customer that has implemented XBRL GL-based internal reporting and is ready to file with the SEC using an integrated solution provided by Rivet.
5. Do your clients internally use XBRL for data consolidation and reporting or are any of them planning to adopt XBRL to maximize the efficiency of their internal processes as well?
We are starting to see clients integrating XBRL into their internal consolidation/reporting process. Most companies are playing catch-up on the mandate, and we believe that once the filing mandate becomes a standard business process, companies will be open to discover additional ways to adopt XBRL and to make their business processes more effective.
Software vendors need to be forward-thinking and create solutions that can take the customers to the next stage. It might not be a revenue generator today, but it will go a long way to better serve the user community if software companies work hard to create solutions that are needed tomorrow.
6. Present us with Rivet Software’s product and briefly tell us how it makes our life easier in tagging and analyzing financial statements.
We have three main products that are all based on our Crossfire Financial Reporting Platform – Compliance, Controller and CFO. All three are designed to meet the XBRL reporting requirements of SEC corporate filers as well as providing better financial reporting for all users. The difference between the packages, in a nutshell, is that our Compliance Package is designed to manage your filing preparation by using a simple cut-and-paste approach; our Controller Package streamlines the process by automatically integrating your data and includes improved internal controls and financial statement production and consolidation; and our CFO Package has the ability to integrate multiple data sources (from your GL/ERP/CPM) while providing more effective ways to communicate your information both internally and externally.
Rivet’s Crossfire Financial Reporting Platform includes features such as built-in tagging assistance, task-based workflow to facilitate working in teams, and basically reduced complexity to protect the end-user from XBRL – your taxonomy is completely hidden so your preparers will only see financial statement line items. All three packages include the complete support of our Professional Services team, comprised of experienced CPAs, accounting, XBRL and finance professionals, to assist the user throughout the tagging and filing process.
7. It seems to me that your company is currently focused on USA and Canadian markets. Do you plan to expand business internationally? Have you seen an interest in that?
We do focus a lot more on the U.S. today because it’s an important market, and because we have worked very closely with the SEC in the past few years.
We created an XBRL-solution for Thomson/Reuters in 2008, and it’s currently being used to process XBRL filings from China, Japan and Korea. One of our other major clients is the Microfinance Information Exchange, Inc. (MIX). They are a leading business information provider dedicated to strengthening the global microfinance sector. The MIX is using our solutions to tag and process thousands of XBRL documents based on the IFRS taxonomy.
Rivet will look at opportunities from other countries carefully. We believe that we have created a world-class XBRL-based reporting and analysis tool that can provide great benefits to many markets. XBRL is a solution without borders, and Rivet is well positioned to pursue international opportunities.
8. What are the minimum requirements to fulfill XBRL-enabled software? What are a few tips on what features customers should look for in XBRL software?
Our view might be different from other software companies when it comes to XBRL. We believe in a well-crafted, comprehensive solution instead of specialized software components just to address certain areas that XBRL would touch.
Take SEC corporate filers as an example. We have created the Crossfire Reporting Platform to address the entire lifecycle of XBRL. Tagging is just a start, an integrated viewing and reviewing component that is critical for the filers to fully understand the “tags” selected for their companies, and we also show the filers how their selected tags are comparable – or not – to other SEC filers as well as other filers in their industry. We also show how the filing would be rendered to the public once it’s filed with the SEC.
Our benchmark module enables the filers to compare their filings with their competitors inside the Crossfire Reporting Platform. It’s one thing to fulfill the SEC mandate and it’s another to be able to become more competitive while fulfilling the mandate requirements.
Companies should do their homework and ask tough questions when selecting their XBRL vendors. Select a vendor that can be your partner on this journey to financial transformation; select a vendor that can turn a compliance task into an opportunity.
9. Was the software industry adequately prepared for the introduction of XBRL? What is your comment on the lack of open source solutions?
In order to implement XBRL software, companies have devoted a lot of money and resources. It’s understandable that companies would be reluctant to put their expensive IPs into open source. Rivet has a different view and has provided open source solutions for tagging and rendering. Anyone can go to the SEC website and download the source code for the SEC rendering engine and incorporate it into their own products. Our hope was to promote a sense of community, so collectively we can all work together to make XBRL more accessible to end-users.
10. After a period of tagging XBRL reports, we are expecting the period of report analysis, comparison… What will be the key trends of XBRL software development in the future?
Reporting and analysis is the logical next step for XBRL software development. With the availability of financial, mutual fund and other types of business data, customers will start looking for powerful, standards-based reporting/analysis solutions soon. Other key areas for development might be auditing applications and budgeting/forecasting applications.