Experts at the W3C are exploring the potential for applying the Semantic Web to financial data, especially XBRL, the extensible business reporting language.

Delivering precise semantics to financial reports is near and dear to the heart of Dave Raggett, a W3C fellow sponsored by Justsystems to explore the potential for applying the Semantic Web to financial data, especially XBRL (extensible business reporting language). If there was ever a time to fulfill a mission, it’s this mission, and it’s now.

The end result would be to make it easier to deliver greater transparency into rporate financial operations. The XBRL markup standard for financial reports — born before semantic web standards crystallized — helps, by avoiding re-keying of data for financial analysis, which inevitably introduces errors and sts. And it’s still difficult to mbine financial data from mpany reports with other sources of data.

“XBRL uses XML in a fairly mplicated way, so it’s not so easy to manipulate data expressed in XBRL directly,” says Raggett. Typically you must import data and nvert it to some other format, and “rather than having to create your own proprietary solution to that, it’s much better to take advantage of the investment that’s gone into the semantic web.”

Raggett points to the trend of greater transparency in the way in which businesses operate, and he expects that this will ntinue, particularly given the recent troubles the world has seen in the financial markets. ernment regulators, such as the SEC here, and other bodies around the world, have sought and are likely to seek even more acuntability, including the use of the XBRL format in financial submissions, so Raggett expects to see a lot more data in the form of XBRL in a few years’ time.

How the semantic web technologies play into this is in their ability to potentially create an “open market” for people to add value in the processing of XBRL data translated into RDF format, Raggett says. He notes the potential to apply this not just to annual or quarterly reports for regulatory and investor review, but for related kinds of markup on work that represents rporate risk and other factors.

“Within mpanies the potential in the long run for people is to use XBRL and semantic web

technologies to make their mpanies more open, and much easier to see what is going on within the mpany so you can manage the mpany better,” he says.

Raggett is working on an open source XBRL import tool to translate XBRL data into RDF. He also is in the process of setting up an interest group at the W3C on XBRL and the application of the semantic web to financial data, which he hopes to me together in the early part of the year. He sees potential for XBRL International and the W3C standards bodies to potentially benefit from feedback that uld lead to mplementary extensions or improvements to XBRL and semantic web standards. And from his nversations, businesses are eager to see developments in this area.

“I think that in order for mpanies to mply with an increasingly mplex regulatory environment, they are going to find it necessary, perhaps, to evolve how they handle financial data, so XBRL and the semantic web has potential to help with that,” he says. “The ntacts I’ve had [with business people] all show strong interest in this.”

Things are still very early stage, and Raggett sees challenges as well as opportunities ahead. Take scalability, for instance. “When it mes to scaling, if you want to run analytics or projections across mpanies and markets, obviously there is a large amount of data involved, so the challenge is to make it work quickly,” says Raggett.

“Think about web search engines today — you get raw results back fast. Ideally it’s the same with financial data, so there are challenges in how to make it happen. In the semantic web people are building larger and larger triple stores, but the issue of how to make this scale is an interesting one. There is lots of potential in cloud mputing to address those issues.”