TechnologyBudgets soar to tackle iXBRL accounts

Budgets soar to tackle iXBRL accounts

Rocketing technology - R&D budgets for software providers rise to meet government deadline

Innovation was behind the decision to revolutionise corporate tax returns.
From 2011 they will have to be submitted in a computer language (iXBRL) that
makes comparison easier for the taxman.

However, that revolution comes at a price, and technology companies have seen
their research and development budgets rocket as they try to keep up with the
mandated deadline of 1 april 2011 set by the government.

Who foots the bill?

So has the customer been left to pick up the bill? According to Sage, one of
the largest accountancy software providers in the country, there are no plans to
increase the price of products for customers that receive upgrades.

All accountants who use Sage’s Practice Suite products, and have an annual
licence, will receive an iXBRL update free of charge when they become available.
Some customers who buy Sage software but are not paying a maintenance fee, so
will not receive free upgrades, will have to pay for the new software, although
the business has yet to outline a cost structure for that.

According to Jayne Archbold, MD of Sage accountants division, the research
and development budget in her department to develop iXBRL (inline Extensible
Business Reporting Language) was set at approximately 30%. However, this figure
recently shot up to approximately 60% (see graph). Archbold said the increased
cost is higher than the business expected however, it reallocated resources from
around the business to accommodate the increase so costs do not have to be
passed to customers. Sage spent 12% (£172.6m) of group global revenues on
research and development for all its products for the year ending September
2009.

Budget busting

One of the largest suppliers of financial software to accountancy practices,
IRIS, has so far used 75% of its R&D budget towards building and developing
iXBRL upgrades in the last 18 months. Iris also claims customers will not incur
higher fees on upgrades, although the business has yet to outline if there will
be an increased cost for new customers.

IRIS spent £13m on R&D as a group for the year ending 30 April 2010, with
the accounts division the largest in the group. However, the biggest impact to
customers is not in terms of price rises however, claims Phill Robinson, MD of
the accountancy division at IRIS. It is the reduction in the IT industry’s
ability to deliver new features with resources devoted to iXBRL compliance and
not on new technology.

The government has “stagnated” innovation in the technology sector as IT
businesses are spending all their time on iXBRL rather than creating new
products, he said.

So far IRIS has doubled its engineering team to cope with iXBRL with Robinson
anticipating further iXBRL development as the country moves to International
Financial Reporting Standards from UK GAAP.

IRIS and Sage both declined to outline the value of resources they allocated
to iXBRL R&D. Digita/Thomson Reuters, a large supplier of tax software,
declined to comment on any aspect of its R&D budget in relation to iXBRL.

Ixbrl-research-spend

Related Articles

Is predictive analytics the end of the annual audit?

Audit Is predictive analytics the end of the annual audit?

2d Martin Herron, MHA MacIntyre Hudson
Cybersecurity webinar: how protected are you and your data?

Security Cybersecurity webinar: how protected are you and your data?

6d Emma Smith, Managing Editor
Back to the Future: why financial transformation just hasn’t happened

Technology Back to the Future: why financial transformation just hasn’t happened

1w Workday | Sponsored
GDPR: Don’t forget the human touch

Security GDPR: Don’t forget the human touch

2w Neil Patrick, Director of GRC and Centre of Excellence EMEA for SAP
5 key tech innovations helping accountants transform their businesses

Accounting Software 5 key tech innovations helping accountants transform their businesses

3w Heather Darnell, Founder of Ask the BOSS
HMRC scaling back digital projects to ‘release project capability to EU Exit work’

Brexit HMRC scaling back digital projects to ‘release project capability to EU Exit work’

3w Alia Shoaib, Reporter
What is the role of governance, compliance, and control in financial transformation?

Corporate Governance What is the role of governance, compliance, and control in financial transformation?

4w Workday | Sponsored
Grant Thornton joins with Immersive Labs to increase cyber talent

Career Grant Thornton joins with Immersive Labs to increase cyber talent

1m Lucy Skoulding, Reporter