We are on the verge of a fundamental transformation in corporate accounting: the standardization of electronic financial data. XBRL (Extensible Business Reporting Language) enables the "bar-coding" of electronic financial data.

You say that financial data standards bore you? Wake up and smell the coffee: Standards are everything.

The foundation of the information revolution is standardization. Indeed, standardization has been a key factor in the past technological revolutions. For example, railroads did not spread across continents until the manufacture of rails was standardized so that any two fit together exactly.

Financial data standardization will take place in the next three to five years. It will have a profound impact, similar to that of double-entry bookkeeping on the Industrial Revolution.

Double-entry bookkeeping, first described by medieval Italian writers in the 15th century, enabled the financial infrastructure of the Industrial Revolution to evolve in the 18th century. It created a rigorous "gestalt" framework for assessing the health of businesses as organic, ongoing entities. This allowed for the management of far larger enterprises and investments than had been possible before.

Ultimately, the Internet's true potential for businesses depends on consistent standards for defining business processes.

XML (for "extensible markup language") is the Web standard for exchanging data consistently. XBRL takes XML's technology and customizes it for finance. It allows investors, by clicking a mouse, to compare the underlying financial realities of companies.

This information always was available, but sometimes difficult to retrieve and decipher. This is the domain of financial analysts who examine the fine print of financial statements.

Like the securities legislation of the 1930s, Sarbanes-Oxley Act of 2002 attempts to shine a bright light on the realities of a company's financial performance. And financial transparency (and reliability) is a critical enabler for investment and collaboration in the international economy.

This trend toward transparency is being driven by a unique convergence of increased public scrutiny of financial results and accounting controls, increased regulatory oversight and the emergence of a new generation of technologies.

XBRL will be a critical tool for enabling compliance with key provisions of the Sarbanes-Oxley Act, specifically management assessment of internal controls (Section 404) and preparing for the real-time reporting requirements of Section 409. It will also enable powerful efficiencies in internal reporting systems and in the due-diligence phase of mergers and acquisitions.

XBRL is an XML-based, royalty-free, and open standard being developed by a consortium of more than 200 companies and agencies, and it is being used by investors, accountants, regulators, executives, business and financial analysts and information providers.'

XBRL will tighten supply-chain collaboration. The dot-com era taught us that there is no magic recipe for Internet success, that e-commerce efficiencies are best achieved when workflow inefficiencies are optimized and those improvements are embedded in software.

Businesses are still in the early stages of adopting XBRL, as the infrastructure is being created to enable companies to easily adopt the standard. Most big software vendors are creating XBRL-enabled applications. Financial standards organizations are working together to narrow variance of international financial reporting standards, particularly the generally accepted accounting principles (GAAP), widely used in the United States, and the global International Accounting Standards (IAS).

XBRL has the characteristics of successful standards of the past. Based on existing accounting standards, it has the muscle of Sarbanes-Oxley and an investor community demanding financial transparency.

Just as importantly, it answers the need for the consistent labeling and use of financial data in the vastness of the Internet, just as bar coding was an enabler for managing giant warehouses of physical inventory.

XBRL will affect financial analysis as fundamentally as the Web browser affected user interface design -- taking the pain out of collaboration.