Public Sector Transformation Through E-Government

by Christopher G Reddick

  financial and business reports,

  and most importantly enhancing the quality of data dissemination and dis-

  closure. All these important features of XBRL have commended XBRL as

  an imperative reporting technology that has transformed the e-government

  process in regulatory authorities.

  In this chapter, two leading government agencies exemplify this tech-

  nological paradigm shift by adopting XBRL to be an integral part of their

  existing electronic fi l

  fi ing systems. These are the United Kingdom’s Compa-

  nies House (CH) and the United States’ Securities and Exchange Commis-

  sion (SEC). XBRL has been recognized as a strategic component of these

  agencies’ e-fi

  filing agenda. Facilitated by the growth of the Internet, XBRL

  has had a prominent impact on the global regulatory adopters’ community,

  which thrives on the processing of voluminous data and the efficient deliv-

  ery of information services.

  The XBRL adoption processes at CH and the SEC have been impacted

  by certain Critical Success Factors (CSFs). These factors have been exam-

  ined in this chapter through conducting a comparative assessment of XBRL

  adoption process at CH and the SEC. Through this assessment, the CSFs

  are identified to determine the potential similarities and differences in each

  agency’s approach toward adopting XBRL, and the impact such factors

  would have on XBRL adoption process. This comparative analysis will

  demonstrate the transformative role of XBRL as a notable interactive data

  reporting tool that has revitalized the e-government process in two leading

  government agencies in the United Kingdom and the United States.

  The rest of the chapter is organized as follows: Section 2 provides a review of the literature on e-government reporting and technologies with

  focus on XBRL and the main CSFs that aff

  ffect XBRL adoption; Section 3

  provides a comparative analysis of each government agency’s CSFs based

  on the empirical evidence. Section 4 provides the research fi nd

  fi

  ings. The

  practical signifi

  ficance and conclusions of the research are provided in the

  fi na

  fi

  l section.

  2 LITERATURE REVIEW

  Electronic government initiatives have been considered one of the pow-

  erful mechanisms to improve the performance of the administrative and

  200 Rania Mousa and Yu-Che Chen

  data processing tasks of government agencies (Kraemer & King, 2003).

  E-government provides the best example of utilizing the Internet and infor-

  mation and communication technologies (ICTs) such as databases, net-

  working, multimedia, and reporting technologies. In the specific context

  of online services delivery, Brown and Brudney (2001, p.1) defi ne

  fi

  e-gov-

  ernment as the “use of technology, especially web-based applications to

  enhance access to and to effi

  fficiently deliver government information and

  services.” Many innovative reporting technologies are instrumental to their

  regulatory adopters as such technologies help in improving existing report-

  ing processes and systems. The adoption of those reporting technologies

  requires the collaboration of diff

  fferent individuals and stakeholder groups

  and the participation of diff

  fferent players in an organizational context. In

  a regulatory context, the adoption of e-government initiatives requires the

  inclusion of people, technology, organizational resources as well as govern-

  ment’s stakeholders in the adoption process (Dawes and Pardo, 2002). One

  of these e-government initiatives that has played a crucial role in redefi nin

  fi

  g

  the landscape of regulatory electronic reporting is the Extensible Business

  Reporting Language, or XBRL.

  The adoption of e-government initiatives in general and XBRL in par-

  ticular, has unique characteristics, particularly with references to many

  CSFs that impact the e-government adoption process. In the literature of

  technology adoption, Tornatzky and Fleischer (1990) provide a compre-

  hensive framework for understanding technology adoption in an organiza-

  tional context. This framework has been recognized by Cahill, Stevens, and

  Laplante (1990, p. 74) who indicate that the “confi

  figuration of hardware,

  software applications, individuals and procedures which together comprise

  information system technology in any organization is a “complex package,”

  which is highly unique and diff

  fferentiated among and between public sector

  organizations with varying purposes, charters, resource levels and access to

  technology.” Cahill et al. (1990) emphasize that Tornatzky and Fleischer’s

  Critical Success Factors provide great explanatory power for understating

  technology adoption process in various government settings. These CSFs

  have been closely re-examined in the context of XBRL regulatory adop-

  tion to determine their applicability and transformative role in developing

  e-government process (Mousa, 2010).

  These CSFs include recognizing the importance of making the XBRL

  business case for the adopting government agency. This entails the real-

  ization of the benefi

  fits pertinent to the adoption of XBRL with regard to

  disseminating business and fi

  financial information and minimizing regula-

  tory ineffi

  fficiencies (Hampton, 2005). XBRL is perceived as an important

  reporting tool that would enhance data processing (Boyd, 2004) and facili-

  tate the disclosure of publicly traded companies’ data (Rezaee & Turner,

  2002; Willis, 2007). XBRL literature also emphasizes the espoused benefits

  delivered by XBRL including data comparability, reliability and timeliness

  (ICAEW, 2004; Kull et al., 2007; Kull & Abraham, 2008; Rogers, 2010).

  E-Government Adoption of XBRL 201

  XBRL business case for stakeholders has been also identifi

  fied as another

  Critical Success Factor. Identifying and meeting potential stakeholders’

  needs—especially end users-—during the process of adopting technolo-

  gies has been reported in e-government literature (Barret & Green, 2001;

  West & Berman, 2001; Dawes & Pardo, 2002; GAO, 2001). In addi-

  tion, Schwester argues that building a strong public support for adopted

  technologies helps to reduce public resistance towards using government

  information services (Schwester, 2009). The literature also indicates that

  government agencies should provide technology demonstration and proto-

  types to make the business case for potential users (Caff

  ffrey, 1998; Dawes

  & Pardo, 2002).

  E-government literature indicates that the process of adopting e-gov-

  ernment initiatives is not only a function of the adopted technology or the

  processed data but also a function of the availability of technical expertise

  needed to support such technology (Brudney & Selden, 1995; Heeks, 1999;

  Lee et al., 2003). Technical expertise has been recognized as another Criti-

  cal Success Factor that emphasizes
the importance of hiring and retaining

  qualified technical professionals and experts who have the education back-

  ground and/or professional experiences that will enhance the adoption of

  e-government initiatives (Melitski, 2003).

  The literature also recognizes the ability of government agencies to over-

  come the inherent technical diffi

  fficulties associated with technology adop-

  tion as one of the Critical Success Factors. Ambite et al. (2002) and Dawes

  (1996) identify potential difficulties associated with data structure that

  cannot be easily processed by regulatory processing systems. Rogers (1983)

  considers technological complexity as an inhibitory to the adoption and

  DeLone and McLean (2003) make the argument by lining ease-of-use to

  more adoption. The sophisticated structure and the continuous prolifera-

  tion of XBRL taxonomy versions are among the barriers that have been

  noted in XBRL literature that could decelerate XBRL adoption process

  (Rezaee & Turner, 2002; Cushing, 2003; Vun Kannon & Hannon, 2004;

  Dunne et al., 2009).

  Heeks (1999), Norris (1999), and Lee et al. (2003) argue that external

  support—represented by business partnerships—could also be provided

  through software testing, product demonstration, and IT-tailored training

  to enhance the existing organizational skills of the adopting organization’s

  staff memb

  ff

  ers. The access to external technical and non-technical support

  and information from stakeholders has been recognized as a Critical Suc-

  cess Factor (Tornatzky & Fleischer, 1990). In addition, Irani (2002) and

  Dembla et al. (2003) suggest that a supportive regulatory role by top gov-

  ernment offi

  fficials could facilitate the adoption of technologies by govern-

  ment agencies.

  The adoption of XBRL has been driven by regulatory authorities

  which utilize the functionality of data standardization and processing

  tools in their legacy reporting systems (Mousa, 2010). Mousa’s research

  202 Rania Mousa and Yu-Che Chen

  has assessed the impact of the previously discussed CSFs on the adoption

  of XBRL in a British government agency, Companies House (Mousa,

  2010). This chapter builds on Mousa’s fi

  findings and provides a compara-

  tive analysis of XBRL adoption processes at the United Kingdom’s CH

  and the United States’ SEC. The SEC has been selected as an instruc-

  tive example of a government agency that recognized the significance of

  XBRL as a remarkable “interactive data” reporting technology that has

  facilitated the reporting and processing of fi

  financial and business infor-

  mation fi

  filed by publicly traded companies in the United States. CH has

  been selected as a pioneer executive government agency that recognized

  the capabilities of XBRL in processing the audit-exempt annual statutory

  information fi

  filed by small companies in the United Kingdom. The com-

  parative analysis in the following section is based on examining XBRL

  adoption processes at CH and the SEC. A detailed description can be

  made available upon request.

  3 COMPARATIVE ANALYSIS OF CRITICAL SUCCESS FACTORS

  3.1 Making XBRL Business Case for the

  Adopting Government Agency

  The Securities and Exchange Commission and Companies House realized

  the benefi

  fits of XBRL with regard to disseminating business and fi

  finan-

  cial information and minimizing regulatory ineffi

  ci

  ffi encies (Hampton,

  2005). The SEC sought the adoption of XBRL to facilitate the disclosure

  of publicly traded companies’ data. The use of XBRL by the SEC was

  also driven by XBRL’s capability to provide meaningful and timely com-

  parison of corporate data. XBRL was perceived as a machine-readable

  reporting medium that would enhance data capturing and manipulation

  in the audit-exempt companies’ accounts at CH. This fi nd

  fi

  ing supports

  the importance of XBRL in facilitating the processing of information

  received from companies fi

  filing their statutory information. CH was also

  driven by the fi

  financial outcome of selling XBRL data to Internet users

  and data aggregators. Table 15.1 illustrates the profi

  fits (losses) generated

  by providing registration versus dissemination services during the period

  2002–2010.

  Both government agencies’ decisions to adopt XBRL were aligned with

  their strategic vision to digitize the processing of regulatory fi

  filings and pro-

  vide timely and reliable fi

  financial and business information to various XBRL

  user groups, including investors and public users. CH’s and the SEC’s rec-

  ognition of XBRL’s benefi

  fits was an important catalyst and a Critical Suc-

  cess Factor in the process of making XBRL business case for the agencies,

  which paved the way for integrating XBRL into their existing electronic

  reporting systems.

  E-Government Adoption of XBRL 203

  Table 15.1 Financial Results of CH’s Registration and Dissemination Services

  (2002–2010)

  Profi

  fit (Loss) (£ million)

  2002/ 2003/ 2004/ 2005/ 2006/ 2007/ 2008/ 2009/

  Services

  03

  04

  05

  06

  07

  08

  09

  10

  Registration Services—

  3.0

  3.4

  (6.2)

  2.0

  0.1

  2.0

  (2.0)

  (2.2)

  include incorporation,

  annual registration,

  dissolutions and late

  fi ling penalties.

  fi

  Dissemination Services

  2.1

  0.7

  6.5

  0.7

  0.9

  1.6

  1.8

  1.1

  —include searches

  delivered on paper,

  electronically and

  to bulk users

  (data aggregators)

  Source: CH Annual Reports

  3.2 Making XBRL Business Case for Stakeholders

  Addressing potential users’ concerns varied between the Securities and

  Exchange Commission and Companies House. During the course of imple-

  menting the voluntary fi

  filing program, the SEC was keen to identify poten-

  tial concerns of the impact of adopting XBRL on reporting businesses

  by taking a phase-in schedule starting with large companies to minimize

  the compliance cost for smaller companies. In the published fi

  final rule on

  XBRL reporting (Interactive Data to Improve Financial Reporting: Final

  Rule, Feb.10, 2009), the SEC made XBRL business case for investors by

  emphasizing the potential advantages of fi

  filing corporate data in XBRL.

  The SEC’s eff

  fforts have been supported by e-government literature in terms

  of the need to build a strong public support for the adopted technology to

  reduc
e potential public resistance toward using government information

  services. The published fi

  final rule on XBRL was followed by the SEC’s

  move to mandate the use of XBRL in June 2009. CH adopted a different

  approach in making XBRL business case for the small companies by off

  ffer-

  ing reduced XBRL fi

  filing fees and by raising users’ awareness through the

  showcase and testing sessions, which supports the ICAEW report (2009)

  on the importance of testing XBRL capabilities in coping with processing

  large volumes of data. While the SEC took a voluntary then mandatory

  phase-in approach, CH opted for introducing XBRL on a voluntary basis

  to small companies. However, in its future plans to expand the use of

  204 Rania Mousa and Yu-Che Chen

  XBRL for the fi

  filing of audited accounts presented by large companies,

  CH would follow the UK government mandate to receive XBRL-based

  audited accounts.

  3.3 Availability of Technical Expertise

  As an organization, CH did not have adequate in-house technical exper-

  tise to build XBRL taxonomy structure that would support the fi lin

  fi

  g of

  the audit-exempt accounts. CH did not have a full-fl

  fledged IT department.

  When CH’s XBRL team was formed, two members acquired practical IT

  knowledge, specifi

  fically in computer programming and XML languages.

  Upon implementing XBRL, CH struggled with recruiting and retaining

  additional IT professionals as they opted for better employment oppor-

  tunities at private sector organizations. However, the SEC had a strong

  IT department of approximately 120 full-time employees who were

  responsible for the IT function of the agency direction and administrative

  support (U.S. Securities and Exchange Commission, 2009). The SEC’s

  signifi

  ficant IT expertise was a Critical Success Factor in adopting XBRL,

  as the IT department successfully collaborated with different stakehold-

  ers during the implementation of the voluntary fi

  filing program, which

  eventually provided a stronger foundation for building XBRL taxonomy

  for the companies’ data.

  3.4 Overcoming XBRL Complexity

  The sophisticated structure and the continuous proliferation of XBRL

  taxonomy versions were among the barriers faced by CH and the SEC.

  However, CH and the SEC managed to maneuver the data complexities

  associated with XBRL taxonomy. Due to CH’s lack of technical expertise,