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Information Technology

ALTHOUGHTHEUSEOF information technology (IT) is not a focal point of the integrated reporting movement's conversation today, it should be. IT, which involves the "development, maintenance, and use of computer systems, software, and networks for the processing and distribution of data,"1 poses a major challenge for integrated reporting. Yet it is also an opportunity. Not only can IT dramatically improve the process and quality of integrated reporting to the benefit of both the company and its audience, it can also improve both parties' integrated thinking.

To understand how this can be accomplished, corporate reporting in general and integrated reporting in particular must be considered in the context of four technological trends sweeping the business world today: big data, analytics, cloud computing, and social media. Companies have rightly focused on how these technologies can support and transform their business model. Virtually no attention, however, has been given to their application in integrated reporting. We believe that should—and will—change. Until senior management gives proper consideration to how to leverage IT for corporate disclosure, the full promise of integrated reporting (<IR>) and integrated thinking (<IT>) will not be achieved. The previous two chapters' analysis supports this contention. As shown in Chapter 7, paper-based reports have severe inherent limitations and, as shown in Chapter 8, the corporate reporting websites of the 500 largest companies in the world today only scratch the surface when it comes to using currently available IT. To put IT more directly into the movement's conversation about integrated reporting, we have devoted an entire chapter of the book to this topic.2

We will begin by explaining how existing IT can be used to support the processes required for integrated reporting. Emphasizing the role intelligent, machine-readable data will play in the not-too-distant future, we review the four trends and how they might contribute to <IR> and <IT>, ultimately introducing the concept of "contextual reporting"—a kind of reporting in which any single piece of information is easily viewed in the context of the "big picture." The chapter concludes with a brief glimpse into the future of integrated reporting with the hypothetical company World Market Basket.

INTEGRATED REPORTING PROCESSES

Used properly, IT, along with supporting internal control systems, can play a major role in the support of integrated thinking and integrated reporting. But this can only be accomplished if the company has a clear strategy for how to use IT to support its fundamental business processes. In an integrated reporting context, these processes are identification, validation, analysis, audience filtering, publishing to internal audiences, and publishing to external audiences (Figure 9.1).3

Identification

Integrated thinking inside a company is contingent on management's access to information about business processes, their outcomes, and the positive and negative externalities created as the company uses the International Integrated Reporting Council's (IIRC's) six capitals to create value for its shareholders. This information exists in at least three different forms: narrative or story format, structured information, and unstructured information. Given the broad scope and holistic nature of integrated reporting, the information that drives <IT> and <IR> could come from any unit in the company or outside the boundaries of the enterprise, including its suppliers, customers, business and partners, nongovernmental organizations (NGOs), and members of civil society. For this reason, it is necessary to identify relevant sources

IT Support for Integrated Reporting Processes

FIGURE 9.1 IT Support for Integrated Reporting Processes

of information and, when it is not available, use proxies or develop new sources.

While a company's enterprise resource planning (ERP) system4 offers one major source of information, others include employee spreadsheets, online databases, and social media platforms like Twitter. The ERP's carefully structured information usually relates to the tracking of transactional data. As they exist now, these systems are limited in their ability to track the sort of nonfinancial information integrated reporting requires. Much of it is unstructured; it is not neatly organized within the company's ERP system or any other information system that has conventions to which the data must adhere. The challenge for IT is to pull together the structured and unstructured information that comprises the content elements in the International <IR> Framework (<IR> Framework), which, taken together through the Framework's guiding principles, create the narrative backbone of an integrated report.

 
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