Modeling of Business Enterprises withthe Resource-Event-Agent (REA)

Ontology G. L. Geerts (University of Delaware) &

W.E. McCarthy (Michigan State University)• Semantic business process model developed initially at

Michigan State University– Ontology extensions (vertical and horizontal)– Refereed literature in accounting & computer

science– Successful way of teaching modern accounting and

business systems– Candidate for standard use

• UN/CEFACT & ebXML• ISO Open-edi• EEC e-commerce integration (ECIMF)

• Now at point of increasing formalization need:– Protégé– KIF– Connections to upper ontology

Pattern: A prototypical constellation of entities

• REA is an accounting transaction (BP) pattern that has been expanded for full enterprise use

• Can we standardize the world of ERP business objects and business object connections with a library of BP patterns ?

• Can we standardize collaboration space with collaboration patterns ?

Cookie-Monster (the customer) and Elmo (the entrepreneur) meet in the (real or virtual) marketplace, thus setting the

stage for an Economic Exchange

Cookie-Monster (the customer) and Elmo (the entrepreneur) engage in a

SHIPMENT (transfer of Cookie Inventory)

Cookie-Monster (the customer) and Elmo (the entrepreneur) engage in

a PAYMENT (transfer of Cash)

EconomicEvent

EconomicAgent

EconomicResource

stock-flow{outflow{use,consumption,give}, inflow{take,production}}

participation{outside, inside{accountability}}

duality{transfer, transformation}

CookieEconomic Resource

stock-flow

Cash-ReceiptEconomic Event

CashEconomic Resource stock-flow

duality{transfer}

CustomerEconomic Agent

SaleEconomic Event

participation{outside}

SalespersonEconomic Agent

CashierEconomic Agent

participation{accountability}

participation{accountability}

participation{outside}

PORTFOLIO of ATTRIBUTES: (Lancaster)

• ingredients

• baked

• advertised

• delivered

• guaranteed fresh

??

Horizontal expansion of BP pattern (Porter Value Chain)

delivered raw materials

delivered manufactured goods

$$$$

$$

$$manufactured goods

payment

sale

Cash payout

Cash payment

logistical operation

shipment

labor

payment

labor acquire

labor

labor

facilities, services & technology

payment

service acquire

manufacture job

material issue

manufacture operation

$$

$$

advertise campaign

serv. & labor cons

targeted product & customer services

labor

raw materialspurchase

payment

$$

Value Chain advertising

service

delivered raw materials

delivered manufactured goods

$$$$

$$

$$manufactured goods

payment

sale

Cash payout

Cash payment

logistical operation

shipment

labor

payment

labor acquire

labor

labor

facilities, services & technology

payment

service acquire

manufacture job

material issue

manufacture operation

$$

$$

advertise campaign

serv. & labor cons

targeted product & customer services

labor

raw materialspurchase

payment

$$

Value Chain advertising

service

Vertical expansion of BP pattern (ISO Open-edi)

Negotiation

Identification

Planning

Post-Actualization

Actualization

Cookie-Monster plans his acquisition

Cookie-Monster and ELMO identify their potential trading partners

after

Cookie-Monster negotiates with ELMO until they reach a contract

Offer

Counter-offer

Instrument of offer

Instrument of acceptance

Cookie-Monster and Elmo do the

deal

THE “HAPPY PATH”

event stream

pay

pay

pay

pay

deliver

deliver

deliver

deliver

SELLER

BUYER

fail to pay

deliver return

fail to deliver

pay

pay

To accommodate this wider view of business process modeling, what changes ?

• Declarative:– Use the basic REA pattern

• Abstract up to types• Account for the future with commitments

– Establish Aggregations• UP (value chain)• DOWN (workflow)

• Procedural:– Use a state machine for continuous monitoring and

reporting

Declarative Extensions

Harry

Jane

Named Set of Objects

Tom

Dick

Ashley

Typification

Salespeople

Tom

Dick

Ashley

Abstraction

Harry

Jane

Named Set of Objects with Labeled Clusters

Group & Name Clusters Cashiers

Named Set of Groups

Cashiers

Salespeople

Economic Agent Type

Economic Agents

Operational Level

Source: Geerts and McCarthy, type paper

Planning & Control levelKnowledge level

cookie

shipment

commitment to ship

Economic

Contract

cash payment

executes

executes

commitment to pay

Business Role

Economic Commitme

nt

Resource Type

Event Type

specifies

specifies

specifies

Source: Geerts and McCarthy, ontology paper

Payroll

Process

Cash

Acquisition

Process

Cash

LaborLabor

Maintenance

Process

Cash

LaborLabor

Car

CarRevenue

Process

Cash

Used Car

Used CarMaintained Car

Used Car

Maintained Car

Used Car

Give

Take

Exchange

Customer

Car Used Car

Car

MaintainedCar

Car

Labor

Used Car Cash

Accept Customer ContactAssess Customer Needs

Check Car File & Choose

Assess Insurance Options & CreditFill in Contract

Customer Pays

Find Car & Provide Keys

Return Car

Update Files

Check Out Car

Revenue

Labor Labor

RentalContract

RentalAgent

Customer

CashReceipt

Cash

Cashier

Standards Models

ISO Open-edi Ontology Collaboration Model

Bilateral Collaboration

governs

Economic Event

Economic Resource

Economic Agent

stockflow from

to

Economic Contract

Economic Commitment

reciprocal

fulfills

establish

duality

Economic Resource

Type

typifies

specifies

Economic Event Type

Business Role

specifies

specifies

typifies

qualifies

reserves

involves

Partner Third Party

Mediated Collaboration

Business Transaction

participates

requires

Agreement

Regulator

constrains

SOURCE: Adapted from ISO 15944-4, W.E. McCarthy

Why are we here ??

• Connection to Ontolog and core components (UBL) and (hopefully) SUMO

• Learn more about formalization for extensions (Protégé and KIF)

• For further REA information:

http://www.msu.edu/user/mccarth4