Modeling of Business Enterprises with the 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)

{transfer, transformation} Economic Resource Economic Event Economic Agent duality {transfer, transformation} participation {outside, inside{accountability}} stock-flow {outflow{use,consumption,give}, inflow{take,production}} Sale Economic Event participation {accountability} Salesperson Economic Agent Cookie Economic Resource stock-flow participation {outside} Customer Economic Agent duality {transfer} participation {outside} Cash Economic Resource stock-flow Cash-Receipt Economic Event Cashier Economic Agent participation {accountability}

Horizontal expansion of BP pattern (Porter Value Chain) ?? PORTFOLIO of ATTRIBUTES: (Lancaster) ingredients baked advertised delivered guaranteed fresh

Value Chain $$ $$ raw materials $$ $$ labor $$ manufactured goods Cash payout Cash payment $$ $$ raw materials purchase payment $$ $$ logistical operation shipment labor payment labor acquire $$ manufactured goods delivered raw materials $$ labor facilities, services & technology payment service acquire manufacture job material issue manufacture operation delivered manufactured goods payment sale $$ advertise campaign serv. & labor cons targeted product & customer services advertising service Value Chain

Value Chain financing procurement transportation human resources Cash payout Cash payment financing $$ $$ raw materials purchase payment $$ procurement transportation $$ logistical operation shipment human resources labor payment labor acquire $$ manufactured goods delivered raw materials $$ labor facilities, services & technology payment service acquire manufacturing manufacture job material issue manufacture operation delivered manufactured goods procurement payment sale $$ advertise campaign serv. & labor cons targeted product & customer services sales marketing service advertising service Value Chain

Vertical expansion of BP pattern (ISO Open-edi) Negotiation Identification Planning Post-Actualization Actualization

PLANNING

Cookie-Monster plans his acquisition

IDENTIFICATION

Cookie-Monster and ELMO identify their potential trading partners after

NEGOTIATION

Cookie-Monster negotiates with ELMO until they reach a contract Offer Counter-offer Instrument of offer Instrument of acceptance

ACTUALIZATION

Cookie-Monster and Elmo do the deal THE “HAPPY PATH”

POST ACTUALIZATION

n-to-1 1-to-n 1-to-1 delivery penalty payment SELLER BUYER event stream BUYER deliver pay n-to-1 pay deliver 1-to-n deliver pay 1-to-1 pay deliver fail to pay deliver return fail to deliver pay delivery penalty payment

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

Planning & Control level Named Set of Groups Cashiers Salespeople Economic Agent Type Abstraction Planning & Control level Knowledge level Typification Operational Level Harry Jane Named Set of Objects Tom Dick Ashley Salespeople Tom Dick Ashley Harry Jane Named Set of Objects with Labeled Clusters Group & Name Clusters Cashiers Economic Agents Source: Geerts and McCarthy, type paper

reciprocal duality executes cookie shipment commitment to ship Economic Contract cash payment duality executes commitment to pay reciprocal

Resource Type Economic Commitment Event Type Business Role specifies Economic Commitment specifies Event Type specifies Business Role Source: Geerts and McCarthy, ontology paper

Payroll Process Maintenance Revenue Process Process Acquisition Car Cash Payroll Process Labor Labor Cash Labor Maintenance Process Maintained Car Revenue Process Used Car Labor Car Labor Labor Maintained Car Used Car Cash Acquisition Process Cash Used Car Used Car Car Revenue Maintained Car Customer Rental Agent Labor Used Car Rental Contract Car Car Give Take Exchange Cash Receipt Cash Used Car Cash Customer Cashier Accept Customer Contact Find Car & Provide Keys Assess Customer Needs Check Out Car Check Car File & Choose Assess Insurance Options & Credit Return Car Fill in Contract Update Files Customer Pays

Standards Models

UN/CEFACT

Bilateral Collaboration Economic Resource Type Mediated Collaboration 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 qualifies reserves involves Partner Third Party Mediated Collaboration Business Transaction participates requires Agreement Regulator constrains SOURCE: Adapted from ISO 15944-4, W.E. McCarthy

ECIMF

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