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)
Economic
Resource
Economic
Event
Economic
Agent
duality
{transfer, transformation}
participation
{outside, inside{accountability}}
stock-flow
{outflow{use,consumption,give}, inflow{take,production}}
Sale
participation
Economic Event {accountability}
Cookie
Economic Resource
stock-flow
duality
{transfer}
participation
{outside}
Salesperson
Economic Agent
Customer
Economic Agent
participation
{outside}
Cash
Economic Resource
stock-flow
Cash-Receipt
participation
Economic Event {accountability}
Cashier
Economic Agent
Horizontal expansion of BP pattern
(Porter Value Chain)
??
PORTFOLIO of ATTRIBUTES:
(Lancaster)
• ingredients
• baked
• advertised
• delivered
• guaranteed fresh
$$
Cash
payout
$$
Cash
payment
$$
raw materials
$$
payment
purchase
labor
$$
$$
logistical
operation
labor
acquire
payment
facilities, services
& technology
labor
delivered raw manufactured
materials
goods
labor
material
issue
manufacture
operation
payment
$$
Value
Chain
service
acquire
shipment
manufacture
job
sale
labor
serv. &
labor cons
advertising service
delivered
manufactured goods
advertise
campaign
payment
targeted product &
customer services
$$
Cash
payout
$$
Cash
payment
$$
raw materials
$$
payment
purchase
labor
$$
$$
logistical
operation
labor
acquire
payment
facilities, services
& technology
labor
delivered raw manufactured
materials
goods
labor
material
issue
manufacture
operation
payment
$$
Value
Chain
service
acquire
shipment
manufacture
job
sale
labor
serv. &
labor cons
advertising service
delivered
manufactured goods
advertise
campaign
payment
targeted product &
customer services
Vertical expansion of BP pattern
(ISO Open-edi)
Planning
Identification
Negotiation
Actualization
Post-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”
SELLER
event stream
BUYER
deliver
pay
deliver
pay
deliver
pay
deliver
pay
deliver
return
fail to
deliver
pay
fail to
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
Named Set of Groups
Economic
Agent Type
Abstraction
Cashiers
Salespeople
Planning & Control level
Knowledge level
Operational Level
Tom
Tom
Dick
Dick
Ashley
Ashley
Salespeople
Harry
Harry
Jane
Jane
Economic
Agents
Named Set of Objects
Group & Name Clusters
Cashiers
Named Set of Objects with Labeled Clusters
Source: Geerts and McCarthy, type paper
Economic
Contract
commitment
to ship
executes
cookie
shipment
commitment
to pay
executes
cash
payment
specifies
Economic
Commitment
specifies
Resource
Type
Event
Type
specifies
Business
Role
Source: Geerts and McCarthy, ontology paper
Car
Labor
Cash
Labor
Payroll
Cash
Labor
Process
Labor
Maintained Car
Used Car
Revenue
Maintenance
Car
Labor
Process
Labor
Process
Maintained Car
Cash
Acquisition
Process
Used Car
Used Car
Car
Revenue
Labor
Maintained
Car
Rental
Agent
Customer
Rental
Contract
Used Car
Car
Car
Exchange
Give
Take
Cash
Receipt
Cash
Used Car
Cash
Cashier
Customer
Accept Customer Contact
Assess Customer Needs
Check Car File & Choose
Assess Insurance Options & Credit
Fill in Contract
Customer Pays
Find Car & Provide Keys
Check Out Car
Return Car
Update Files
Used
Car
Cash
Standards Models
Economic
Resource
Type
Economic
Contract
governs
Agreement
typifies
establish
specifies
involves
specifies
reciprocal
Economic
Commitment
specifies
reserves
Economic
Event
Type
qualifies
fulfills
typifies
Economic
Resource
stockflow
Business
Role
Economic
Event
from
to
Regulator
Economic
Agent
constrains
duality
Partner
Business
Transaction
Third
Party
requires
Bilateral
Collaboration
participates
Mediated
Collaboration
ISO Open-edi Ontology Collaboration Model
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