Understanding Business Domain Models: The Effect of Recognizing Resource-Event-Agent Conceptual Modeling Structures

The Resource-Event-Agent Ontology

The REA ontology has been accepted in August 2007 as the international ISO/IEC standard 15944-4, referred to as the Open-edi Business Transaction Ontology (OeBTO). Different reference models and methodologies for designing business services in e-collaboration contexts (e.g., the UN/CEFACT’s Modeling Methodology (UMM), the E-Commerce Integration Meta-Framework (ECIMF), the ISO/IEC 14662:1997 reference model for electronic data interchange) use REA as underlying business ontology for grounding the constructs of their modeling formalisms.

Alternative ontologies for the same domain may differ because of the lens through which they look at reality and that determines their domain conceptualization (i.e., the domain concepts that they consider relevant). The basis of REA is the semantic data model for accounting proposed by McCarthy (1982). REA thus focuses heavily on those enterprise concepts that are required to implement accountability and control principles. The conceptualization of an enterprise specified by REA is that of a chain of interconnected transaction cycles that all contribute to the generation of ‘value’ for the enterprise. Each transaction cycle is an aggregate of (usually two) business processes that effectuate either market exchange transactions or internal conversion operations. An example of the former is the revenues cycle, which integrates sales and collection processes (i.e., the order taking and delivery of a product or service and the collection of the payment make up a ‘cycle’). An example of the latter is the production cycle, where the use or consumption of resources like raw materials, labor, machinery, energy, etc. leads to the production of finished goods.