Proposed Specialization Module for the UMM – June 2006 Bill McCarthy, Michigan State University...

Proposed Specialization Module for the UMM – June 2006

Bill McCarthy, Michigan State University

EconomicEvent

EconomicAgent

EconomicResource

duality

Buyer Seller

Third Party

Collaboration Space

Value Exchange

Japan expert contribution to 15944-4, 9 May 2002, Seoul Korea

Declarative (structural) components of a

business process -- class diagram

What actually occurred

What could be or should be

What is planned or scheduled

Commit Event

Rtype

Etype

Atype

Rtype Etype Atype

Resource Event Agent

Color-coded time expansion

Economic Event

Economic Resource

Economic Agent

stockflow inside

outside

Economic Commitment

reciprocal

fulfills

duality

Economic Resource

Type

typifiesspecifies

Economic Event Type

Economic Agent Type

specifies

specifies

typifies

typifies

participate

policy

policy

policy

1. Green – “What has occurred” – REA, duality, stockflow, participation

2. Yellow – What could be or should be – TYPES, typify, policy

3. Purple – What is planned or scheduled – COMMITMENTS, specify, fulfill, reciprocal, triggers

Business Process Phases

Negotiation

Identification

Planning

Post-Actualization

Actualization

Figure 22 -- ISO Open-edi Phases with Components

Ontological Components

typification

fulfillment

Business Events with Types of Resources &

Persons

Business Events with Commitments for Types of Resources, Events &

Persons

Business Events and Economic Events with Resources & Persons

Key REA ontological primitive = Economic Resource

Economic Resource

Something that is scarce and has utility,

and is under the control of an

enterprise (1982 paper & Ijiri)

PORTFOLIO of ATTRIBUTES:

• ingredients

• baked

• advertised

• delivered

• guaranteed fresh

(Lancaster)

??

Figure 7 -- Subtypes (possible) for ECONOMIC RESOURCE

Services Rights Goods

Intellectual Product

(IPR)

Real Estate

Regulatory Service

Transport-ation

Services

Materials Human Services

Funds Right of Way

Warranty Insurance

Economic Resource

Figure 4 -- Subtypes of Person Based on Identity

Economic Agent (ISO Person)

IndividualPublic

AdministrationOrganization

Figure 5 – Person and Economic Resource as the Basis for Exchange

control

Economic Agent

(Person)

Economic Resource

control

Economic Agent

(Person)

Economic Resource

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

stage for an Economic Exchange (a business process)

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)

Normative Primitives of 1982 REA ontology

Economic Event

Person stock-flow

duality

Economic Resource

participation

Named Set of Groups

Cashiers

Salespeople

Economic Role

Typ

ifiy

Gro

upin

g

Salespeople

Tom

Dick

Ashley

Harry

Jane

Named Set of Objects with Labeled Clusters

Group & Name Clusters Cashiers

Harry

Jane

Named Set of Objects

Tom

Dick

Ashley

Persons

Operational Level

Planning & Control level

Typifying to Planning & Control Level

Economic Resource

EconomicEvent

Personstock-flow participation

Economic Resource

Type

Economic Event Type

Economic Rolepolicy

typify typify typify

policy

Economic Agreeme

nt

reciprocalcommitment

fulfills

commitment

fulfills

economic event

duality economic event

Adding Commitments

Commitment

specifies

Resource Type

specifies Event Type

specifies

Agent Type

Abstract Specification of Commitments

Expansion of normative model

normative REA model

expand horizontally on “time” dimension

expand vertically on

“granularity” dimension (3-level arch.)

• Planning: In the Planning Phase, both the buyer and seller are engaged in activities to decide what action to take for acquiring or selling a good, service, and/or right.

• Identification: The Identification Phase pertains to all those actions or events whereby data is interchanged among potential buyers and sellers in order to establish a one-to-one linkage.

•  Negotiation: The Negotiation Phase pertains to all those actions and events involving the exchange of information following the Identification Phase where a potential buyer and seller have (1) identified the nature of good(s) and/or service(s) to be provided; and, (2) identified each other at a level of certainty. The process of negotiation is directed at achieving an explicit, mutually understood, and agreed upon goal of a business collaboration and associated terms and conditions. This may include such things as the detailed specification of the good, service, and/or right, quantity, pricing, after sales servicing, delivery requirements, financing, use of agents and/or third parties, etc.

• Actualization: The Actualization Phase pertains to all activities or events necessary for the execution of the results of the negotiation for an actual business transaction. Normally the seller produces or assembles the goods, starts providing the services, prepares and completes the delivery of good, service, and/or right, etc., to the buyer as agreed according to the terms and conditions agreed upon at the termination of the Negotiation Phase. Likewise, the buyer begins the transfer of acceptable equivalent value, usually in money, to the seller providing the good, service, and/or right.

• Post-Actualization: The Post-Actualization Phase includes all of the activities or events and associated exchanges of information that occur between the buyer and the seller after the agreed upon good, service, and/or right is deemed to have been delivered. These can be activities pertaining to warranty coverage, service after sales, post-sales financing such as monthly payments or other financial arrangements, consumer complaint handling and redress or some general post-actualization relationships between buyer and seller.

SOURCE: ISO FDIS 15944-1 – Operational Aspects of Open-edi for implementation Figure 21 -- ISO Open-edi Phases of a Business Transaction

The (color-coded) REA Ontology

Economic Event

Economic Resource

Economic Agent

stock-flow

from-participant

Economic Agreement

Economic Commitment

fulfills

bundles

duality

Economic Resource

Type

specifies

Economic Event Type

Economic Agent Type

specifies

specifies

typify

reciprocal

Business Processgoverns

Business Event

Business Process Phases

workflowValue/Supply

Chain

networked

to-participant

typify

typify

policypolicy

ACustomer

BProductSupplier

CLogisticsVendor

DBank

PORAAA

FreightOrderAA

AdvanceShipNoticeRA AdvanceShipNotice

AA

ShippingDocumentAdvanceShipNoticeRA

FundTransferAdviceAA

ReceivingAdviceRA

FundTransferAdviceAA

FundsTransferNoticeRA

FundsTransferNoticeRA

Business Process: MultiParty Collaboration

Bilateral Transaction

governs

Economic Event

Economic Resource

Economic Agent

stockflow from

to

Economic Agreement

Economic Commitment

reciprocal

fulfills

establish

duality

Economic Resource

Type

typifies

specifies

Economic Event Type

Economic Role

specifies

specifies

typifies

typifies

reserves

involves

PartnerThird Party

Mediated transaction

Business Transaction

participates

requires

Regulator

constrains

Business Event

Economic Event

Economic Resource Person

stock-flow from

to

Economic Claim

materializes

settles

duality

Figure 14 -- Addition of Location and Economic Claim

site

Location Location Type

typificationBusiness

Event

Procedural (dynamic) components of a

business process -- state machine

SOURCE: Object-Oriented Application Development Using Java, Doke, Satzinger, and Williams, 2002, p. 156.

real things

business objects

Figure 24 – Business Objects, Lifecycles, States, and Events

Business Object

Business Object

Lifecycle

Business Object State

Business EventtransitionedBy

• Pending

• In-Service

• Complete

Business Process Phase

• Candidate

• Planned

• Identified

• Proposed

• Specified

• Substituted

Economic Resource Type

• Materialized

• Settled

Economic Claim

• Waiting-Start

• In-Service

• Completed

• Aborted

• Suspended

Business Process

Example States (Lifecycles) for Business

Transaction Entity

Sample Business Transaction Entity

Figure 26 – Sample States for Business Objects

EconomicResourceType

Candidate<<BusinessEvent>>

publishCatalogPlanned

<<BusinessEvent>>

sendAvail&PriceRequest

Proposed <<BusinessEvent>>

sendOffer

Identified

<<BusinessEvent>>

returnAvailabilityAndPriceResult

<<BusinessEvent>>

acceptOffer

Specified <<BusinessEvent>>

sendReceivingReport

Actualized

State Machine Diagram for Economic Resource Type

Economic Event

Economic Resource

Economic Agent

stock-flow inside

outside

Economic Agreement

Economic Commitment

Economic Claim

materializes

settles

fulfills

establish

duality

Economic Resource

Type

typifyspecifies

Economic Event Type

Economic Agent Type

specifies

specifies

typify

typify

reciprocal

Business Processgoverns

Business Event

Business Process Phases

workflowSupply Chain

networked

aggregate

BT Phase Example Business Event Planning Seller publishes Catalog

Buyer sends CatalogRequest to Seller

Seller sends Catalog to Prospective Buyer

Identification Buyer sends AvailabilityandPriceRequest to Seller

Seller returns AvailabilityandPriceResult to Buyer

Negotiation Buyer sends Offer to Seller

Seller sends CounterOffer to Buyer

Buyer accepts details of CounterOffer on Shipment and proposes PaymentSchedule

Seller accepts PaymentSchedule, completing Contract specification (alternatively, another CounterOffer would loop or a NonAcceptance would suspend or abandon the Business Transaction)

Actualization Seller sends an AdvanceShippingNotice when goods are prepared for shipping

Buyer sends ReceivingReport to Seller when inspected goods are accepted

Seller sends an Invoice to Buyer after parts are shipped

Buyer sends RemittanceAdvice to Seller with information about payment of the Invoice

Post-Actualization

Buyer sends WarrantyInvocation to Seller

An Example Business Process with Business Events Grouped in Phases

Figure 23 -- Phases of a Business Transaction and Object States for Completion

Business Process

Planning Identification Negotiation ActualizationPost

Actualization

Economic Resource Type

and Agent become

Candidates

Economic Resource Type

becomes Identified

Economic Contract Is

In-Force

Requiting Economic Event is

Complete

Invoked Warranty

Component Complete

BUYER SELLER

<Business Event>

generateResourceNeeds

<Business Event>

publishCatalog

<SharedBusinessEntityState>

:PlanningPhase

[InService]

<Business Event>

sendCatalog

<SharedBusinessEntityState>

:EconomicResourceType

[Candidate]

<SharedBusinessEntityState>

:PlanningPhase

[WaitingStart]

<Business Event>

sendCatalogRequest

<SharedBusinessEntityState>

:EconomicAgent

[Candidate]

<Business Event>

receiveCatalog

<SharedBusinessEntityState>

:PlanningPhase

[Complete]

BUYER SELLER

<Business Event>

sendAvailabilityAndPriceRequest

<InternalBusinessEntityState>

:Order

[Prepared]

<Business Event>

sendOffer

<SharedBusinessEntityState>

:NegotiationPhase

[InService]

<Business Event>

receiveOffer

<SharedBusinessEntityState>

:EconomicResourceType

[Proposed]

<Business Event>

prepareOrder

<SharedBusinessEntityState>

:EconomicResourceType

[Planned]

<SharedBusinessEntityState>

:IdentificationPhase

[InService]

<Business Event>

returnAvailabilityAndPriceResult

<SharedBusinessEntityState>

:EconomicResourceType

[Identified]

<SharedBusinessEntityState>

:IdentificationPhase

[Complete]

BUYER SELLER

<Business Event>

evaluateOffer

<Business Event>

prepareCounterOffer

<SharedBusinessEntityState>

:EconomicResourceType

[Proposed]

<SharedBusinessEntityState>

:EconomicEventType

[Proposed]

<SharedBusinessEntityState>

:EconomicAgentType

[Proposed]

<Business Event>

submitCounterOffer

<Business Event>

evaluateOffer

<InternalBusinessEntityState>

:Order

[AcceptableShipmentTerms]

<InternalBusinessEntityState>

:Order

[NotAcceptableShipmentTerms]

OK?yes no

BUYER SELLER

<Business Event>

acceptOffer

<SharedBusinessEntityState>

:EconomicEventType

[Specified]

<SharedBusinessEntityState>

:EconomicResourceType

[Specified]

<SharedBusinessEntityState>

:EconomicAgentType

[Specified]

<SharedBusinessEntityState>

:Commitment

[InForce]

<SharedBusinessEntityState>

:Contract

[InForce]

<Business Event>

receiveContract

<SharedBusinessEntityState>

:NegotiationPhase

[Complete]

constraint components of a business transaction (assertions)

Constraints (assertions) & business rules

• Constraints are rules governing the integrity of data that prevent invalid assertions or the movement of data from one state to another without proper controls. For example:– What conclusions can be materialized– What control conditions must be upheld– Which task should follow next.

• Constraints are internal and/or external• To a large extent, specifiable in OCL• Two major behavioral kinds of business rules (Eriksson and Penker, p.

154):– Those that define how knowledge in one form may be derived or

inferred from another form– Those that constrain either the possible structure or the behavior of

objects or processes; that is, the way objects are related to each other or the way object state changes may occur.

Internal control policy examples

• Only an employee playing this role (employee type) can authorize a payment of this amount (event type)

• An employee who is playing this role (authorizer of transaction) cannot play this other role (recorder of the transaction) or this third role (custodian of the asset affected by the transaction).

• {delivery} in state {complete} is a pre-condition for moving {payment} to state {authorized}

participate

stock-flow

Economic Agent

Economic Resource

Economic Event

Raw Material

Purchase

Buyer

Business Event

Record receipt of goods (moves object Economic Event to state complete)

Receiving Clerk participate

Economic Agent

custody

Economic Agent

Inventory Storeroom Clerk

mutually excludes

mutually excludes

stock-flow

Economic Agent

Economic Resource

Economic Event

Raw Material

Purchase

Buyer

Business Event

Record receipt of goods (moves object Economic Event to state complete)

Receiving Clerk

participat

e

Economic Agent

Economic Agent

Inventory Storeroom Clerk

Mutually excludes

Mutually excludes

participat

e

custody

Economic Agent

Economic Resource

Economic Event

Business Event

Economic Agent

Economic Agent

Mutually excludes

Mutually excludes

delivered raw materials

delivered manufactured goods

$$$$

$$

$$manufactured goods

cash recsale

Cash receipt

Cash paymnt

logistical operation

shipment

labor

payment

labor acquire

labor

labor

facilities, services & technology

payment

service acquire

manufacture job

material issue

manufacture operation

$$

$$

sales campaign

Sales emp operation

product services

labor

raw materialspurchase

payment

$$

BP = Cycles

delivered raw materials

delivered manufactured goods

$$$$

$$

$$manufactured goods

cash recsale

Cash receipt

Cash paymnt

logistical operation

shipment

labor

payment

labor acquire

labor

labor

facilities, services & technology

payment

service acquire

manufacture job

material issue

manufacture operation

$$

$$

sales campaign

Sales emp operation

product services

labor

raw materialspurchase

payment

$$

How does transaction level ontology fit with

XBRL ??

Collaboration Messaging for:

Planning Identification Negotiation Actualization Post-Actualization

Collaboration System

Enterprise System for Company B

Enterprise System for Company A

COMPANY A

Business Service Interface (BSI)

XBRL

General Ledger Taxonomy:

•Purchases – xx AccPay (A) – xx

•AccPay (A) -- xx Cash – xx

traditional financial statements

continuous reporting (ebXML, OAG, ISO) transactions, business events, value creation, and

controls

Business Service Interface (BSI)

COMPANY B

traditional financial statements

XBRL

General Ledger Taxonomy:

•AccRec (B) – xx Sales -- xx

•COGS – yy Inventory – yy

•Cash -- xx AccRec (B) – xx

Modeling Collaboration Space

BusinessProcess

BusinessProcess

BusinessProcess

Independent view of Inter-enterprise events

Enterprise #1

Enterprise #2

BusinessProcess

BusinessProcess

BusinessProcess

Enterprise #3

BusinessProcess

BusinessProcess

BusinessProcess

Collaboration Perspective: Trading Partner vs. Independent

Trading Partner view of Inter-enterprise events (upstream vendors and downstream customers)

Dotted arrows represent flow of goods, services, and cash between different companies; solid arrows represent flows within companies

Figure 2 – Different Views of Business Collaboration

Japan expert contribution to 15944-4, 22 Oct 2001, Victoria BC

Questions ?? William E. McCarthy

Michigan State University

East Lansing, MI 48824 USA

Email: mccarthy@bus.msu.edu

Phone: + 517-432-2913

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