1. Proposed Specialization Module for the UMM – June 2006 Bill McCarthy, Michigan State University Economic Event Economic Agent Economic Resource duality

2. BuyerSeller Third Party Collaboration Space Value Exchange Japan expert contribution to 15944-4, 9 May 2002, Seoul Korea

3. Declarative (structural) components of a business process -- class diagram

4. What actually occurred What could be or should be What is planned or scheduled CommitEvent Rtype Etype Atype RtypeEtypeAtype Resource EventAgent Color-coded time expansion

5. Economic Event Economic Resource Economic Agent stockflow inside outside Economic Commitment reciprocal fulfills duality Economic Resource Type typifies specifies Economic Event Type Economic Agent Type specifies typifies participate 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

6. 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

7. 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)

8. PORTFOLIO of ATTRIBUTES: ingredients baked advertised delivered guaranteed fresh (Lancaster) ??

9. Figure 7 -- Subtypes (possible) for ECONOMIC RESOURCE Services RightsGoods Intellectual Product (IPR) Real Estate Regulatory Service Transport- ation Services Materials Human Services FundsRight of Way WarrantyInsurance Economic Resource

10. Figure 4 -- Subtypes of Person Based on Identity Economic Agent (ISO Person) Individual Public Administration Organization

11. Figure 5 – Person and Economic Resource as the Basis for Exchange control Economic Agent (Person) Economic Resource control Economic Agent (Person) Economic Resource

12. 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)

13. Cookie-Monster (the customer) and Elmo (the entrepreneur) engage in a SHIPMENT (transfer of Cookie Inventory)

14. Cookie-Monster (the customer) and Elmo (the entrepreneur) engage in a PAYMENT (transfer of Cash)

15. Normative Primitives of 1982 REA ontology Economic Event Person stock-flow duality Economic Resource participation

16. Named Set of Groups Cashiers Salespeople Economic Role Typifiy Grouping 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

17. Economic Resource Economic Event Person stock-flow participation Economic Resource Type Economic Event Type Economic Role policy typify policy

18. Economic Agreement reciprocal commitment fulfills commitment fulfills economic event duality economic event Adding Commitments

19. Commitment specifies Resource Type specifies Event Type specifies Agent Type Abstract Specification of Commitments

20. Expansion of normative model normative REA model expand horizontally on “time” dimension expand vertically on “granularity” dimension (3-level arch.)

21. 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

22. 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 typify reciprocal Business Process governs Business Event Business Process Phases workflow Value/Supply Chain networked to-participant typify policy

23. A Customer B ProductSupplier C LogisticsVendor D Bank PO RA AA FreightOrder AA AdvanceShipNotice RA AdvanceShipNotice AA ShippingDocument AdvanceShipNotice RA FundTransferAdvice AA ReceivingAdvice RA FundTransferAdvice AA FundsTransferNotice RA FundsTransferNotice RA Business Process: MultiParty Collaboration

24. 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 typifies reserves involves Partner Third Party Mediated transaction Business Transaction participates requires Regulator constrains Business Event

25. 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 typification Business Event

26. Procedural (dynamic) components of a business process -- state machine

27. SOURCE: Object-Oriented Application Development Using Java, Doke, Satzinger, and Williams, 2002, p. 156. real things business objects

28. Figure 24 – Business Objects, Lifecycles, States, and Events Business Object Business Object Lifecycle Business Object State Business Event transitionedBy

29. 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

30. EconomicResourceType Candidate > publishCatalog Planned > sendAvail&PriceRequest Proposed > sendOffer Identified > returnAvailabilityAndPriceResult > acceptOffer Specified > sendReceivingReport Actualized State Machine Diagram for Economic Resource Type

31. Economic Event Economic Resource Economic Agent stock-flowinside outside Economic Agreement Economic Commitment Economic Claim materializes settles fulfills establish duality Economic Resource Type typify specifies Economic Event Type Economic Agent Type specifies typify reciprocal Business Process governs Business Event Business Process Phases workflow Supply Chain networked aggregate

32. BT PhaseExample Business Event PlanningSeller publishes Catalog Buyer sends CatalogRequest to Seller Seller sends Catalog to Prospective Buyer IdentificationBuyer sends AvailabilityandPriceRequest to Seller Seller returns AvailabilityandPriceResult to Buyer NegotiationBuyer 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) ActualizationSeller 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

33. Figure 23 -- Phases of a Business Transaction and Object States for Completion Business Process Planning Identification NegotiationActualization Post 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

34. BUYERSELLER generateResourceNeeds publishCatalog :PlanningPhase [InService] sendCatalog :EconomicResourceType [Candidate] :PlanningPhase [WaitingStart] sendCatalogRequest :EconomicAgent [Candidate] receiveCatalog :PlanningPhase [Complete]

35. BUYERSELLER sendAvailabilityAndPriceRequest :Order [Prepared] sendOffer :NegotiationPhase [InService] receiveOffer :EconomicResourceType [Proposed] prepareOrder :EconomicResourceType [Planned] :IdentificationPhase [InService] returnAvailabilityAndPriceResult :EconomicResourceType [Identified] :IdentificationPhase [Complete]

36. BUYERSELLER evaluateOffer prepareCounterOffer :EconomicResourceType [Proposed] :EconomicEventType [Proposed] :EconomicAgentType [Proposed] submitCounterOffer evaluateOffer :Order [AcceptableShipmentTerms] :Order [NotAcceptableShipmentTerms] OK? yesno

37. BUYERSELLER acceptOffer :EconomicEventType [Specified] :EconomicResourceType [Specified] :EconomicAgentType [Specified] :Commitment [InForce] :Contract [InForce] receiveContract :NegotiationPhase [Complete]

38. constraint components of a business transaction (assertions)

39. 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.

40. 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}

41. 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

42. 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 Inventory Storeroom Clerk Mutually excludes participate custody

43. Economic Agent Economic Resource Economic Event Business Event Economic Agent Mutually excludes

44. delivered raw materials delivered manufactured goods $$ manufactured goods cash recsale Cash receipt Cash paymnt logistical operation shipment labor payment labor acquire labor facilities, services & technology payment service acquire manufacture job material issue manufacture operation $$ sales campaign Sales emp operation product services labor raw materials purchase payment $$ BP = Cycles

45. delivered raw materials delivered manufactured goods $$ manufactured goods cash recsale Cash receipt Cash paymnt logistical operation shipment labor payment labor acquire labor facilities, services & technology payment service acquire manufacture job material issue manufacture operation $$ sales campaign Sales emp operation product services labor raw materials purchase payment $$

46. How does transaction level ontology fit with XBRL ??

47. 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

48. Modeling Collaboration Space

49. Business Process Business Process Business Process Independent view of Inter-enterprise events Enterprise #1 Enterprise #2 Business Process Business Process Business Process Enterprise #3 Business Process Business Process Business Process 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

50. Questions ?? William E. McCarthy Michigan State University East Lansing, MI 48824 USA Email: mccarthy@bus.msu.edumccarthy@bus.msu.edu Phone: + 517-432-2913 Web: http://www.msu.edu/user/mccarth4http://www.msu.edu/user/mccarth4