Towards an OWL-formalization of the Resource Event Agent Business Domain Ontology

Business domain ontologies offer great opportunities for facilitating communication between people in business, for improving the enterprise system engineering processes and for creating interoperability between enterprise systems. However despite these opportunities, their use in practice is still limited. This can be partly attributed to the lack of formal representation of these ontologies. This paper analyses current formalizations of the Resource Event Agent business domain ontology (REA-ontology) and investigates how this formalizations can be improved. Our approach recognises the opportunities that the conceptual modelling and database field can offer for ontology engineering and as a consequence a UML conceptualization of the business domain ontology is used as starting point of the formalization. Based on the transformation guidelines from UML to OWL and the current formalization of OWL we present some transformation dilemmas. It is our believe that these formalization problems are not unique to business domain ontologies and that other domain ontologies can also benefit from standard solutions to these formalization problems. 1 Problem and Context Business domain ontologies offer great opportunities for creating interoperability between enterprise systems. The successful application depends on the quality of the business domain ontology. Important ontological quality factors are reusability, reliability, shareability, portability and interoperability[1, 2]. In our view a business domain ontology with a strong theoretical basis which is engineered following a good methodology resulting in a proper formalisation will be of a much higher quality. This in turn will lead to more and successful applications. The last decade different business domain ontologies (Tove[3], Enterprise Ontology[4], REA Business Ontology[5], E3 value Ontology[6] and Business Model Ontology[7]) have been proposed. The developers of these business domain ontologies have different scientific backgrounds and this is shown in the different theoretical backgrounds of the ontologies. The creators of Tove and the Enterprise Ontology have an artificial intelligence background and the development ⋆ Corresponding Author of their ontologies gave them a more precise understanding of the ontology engineering process. The other ontologies share a more business-oriented focus. The Business Model Ontology is based on the balanced scorecard and has a strategic focus. The E3 value ontology is developed to support the requirements engineering process of an e-commerce project and should make sure that economic value is created. The REA-business domain ontology has a strong theoretical basis in accounting and micro-economics, and will be further described in detail later in this paper. Most of these domain ontologies have a strong theoretical basis but lack a formal description that can be used in practice. Tove and the Enterprise Ontology are both formalized by the Ontolingua framework but to our knowledge this has not lead to much usage in practice. For the development of a formal representation of the Business Model Ontology[7] and the REA business domain ontology [8] Protégé 2000 was used. With the release of the OWL plug-in for Protégé this has also resulted in an OWL formalization of these business domain ontologies. The E3 value ontology is not formalized and according to Gordijn ([6]) this is not required because of the mainly communication focus of the ontology. In [7] the benefits of formalizing the ontology are recognized. In the case of the Business Model Ontology the formalisation has led to a more precise specification of the business domain constructs and relations [9] and the formalization also creates a lot of opportunities in business management research [10]. The Inforge Group of the University of Lausanne is currently investigating how their formalized business model ontology can support new methods and computer-tools for diverse fields as business model design, business strategy and Information Technology/ Information Systems alignment. A formalization of the conceptualization of the application domain helps the developers to analyse their proposed ontology by comparing it with reality and can more easily expose critical issues. Formal languages describe the meaning of knowledge precisely and this supports automatic reasoning, which can be used for checking the consistency of the ontology[11]. A formal description also makes it easier to map different ontologies and find similarities between ontologies. Generally a formal description will improve the acceptance of the business domain ontology and will facilitate the development of applications. The Resource Event Agent business ontology (REA-ontology)[5] is another business domain ontology that offers great possibilities because of its strong theoretical basis and its unique structural characteristics. Its foundation in microeconomics(Theory of the Firm), strategic concepts (Porter’s Value Chain[12]) and basic accounting principles holds great promises for enterprise system design and creating interoperability between enterprise systems. The accounting background of the REA-ontology is evidenced by its core construct: economic duality. This means that each increment event in the business’s resources is linked with a corresponding decrement event. This constraint thus ”forces the business analyst or designer to consider explicitly the causal links between events and resources [13]” and should lead to more complete business models when the REA business domain ontology is used during enterprise system design. Unfortunately unlike the Business Model Ontology, the REA-ontology is underspecified as an ontology. The terminology of the constructs of the REAontology is sometimes inconsistent and confusing [14]. The proposed definitions, relations and constraints need to be converted into a formal language to discover inconsistencies and to analyze operational use[15]. A more formal conceptualization in an ontology language will improve the definition of the constructs and will prove that the REA-ontology can offer real support for enterprise system design and creating interoperability between enterprise systems. The machine readable REA-ontology can be used to develop tools for business modelling and can offer support for supply chain collaboration [16]. In this paper we take the first step towards developing a formal representation of the REA-ontology in OWL. In the next section the current specification, conceptualization, formalization and implementations of the REA business domain ontology are described. In the third sections this current description and some existing formalization guidelines are used to discuss some ’UML to OWL transformations’ that can be used to formalise the REA-ontology. Finally, the last section outlines the conclusions and our future research. 2 Existing Resources and Past Work The formalization of the REA business domain ontology must be the result of a structured ontology development process. Our approach is based on the Methontology Framework developed by [17] but mainly focuses on the development oriented activities. The management and support activities that support the ontology development process are also important and will surely improve the development process but they are not the main focus of this paper. In the next subsections the current specification, conceptualization, formalization and implementation of the REA business domain ontology is described. 2.1 Specification REA Business Domain ontology For almost twenty years the REA model was widely used as an educational instrument for teaching business students how to design accounting databases [18], while its use in system development practice was limited to a few companies[19]. Recently there has been a remarkable increase in researchers’ and practitioners’ interest in the model because of two reasons. First, the REA model developers were involved in a number of international standardization efforts for e-collaboration systems (e.g. ISO Open-EDI initiative, UN/CEFACT, OAG, eBTWG). This participation has resulted in the adoption of (parts of) the REA model as a business process ontology in the UMM business process and information model construction methodology [20] and the ECIMF system interoperability enabling methodology [21]. Second, the REA model has been proposed as a theoretical basis for the reference models that underlie ERP systems [22]. Both developments are witnesses of the REA model’s importance in the current and future enterprise systems landscape. The original REA-model was developed by McCarthy in 1982 and presented as a semantic model for the development of accounting systems[23]. Over the years McCarthy and Geerts changed focus and started to consider REA as a business domain ontology, which resulted in extensions to the basic REA model. These include the modelling of accounting phenomena at different levels of abstraction (value chain, process and task) and additional ontological primitives and axioms(commitment events, type images)[5]. 2.2 Conceptualization of the REA Business Domain ontology For the description of the REA-ontology the recent work of Geerts and McCarthy can be used[15, 24]. In these papers REA-ontology constructs and the relations between them are presented by means of ER diagrams or UML class diagrams. Table 1 summarises the most important definitions. Table 1. REA-ontology concepts definitions[5, 15, 24] REA-construct Definition Business Process a collection of activities that takes one or more kinds of input and creates an output that is of value to the customer [25]. Economic Event Economic Events represent increments or decrements of the value of the resources. Economic events in the exchange processes represent transfer of control of an economic resource from one economic agent to another, where one agent provides other agent certain rights for the resou