Enterprise ontology - unpublished paper

This is a companion piece to an article entitled “Business Language Analysis for Object-Oriented Information Systems”, appearing in the second quarter 1996 issue of IBM Systems Journal.  The article provides examples of business concept patterns, in the context of a discussion of why and how to do business language analysis.  This paper expands on the article by laying out a relatively complete set of business concepts and the patterns of their semantic relationships to each other.

The full paper can be downloaded from here.

Introduction

The purpose of business concepts is to provide a set of categories, or buckets, to sort out the large lists of business terms discovered in the process of business language analysis.  Simply viewing the set of business terms as classified by concept is very revealing of the essential concerns and information needs within a particular organization, or human activity system.  Further relating the business terms to each other, by using the relationships indicated by concept patterns, turns business language into a model that provides a powerful basis for information system modeling and design.

Concept patterns form a seamless semantic network.  This is almost impossible to portray via any two-dimensional medium, such as this paper.  The best we can hope for is to provide an approximation of a multi-dimensional network.  The approximation used here is a set of subnets, each of which is focused on one concept.  Each subnet displays all of the relationships from a focal concept to all other relevant concepts in the scheme.  Each relationship is bi-directional, with a pair of names that is meaningful in both directions.  This means that if there is a relationship in one subnet from Concept 1 to Concept 2, there should be a subnet for Concept 2 that shows the relationship back to Concept 1.  These symmetrical relationships should be meaningful converses of each other, such as “requires” and “is required by”, or “produces” and “is produced by”.  In some cases there are important relationships that exist within the concept itself, and these are shown as recursive ovals.  There is an informal convention in the patterns that shows the main relationships to other concepts radiating off to the right of the focal concept.  Coming in from the left are relationships that refine the focal category, or that explore fundamental subtypes of the focal category.  In general, refinements of concepts and subtypes of concepts are not explored in detail in this paper.  Exceptions to this rule include subtypes of resources (material, energy, monetary, human and information resources) and subtypes of relationships (roles, systems, and agreements), and a few others that do have their own sections in this paper.

Figure 1 is a legend for the graphic conventions used in this paper.  It is important to keep in mind that this is an exploration of meaning, and an attempt to provide useful structure to the mass of business language discovered in language analysis.  What you are seeing is not a set of formalisms for building relational databases or object-oriented software.  These are not entity-relationship models or object models.  They are fragments of patterns that relate concepts together in a relatively informal, but hopefully useful and revealing way.

Legend

LEGEND

 
Figure 1

Organization

Organization is a concept that includes groups of people of all types.   An organization is a subtype of system (that is, a human activity system).  From the point of view of the human system of interest there are internal organizations and external organizations.  Within some context there are replicated organizations (field offices, project teams) and singular organizations (the Board of Directors).  An organization can be formal (a department), informal (a committee), or legally constituted (a corporation).

 
Figure 2

Two recursive relationships among organizations are shown.  A containment relationship says that one organization is part of another organization, as in the standard organization chart. It is also possible for an organization to report to another, without actually being a part of it as a larger entity (such as a project team that reports to a steering committee, without being contained by the steering committee).

Organizations can be parties to agreements.  An organization requires certain roles to perform its functions, which in turn are dictated by the role played by the organization itself.  An organization may be defined by a functional area of the enterprise.  It is involved in a number of definable business situations.  It is composed of individuals that are its members.  Like many other business concepts, organizations have discernible states.  Organizations control various types of resources in order to fulfill their roles in the enterprise.

 

Individual

An individual is a human being, and one type of legal entity (the other type of legal entity is a legally constituted organization).

 
Figure 3

Individuals embody the human resources (skills, abilities, attitudes, etc.) that are needed by the enterprise.  People are identified by a number of identifiers, including names, social security numbers, employee numbers, etc.  Individuals can have states, including health, training, etc.  They play any number of roles in relation to actions that are part of processes.  They are involved in an unlimited number of business situations.  They are described by various characteristics (over and above the human resource aspects they embody).    Individuals are members of organizations.  Individuals, as well as organizations, can be party to various agreements, including contractual agreements.

Role

A role is a special type of relationship between a function or action and the individual or organization responsible for it.  Roles may be formal (job title) or informal (committee membership).  There are distinct types of roles, including customer, employee, regulator, sales or distribution channel, and supplier, as well as more general types such as performers, managers, and recipients of various types of results.

 


Figure 4

A role may be characterized by human resources (skills, abilities, etc.), which enables it to be matched with individuals who have those characteristics.  A role may be played by an individual person, a device, or an organization.  Organizations require some set of roles to perform their functions.  A role is the point of responsibility for one or more specific functions.  Roles are involved in identifiable business situations.  Roles generate the events that drive business processes.  It is the responsibility of some roles to provide resources, and all roles require resources to perform their required actions.  Actions are atomic units of business activities that can be performed by some set of roles.

Result

The concept of result is a generalization of the concept of product.  Other types of results are services, by-products, and interim results that are produced in the course of business activity.

 
Figure 5

Results are produced by processes (generally major products and services, as well as incidental by-products) and by functions (generally interim types of results).  A result is generally produced on behalf of a recipient type of role, that expects to receive the result.  Results are composed of resources that have been transformed by processes and functions.  They may, in turn, become resources, to be consumed by other processes.  Results are transmitted via flows, and may be stored or located in specific locations before being received by their intended recipients.

Event

Events occur as external perturbations across the boundary of the enterprise, or are generated internally.  An event can occur as the result of timing or as the result of some condition becoming true.  Externally generated events can be solicited, and therefore expected, or predictable to an extent (e.g. sales, stimulated by marketing campaigns). Unexpected events are things like typhoons, stock market movements, or the appearance of new technology.  Though unexpected in the sense of being out of control of the enterprise, they can in many ways be anticipated and provided for with contingency plans.


Figure 6

An event initiates a flow of material, information, etc., and it takes an event to initiate an identifiable business situation.  An event is generated by a role being played by an individual or internal or external organization.  Events trigger processes within the enterprise.  A common feature of events is that they are time constrained, starting and stopping at discrete times, or ranges of times.  A key purpose of the information resource of the enterprise is to record the sensing of events as they occur.

Process

A process, as used in this ontology, is a complete sequence of business behavior that is triggered by an event and produces a meaningful business result.  Major subclasses of business processes are transactions, transformations, services, and maintenance.  Transactions can be primarily inward - bringing things into the enterprise (money, information, or other resources) or outward - sending things out (bills, products, by-products and waste).  Inward and outward transactions do not necessarily correspond to internal or external event types (e.g., a bill, going out, is triggered by an internal event).  Transformation (conversion) processes take resources as input (material and energy, or information) and transform them into other (value-added) states.  Service processes are less product-oriented and can be either passive from the customer viewpoint (haircut, restaurant meal, airline flight) or collaborative (consortium, information retrieval).

 
Figure 7

Processes are triggered by events.  Processes are composed of functions, invoked as needed.  Processes can be explicitly managed by individuals in the role of manager.  A process generally exists to produce a result, and may be evaluated by the effectiveness of producing the result, and the importance of the result to the enterprise.  Processes may be designed to alter situations, to resolve undesirable situations, or to maintain desirable situations.  As end-to-end sequences of functionality, processes intersect, or cut across the functional areas of the business (accounting, marketing, engineering, etc.)  A key purpose of the information resource of the business is to provide control for its processes.

Function

A function is a unit of business activity that is less complete than a process.  Functions can be active (initiating, transforming, conveying) or passive (storing and receiving).

 
Figure 8

Functions are accomplished by some number of discrete actions.  They are invoked in various orders, to form processes (which means the same function may appear in many processes).  Functions are performed by individuals and/or organizations in roles.  They are triggered, and in turn initiate, flows of resources and control.  Functions are governed by rules, which dictate how flows should be initiated and directed.  Functions produce identifiable results, but these tend to be interim results that contribute to the ultimate results of processes.  At the function level we can see the transformation of resources into interim and final results.

Action

An action is a very atomic unit of business activity.  There is a primary distinction between mental actions and physical actions.  Both require energy, but are distinguished by the types of resources and devices involved.  Physical actions perform transformations, while mental actions provide the logic that directs processes through various functions.  It is sometimes useful to distinguish between actions described at a business level, and those that are performed by information systems.

 
Figure 9

Atomic actions are the activities that accomplish functions.  An action is performed by a (set of) role(s). It is triggered by a flow of material, energy, information, etc. and in turn initiates such flows.  Actions use resources and devices, and action is where we see a trade-off between individuals and devices.  Actions are at the level where it is most reasonable to analyze time durations that aggregate together to allow us to simulate business processes.

Flow

Flow is not one of our topmost categories, and is not often named in business language, except according to things that travel along a flow.  We distinguish four types of flows in most enterprises:  flows of money, physical things, information (or data), and control.

 
Figure 10

Control flow tends to accompany, or direct the flow of other resources.  Flows begin and end at locations, which can be logical or physical, based on the type of resource traveling on the flow.  Flows trigger actions and functions, and are initiated by events, actions and functions, based on business rules.

Resource

The concept of resource represents all those things that are required by an enterprise to sustain its processes and create its results.  Resources break down into five general categories:  physical, energy, monetary, human, and information resources.  At this level we are concerned with general types of relationships that are common to all types of resources.  This will simplify the specific resource-type discussions, through the idea that this general pattern is inherited by each of the more specific types.

 
Figure 11

Resources are provided by individuals and organizations, acting in the role of supplier.  Resources can be located at particular physical or logical locations, and they move from one location to another via appropriate types of flows.  We can talk about the state of any resource.  Resources are the components and materials that are assembled into systems.  Manager roles are responsible for different types of resources within the enterprise. Resources are used by actions in the course of producing results.   At the function level we can see the transformation of resources into interim results, which in turn become resources.  All resources can be valued by the monetary resource; even monetary resources can be valued in terms of money, such as currency conversion, instrument comparison, time value of money, etc.  Resources are controlled by organizations, and can be involved in any number of business situations.

Physical resource

Physical resources represent tangible, molecular things that are used and consumed by the enterprise.  Two intersecting type structures help categorize physical resources.  Resources may be mass (sand, sugar, hydrochloric acid), countable (pencils, transistors), or identifiable (individually tracked and accounted for).  Resources may also be supplies, devices, components, or environmental resources.  These category sets influence each other.  Supplies are almost always either mass or countable type resources.  Environmental resources (land, water, trees) tend to be mass types, but may also be identifiable (a particular lake, a large oak around which a courtyard is constructed).  Components are either identifiable or countable, while devices (tools and machines) are usually identifiable.

 
Figure 12

Physical resources are always quantifiable, and almost always have additional physical characteristics (weight, dimensions, quality, color) that we are interested in.  Many physical resources (devices) require energy, while some are used for storing potential energy.  We need to be able track the life cycle of physical resources, for depreciation and inventory purposes.

Energy resource

Energy is a factor that should be considered more than it generally is in business models.  Energy is either kinetic (producing physical motion), thermal (expressed in terms of temperature measures), or potential (stored in a medium for future release).

 
Figure 13

Actions all require energy.  Physical resources store or contain energy (fuels, batteries) and device-type resources consume energy.

Human Resource

Traditional use of the term human resource refers to employees - human beings employed by the enterprise to do work.  Here we're encouraging the separation of concerns between actual human beings (who we're calling individuals) and the resource aspect of what the enterprise needs.  The resource side of this equation looks at skills, knowledge, attitudes, capabilities, and experience that are required to perform certain required actions, on the one hand, and that are embodied in individuals, on the other.

What this allows us to do is apply the general resource pattern to human resources, without putting individual people directly into these patterns and equations.  We can say things like "Three years of Visual Age experience is worth ...", and then negotiate with individuals, with that monetary valuation as one aspect of the negotiation.

 
 
Figure 14
Human resources, as defined here, are required by specific actions.  The types of human resource, as embodied in individual human beings, is matched against the needs that characterize various roles to be filled by individuals.

Monetary resource

Money produces one of the least interesting of our patterns, notwithstanding the relentless (and understandable) attention paid to it by enterprises of all types.

Money can be promised (to be available in the future) or actual.  In can be incoming (billings, receivables), outgoing (payments, liabilities), or static (balances).

 
Figure 15

Monetary resources are assigned to accounts (which are logical locations).  Money provides valuation for all types of resources used by the enterprise.

 

Information resource

Information resources represent the kinds of things that can be known by the individuals and organizations in the enterprise.  What does it mean for an organization to know something?  It means that it has stored data (physical or electronic), or that its member individuals know it.  This is the distinction between recorded and mental resources.

It is really at the subtype level that we can see how different categories of information resources are actually related to other patterns in this ontology.  This includes how information types are interrelated with each other in interesting ways.  The types shown here, while numerous, are not exhaustive, and information-intensive enterprises tend to expand on this pattern in interesting ways.  A few sample relationships from specific types of information resources to other concepts in the ontology are shown.  Again, this is illustrative, rather than exhaustive.

 
Figure 16
Primary functions of information resources are to record events and control processes.  Information resources are highly dependent on how they are structured by relationships.
 

Location

The concept of location must be present in any business ontology.  Two main types of location, physical and logical, are differentiated here.  They are so different that it may not be intuitive to think about them as part of the same category.  However, they do exhibit very similar semantic patterns, so it is interesting to show the commonality.

Physical locations have to do with space.  Space defined in three, two, one, or zero dimensions corresponds respectively to volumes, surfaces, lines, and points.  Points can be of two types: coordinate (x,y; latitude, longitude) or referential (on the fourth floor of the building; next to the car).  Logical locations include accounts, postal addresses, and network addresses (phone numbers; LAN ids, etc.).

 
Figure 17

We often say that the manager role manages locations; usually it is something at the location that is actually managed.  Locations locate resources and results.  Many locations can be spanned by the complex things we call systems.  They are both the source and destination of flows.  Any number of locations may be involved in a business situation.

Account

As we saw above, account is a type of logical location, which in turn is a type of location.  Some of the basic categories of account are noted (payable, receivable, ledger, personal).

Accounts are often one of the top-level categories in business thinking.  This point of view stems from the preeminence of the accounting discipline in the history of business, and of computing systems.  From the overall perspective of this business ontology, accounts are assigned a lesser position, as logical locations, or buckets, for monetary resources.

 
Figure 18
An account is updated by transactions, and is generally assigned to a manager role.  Many of the business terms that represent flows have to do with flows that access accounts.  As we’ve noted, accounts only exist so that monetary resources can be assigned to them for tracking purposes.

Time period

Time is one of the highest level concepts in our scheme, as in most ontologies.  Obvious order-of-magnitude levels of time granularity that are relevant in measuring business processes are shown.

In addition to activity measurement, we emphasize that events have temporal dimension.  Some of these are discrete, or finite (ATM transaction start time), while others are fairly indefinite (new product idea).

 
Figure 19

Time periods indicate the initiation and termination of business events.  They also determine the frequency of occurrence of events.  Actions are delimited by time periods, which forms the basis for the ability to simulate business processes.  Inventory management is enabled by relationships of time periods to physical resources.

Relationship

Relationship is a special type of information resource that brings a number of pattern concerns to the forefront.  Relationships can involve like things (in the same ontological category) or unlike things.

General types of relationship include containment, composition (both part/whole and piece/whole), and hierarchical.  Hierarchical relationships can be created by generalizing intuitive things to a less intuitive level (individuals and some organizations generalized to "legal entity") by specializing things to more technical level (organization specialized as "government organization").

Certain relationships take on an even more important character.  Agreements (including contractual relationships), roles, and systems are singled out elsewhere in this ontology as high-level concepts in their own right.

 
Figure 20

Key relationships can involve individuals and/or organizations, and can provide structure to physical and information resource types.

Agreement

An agreement is a specific type of business relationship.  Agreements can be contractual, or they can be more informal.

 
Figure 21
Agreements have parties to them, which can be individuals or organizations.  Agreements, especially contractual agreements, are identified by some kind of identifier, such as a contract number.

System

A system is a recognizable, differentiated complex of other things, that exists over time, and is thought to have identity beyond the sum of its parts.  As such, it is a complex type of relationship.  Certain key types of systems that we're concerned about in business include applications, networks, and organizations.  Organization is one of our topmost categories as well, so that it is an example of the same concept appearing at more than “level” in the ontology.  This is a demonstration of the inability of information to obey the law of gravity (there is no absolute “top” in this universe).

 
Figure 22

Systems are assembled from resources of all kinds.  They are differentiated things, and thus have identifiers.  A system spans locations, both logical and physical.

State

The concept of state is one of the most nebulous we have to deal with.  The idea of a finite state machine is well known to information systems professionals, but in the business domain states are not quite so "finite".  At the same time, we need to express ideas that have to do with transient characteristics of resources, individuals, and organizations.  States can describe discrete, step-function changes, or values on a range of continuous values.

 
Figure 23

In comparison to the idea of situation, covered below, state is more limited in scope.  It is descriptive of relatively singular things (resources, organizations, and individuals.)  States of large numbers of things, when viewed in the aggregate, create situations.

Situation

The idea of situation is a complex, and powerful one. A brief definition of a situation is "a structured part of reality that … the agent somehow manages to pick out."  One way to look this idea is as if the whole set of modeling constructs could be frozen at a point in time, and examined in terms of all the processes in progress and the states of all the components.  Situations can represent reality beyond the enterprise - a whole environment or industry - "the OOT marketplace".

Situations can be desirable, in which the enterprise will attempt to sustain them, or undesirable, in which case the enterprise will attempt to change them.   Situations can arise from natural causes, or in the case of business, quite commonly are the result of legal issues.

The concept of situation is actually the heart of most service businesses, which manage more or less complex situations on behalf of their clients.  A classic example is an insurance company, which exists by defining various situation types, analyzing the likelihood of various outcomes, and helping its clients manage the risk-ridden situations in their business and personal lives.

 
Figure 24
A specific situation may be traced back to an initiating event.  It can be resolved, altered by, or maintained by processes that are organized around this purpose.  Situations motivate organizations to establish goals to alter, resolve, or maintain situations.  One situation may involve any number of organizations, roles, individuals, resources, and locations, in their aggregate set of states.

Summary

The field of business ontology is a big subject, and is we have barely scratched the surface here.  The set of concept patterns presented here is changing constantly.  It will continue to change and evolve, based on application to more and different enterprises in different industries.

This whole framework of generic semantic patterns is meant to be used for structuring actual business terminology.  Terms found in use in specific businesses will challenge and extend the structure of these concepts.  At the same time, specific terms will not necessarily be found that match all the categories in this ontology.  Some of the higher-level categories (relationship, location, resource, etc.) exist more as mental placeholders, than as direct linkage to specific terminology.

If successful, this set of business concept patterns will prove useful in the endeavor to create meaningful business information systems.  It is presented in the spirit of exploration, and the reader is encouraged to modify, extend, and use it, and then share the results.