REA – an ISO event standard – for accounting

This week the OMG held its technical meeting and as usual there were some very interesting sessions – particularly the Tuesday meeting by the Business Architecture folks on “Value and Innovation” hosted by William Ulrich. This covered:

Value Chain Modelling: where the actors or agents in an organisation have their inputs and outputs analysed to see what value is being added to a business and where – information which can then be used to prioritise investments, process improvements, etc. There is an effort to standardised a metamodel for Value Chain modelling – the VDM or Value Driven Metamodel. A good adjunct to BPM and Enterprise Architecture levels of business modelling, in my opinion,and related to metrics and BAM (Business Activity Monitoring) to identify the state of your “value chain” and your business operations’ net-current and potential values.

REA or Resources, Events, Agents – provides a slightly more detailed view of the same value perspective. Agents, or actors, add value to  Resources, via Events. Simple, really. CSC’s Klaus Loehnert and Pavel Hruby presented this, with an excellent decomposition of REA diagrams to business events (what they called the IT implementable layer) as well as abstraction up to a value chain model.

To differentiate REA events (which are accounting abstractions of real events) from other events, the term “economic event” is used (and indeed economic resources and economic agents).

The REA concept was first published in 1982 by William McCarthy and is now an ISO standard – see ISO 15944-4. So now you can answer any pub quiz (or inane RFP) question on “what is the ISO standard for business events” …

In both the above, REA and value chain models could probably be emulated in TIBCO BusinessEvents by using a state model and scorecard, with results displayed in a TIBCO BE Views dashboard.