|Subject:||Re: Company centric view ends. Data goes to the Net.|
|Author:||Bob Haugen <firstname.lastname@example.org>|
|>Mike Block said,
>Good, but what is REA?
Todd Boyle replied:
>I'm no expert at REA. McCarthy is the person to ask. Or Bob Haugen,
>he is an expert.
I (Bob Haugen) understand REA pretty well from a supply chain viewpoint; not so well from an accounting viewpoint. But I'll comment on a few points, and leave the rest for Bill McCarthy.
First, an intro: I am an old MRP/ERP programmer. My career for several years was dealing with unhappy ERP customers,
whose businesses moved faster than the ERP system. I mean literally, they could make and deliver products faster than they
could get the orders through the ERP system. (For example, Ford recently announced that it takes them more than a month
to get a demand signal from the head of their supply chain to the tail.)
So I started looking for something better and found REA. I use it for multi-company supply chain collaboration, not
>But REA has been around an awful long time, at least 15 years. It has
>been studied to death by everybody from big 5 CPA firms to OOP developers.
I think "studied to death" is an overstatement. PriceWaterhouseCoopers uses REA in something they call the Geneva project. Ralph Johnson and his gang have been working with it for a couple of years. I've been working with it since 1997. It is just now coming into its own, for Internet business collaboration through groups like ebXML.
>The problem with REA is it's mis-labeled, as an accounting system.
>It is really a high-level, and very generalized model for business
>objects, or business systems.
I would almost agree with that, except that it *is* also an accounting system. But I use it as an object model for multi-company business collaboration.
>It establishes a number of abstractions
>that generalize business events. It guides developers in the creation
>of software objects. It was way ahead of its time. For anybody who
>really wants to know what makes things tick, it's a goldmine.
>REA was created in 1980 apparently in response to circumstances that no
>longer exist, in my opinion.
Could you justify that statement? Most of the weaknesses of ERP systems that led me to abandon the ERP model for REA
still exist, although they are being compensated for (at great cost and complexity) in some of the newer developments of
Oracle, SAP, etc. I see no current solutions for smaller businesses, and even those for big businesses are seldom satisfactory.
>For example, McCarthy identified the
>following weaknesses in the conventional accounting model:
How have those weaknesses been rectified?
Also, I would add:
5. It is difficult to handle multi-company collaboration problems like
6. It is difficult to integrate acquired companies - either the
acquired company needs to change to the acquirer's internal systems, or
the acquirer needs to do a major integration project. If both
companies had been using a joint REA system, it could only mean changing
a few parameters. (Utopian idea, I know, but doable.)
The other aspect of "accurate numbers immediately" is that
you can get many other conclusions from REA event records besides the
usual accounting reports - because all the conclusions are just
views over the basic records of economic events.