What is an ontology?
A shared definition of business concepts and how they relate — what a “customer”, an “order” or a “delivery” is — so people and systems use the same business language.
In detail
Different departments and systems may understand the same word differently: for sales, “customer” includes prospects, while for finance it counts only invoiced customers. An ontology clearly defines these concepts, attributes and relationships, and is the foundation for data integration and for AI to understand the business.
For example
Define “valid order” as “an order that is confirmed, not cancelled and has passed credit review”, and all reports and AI queries calculate on this basis.
How companies use it
Start with the core concepts that often cause disputes, have business and technical staff define them together, and write them into the data dictionary.
Common misconceptions
Treating the ontology as purely technical work. Defining concepts is essentially a business decision and requires the involvement of business owners.
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