Requirements for a better Business Taxonomy Part 3

Having discussed that we can have multiple dimensions for a detailed Business Taxonomy, lets see what dimensions we might want to have. The first two dimensions we discussed about described 1) Who is the company's clientele (for media we should look at the audience) 2)How the company services their clientele. I suggest we also give a dimension for 3)What business need the company accomplishes for their clientele. For instance, our hypothetical healthcare software could accomplish a particular process. A big new push in healthcare is Electronic Medical Records (EMR). If we have this third dimension, we can now classify a Healthcare Consulting company specializing in EMR. Now, if we search for businesses providing EMR solutions, we will get results for any company who are working in that space weather they are software or a consultant. Most taxonomies that "solve" this problem by searching on a mix of keywords and their tree structure. This third dimension gives a way to tie in companies that are working on related subjects but using different methodologies. Look at HR Block and Intuit. One is a service company and one is a software company, but both provide tax solutions. We will look at more dimensions in the next post.

Requirements for a better Business Taxonomy Part 2

Following my previous post, we see that a business can be classified in a parent child hierarchical taxonomy, but sometimes one could create a sub-category which is really expressing a not a sub-type of the parent category, but rather a different aspect of the business. As in healthcare software is not really a sub-category of software. Healthcare defines the customer base or subject matter of the software. A true sub-type of software would be infrastructure software or business application software. An improved business taxonomy would then categorize a company in multiple ways or dimensions. For instance you could have, a dimension to describe the clientele or market that. So our healthcare software company would have its clientele be set to healthcare. Another dimension would describe how the company solves the business problems in the case of our  healthcare software the company would be categorized as software. In my next post we will discuss other possible dimensions for a business taxonomy.

Requirements for a better Business Taxonomy Part 1

Most business taxonomies, I have seen, are hierarchical with parent and child relationships. A good example may be cloud computing. The term is new and kind of vague, but it can be divided into various sub categories like cloud computing hosting like Amazon Web Services or Microsoft Azure which will host virtual machines on the cloud, or cloud computing infrastructure services like cloud based backup services or antivirus services. However, if you see a cloud application that is specially oriented towards a given vertical like Healthcare which has special requirements like HIPPA, do you want to create a cloud subcategory for healthcare. What if there is a licensed software which manages Electronic Medical Records and is HIPPA compliant but does not run in the cloud. Do you create a subcategory for Healthcare under licensed software too? Then how do you find all the HIPPA compliant solutions? It seems that you need to categorize businesses in multiple ways. In effect, you should have a multi-dimensional hierarchical taxonomy to be able to better categorize and hence find businesses in any database. More on what these categories should be in my next post!

Why the North American Industry Classification System (NAICS) is no good?

When navigating a database of businesses, you need a taxonomy in order to find companies in an industry you are interested in. You would think that the NAICS would be ideal, however in practice none of the commercial databases use it. The reason is found on the US Census web site.


As stated on US Census web site, "The North American Industry Classification System (NAICS) is the standard used by Federal statistical agencies in classifying business establishments for the purpose of collecting, analyzing, and publishing statistical data related to the U.S. business economy." and "NAICS was developed under the auspices of the Office of Management and Budget (OMB), and adopted in 1997 to replace the Standard Industrial Classification (SIC) system. It was developed jointly by the U.S. Economic Classification Policy Committee (ECPC), Statistics Canada , and Mexico's Instituto Nacional de Estadistica y Geografia , to allow for a high level of comparability in business statistics among the North American countries."


The reason that it is not useful is that it is used to track broad trends. When you need to analyze business segments of our market you will see that a finer grained and richer taxonomy is needed. I have started this blog to explore this issue as my team and I continue to tackle the issues. Stay tuned.