Working with the Taxonomy

A taxonomy is a hierarchical collection of categories. A category with no sub-categories is known as a leaf category.

Once you upload the taxonomy, you can navigate it on the Categories page ().

• Uploading a Taxonomy
• Navigating a Taxonomy

Taxonomy Design Principles

A well-designed taxonomy is easy to understand and consume. It is also easy to categorize the data into it.

Taxonomy Purpose

A critical aspect of taxonomy design is the purpose of the taxonomy. The purpose of a taxonomy is specific to its consumer audience.

For example, a taxonomy can be used to help procurement leaders understand annual spend by categorizing transactions into broad categories that reflect high-level segmentation of supply markets.

Taxonomy Items

It is important to identify what is being categorized.

For example, if categorizing records of purchase orders for machine parts, it is important to establish whether it is the part that is purchased or the final product sold that should be categorized. Clarifying any ambiguity early allows for consistent categorization.

Mutually Exclusive, Collectively Exhaustive (MECE)

MECE is a grouping principle. The closer a taxonomy follows this principle, the easier it is to categorize into. Though MECE is difficult to realize in practice, remembering this principle when designing a taxonomy helps ensure that each record has exactly one category in which it belongs and that categories are comprehensive.

Tier or Level Homogeneity

Categories within a single tier should be of a single kind.

For example, a taxonomy with perfectly homogeneous tiers is the biology taxonomy, where all first tier categories are of the single kind, domain, and all second tier categories are of kind kingdom. For the vast majority of taxonomies, it is not possible to realize perfect tier homogeneity. The MECE principle applies to the groups within the tier just as it applies to categories across tiers. Instead, a taxonomy should aim to have as few tier-inhomogeneous groups as possible.

Dataset and Taxonomy Fit

A leaf category does not have to exist for every transaction.

If a dataset contains transactions for which no leaf categories are applicable, we recommend to either categorize transactions at a lower tier or rule them out-of-scope. Avoid adding catch-all leaf categories, such as "other" or "misc.".

Note: out-of-scope is not considered the same as "failed or unable to classify", which typically indicates a data quality issue.

Attributes and Properties

Treat attributes or properties as a separate single-level or flat taxonomy. For example, the elements of the periodic table, or colors of the rainbow constitute a flat taxonomy because these attributes do not contain hierarchical information.

Do not include attributes and properties with a small, finite domain set categories in a hierarchical taxonomy. For example, consider these four categories: "Fruit > Green," "Fruit > Red," "Vegetable >Green," "Vegetable > Red." There is no meaningful "parent to child" information conveyed in this hierarchy. To make this apparent, interchange the tiers.