Wednesday, June 5, 2013

The Triple Threat of Simulation

Most organizations really do not understand the power of simulation and how simulation has moved forward in recent years. There are strategic reasons as well as practical operational reasons to employ simulation. There is a strong trend towards using simulation for more intelligent business operations and testing alternative business models. Simulation has become easier to use and the methods have matured to enable todays' business professionals.

The three uses of simulation that have momentum today are as follows.

Process Design:

In recent years, using simulation for testing process models before they are implemented was a major stream of activity. Organizations are able to optimize flows and resource utilization rates ahead of time instead of learning through managing a process by the "seat of the pants" once the process is running in production.  Organizations that have a planning culture tend to test models before running them in production. However, not all organizations have a planning culture, so the next area of expansion for simulation was process optimization using real results and projecting the impact of reactive or proactive changes.

Intelligent Business Operations:

Most recently, organizations are not only using simulations to optimize individual processes, but they are looking to broader scopes to optimize crucial operations of their business. This can include large and wide ranging processes or combinations of multiple process and applications. Quite often simulation is combined with poly analytics and visual dashboards/scorecards to give a more visually rich and scientifically based approach. This engages stakeholders and they start realizing the potential of try different approaches to deliver intelligent business operations. This is optimization at a large scale

Business Model Resilience:

Because or the complexity and volatility of business conditions, simulation is playering a bigger and broader role for organizations. Simulation allows business executives to test their current business models under different business scenarios at a minimum and design new transformational business models at the maximum. This approach to projecting change and conditional business responses requires combining simulation with system dynamic models or agent models to show the interaction of uncontrolled resources in interaction mode.

Net; Net:

Simulation is vastly misunderstood and under appreciated. This trend is turning and simulation is growing from under utilized to a force that organizations can employ to deliver smart businesses. I will be documenting successes going forward for your reading and hopefully enjoyment :)