WHAT IS BUSINESS MODELING?
Identifying the right area to change and improve is paramount to the overall success of an organization. The dangers of implementing business process improvement changes without a clear understanding of how the changes will impact the entire process can be substantial. Therefore tools are needed to help managers truly understand their business processes and how modifications to those processes will impact the overall company.
The Business Modeling method is a technique to model business processes. Business models provide ways of expressing business processes or strategies in terms of business activities and collaborative behavior so we can better understand the business process and the participants in the process. Models are helpful for documenting, for comprehending complexity and for communicating complexity. By documenting business processes from various perspectives, business models can help managers to understand their environment.
With the aide of simulation software, managers can understand their business processes like never before. This type of software can show the flow of work through a system using graphs. This allows managers to clearly see where a problems may lie, and give indications of how to improve them. Once the problem areas are identified, the software can be used to change any parameter the user wishes. Run the simulation once again and immediately see the impact of the change. In this way, companies can change their business processes in a computer environment, without risking costly setbacks of real world trial and errors.
BUSINESS MODELING AND OPERATIONS RESEARCH
Business Simulation has grown from operations research in the 1950s. With the arrival of increasingly cheap and powerful computers, and increasingly user-friendly software, business modeling techniques now allow also non-technical managers to try out various options or scenario’s to assist in the decision-making process.
Another factor that has contributed to the increasing usage of the business modeling method, is the increasing pace of change in business. There is not enough time to try out new products in reality, and correcting mistakes, once they have occurred, is often extremely costly.
Business Process Reengineering and Business Process Management are closely related to Modeling.
TYPICAL USES OF BUSINESS MODELING AND SIMULATION:
• Improve efficiency. By looking at the business process, organizations can improve their efficiency by eliminating redundancies. Also, each block can be looked at and improved by automating a set of activities. Any bottlenecks can be identified and removed.
• Financial Planning, quantifying the impact of business decisions on balance sheet and P&L.
• Risk Management, determining, measuring and managing the balance between profitability and certain types of risks.
• Forecasting, analyzing historical data and using that to predict future scenario’s and trends.
• Business Process Modeling, mapping processes, tasks and process steps in a visual representation to the resources required.