Comments on: Optimizing Costs? Try Simulation http://blogs.gartner.com/jim_sinur/2009/02/12/optimizing-costs-try-simulation/ A member of the Gartner Blog Network Tue, 07 Feb 2012 18:21:18 +0000 hourly 1 http://wordpress.org/?v=3.0.4 By: Simulation and BPM; A Growing Engagement http://blogs.gartner.com/jim_sinur/2009/02/12/optimizing-costs-try-simulation/comment-page-1/#comment-4316 Simulation and BPM; A Growing Engagement Wed, 10 Feb 2010 20:23:50 +0000 http://blogs.gartner.com/jim_sinur/2009/02/12/optimizing-costs-try-simulation/#comment-4316 [...] http://blogs.gartner.com/jim_sinur/2009/02/12/optimizing-costs-try-simulation/ [...] [...] http://blogs.gartner.com/jim_sinur/2009/02/12/optimizing-costs-try-simulation/ [...]

]]> By: Justin Lyon http://blogs.gartner.com/jim_sinur/2009/02/12/optimizing-costs-try-simulation/comment-page-1/#comment-1310 Justin Lyon Mon, 20 Apr 2009 14:01:07 +0000 http://blogs.gartner.com/jim_sinur/2009/02/12/optimizing-costs-try-simulation/#comment-1310 It seems that many people think that simulation is "too hard and requires too much set up." Simudyne's evidence and case studies suggest that simulation is extremely cost-effective with ROI of 10X very common. So, those that are complaining it is too expensive, are most likely bogged down with legacy simulation systems which are hard-to-use and expensive compared to today's simulation platforms. It seems that many people think that simulation is “too hard and requires too much set up.” Simudyne’s evidence and case studies suggest that simulation is extremely cost-effective with ROI of 10X very common. So, those that are complaining it is too expensive, are most likely bogged down with legacy simulation systems which are hard-to-use and expensive compared to today’s simulation platforms.

]]> By: Jim Sinur http://blogs.gartner.com/jim_sinur/2009/02/12/optimizing-costs-try-simulation/comment-page-1/#comment-1209 Jim Sinur Tue, 03 Mar 2009 19:01:28 +0000 http://blogs.gartner.com/jim_sinur/2009/02/12/optimizing-costs-try-simulation/#comment-1209 Some BPM vendors have provided guard rails to make sure you can only play with resources, resource costs, process duration with simple simulations to gain business benefit,s so it is not alsways so complex. A number of comapnies have combined this with resource scheduling to produce nice savings. Simulating the mortgage melt down before it happend accross multiple coutires, indiustries, companies and products is a different story. I take your point about being real accurate on complex interactions, however. Some BPM vendors have provided guard rails to make sure you can only play with resources, resource costs, process duration with simple simulations to gain business benefit,s so it is not alsways so complex. A number of comapnies have combined this with resource scheduling to produce nice savings. Simulating the mortgage melt down before it happend accross multiple coutires, indiustries, companies and products is a different story. I take your point about being real accurate on complex interactions, however.

]]> By: Marty Grubin http://blogs.gartner.com/jim_sinur/2009/02/12/optimizing-costs-try-simulation/comment-page-1/#comment-1206 Marty Grubin Tue, 03 Mar 2009 14:55:21 +0000 http://blogs.gartner.com/jim_sinur/2009/02/12/optimizing-costs-try-simulation/#comment-1206 Jim, I have been doing simulations of business processes for over 20 years. Starting in manufacturing and moving on to banking, financial services and logistics. I have trained a number fo people on simulation, data gathering etc. Here are my observations: 1) The amount of time that is required to gather accurate process data to feed into a process model is often more than most business owners will tolerate ($$$). 2) Many BPM analysts do not correctly measure task time or understand how to use cost accounting data. They do not have the training or statistical knowledge to do it accurately. You must also know how to cross check your simulation results with the “real world” to ensure its validity. 3) The data gathered from "round trip" BPM systems is usually not detailed enough to discover where resources are being consumed. The measure of individual work elements within a job or task is just not captured in enough detail. To truly understand how resources are being consumed you need more detailed information. 4) Often the BPM vendors overstate the capability of their modeling and simulation tools. In fact, many of their employees do not fully understand the concepts of modeling and simulation. I am firm believer in modeling and simulation. It does and can deliver extremely valuable insights. However, like anything else this complex, it must be used by well trained people with plenty of experience. Jim,
I have been doing simulations of business processes for over 20 years. Starting in manufacturing and moving on to banking, financial services and logistics. I have trained a number fo people on simulation, data gathering etc. Here are my observations:

1) The amount of time that is required to gather accurate process data to feed into a process model is often more than most business owners will tolerate ($$$).

2) Many BPM analysts do not correctly measure task time or understand how to use cost accounting data. They do not have the training or statistical knowledge to do it accurately. You must also know how to cross check your simulation results with the “real world” to ensure its validity.

3) The data gathered from “round trip” BPM systems is usually not detailed enough to discover where resources are being consumed. The measure of individual work elements within a job or task is just not captured in enough detail. To truly understand how resources are being consumed you need more detailed information.

4) Often the BPM vendors overstate the capability of their modeling and simulation tools. In fact, many of their employees do not fully understand the concepts of modeling and simulation.

I am firm believer in modeling and simulation. It does and can deliver extremely valuable insights. However, like anything else this complex, it must be used by well trained people with plenty of experience.

]]> By: The Hype about Simulation and Optimization « Leadership BPM http://blogs.gartner.com/jim_sinur/2009/02/12/optimizing-costs-try-simulation/comment-page-1/#comment-1204 The Hype about Simulation and Optimization « Leadership BPM Mon, 02 Mar 2009 14:03:20 +0000 http://blogs.gartner.com/jim_sinur/2009/02/12/optimizing-costs-try-simulation/#comment-1204 [...] the comments of a subsequent blog Jim Sinur claims that 25% of clients are using simulation and optimization, up from 5% a few years [...] [...] the comments of a subsequent blog Jim Sinur claims that 25% of clients are using simulation and optimization, up from 5% a few years [...]

]]> By: Jim Sinur http://blogs.gartner.com/jim_sinur/2009/02/12/optimizing-costs-try-simulation/comment-page-1/#comment-1153 Jim Sinur Tue, 17 Feb 2009 14:06:15 +0000 http://blogs.gartner.com/jim_sinur/2009/02/12/optimizing-costs-try-simulation/#comment-1153 What Steps: I think a greater awarenes of the benefits of simulation (The reason I wrote the blog), more case studies for people to grasp the potential for business benefits, the drive for lower costs, the drive for scenario planning and finally some press. There is no receipe, but these are some of the ingredients. The vendors and solutions providers actually help here as well. The 5% to 25% increase: It was the new epmhasis on process improvement (BPM), the scope and importance of the processes attempeted, the need for material facts before buidling a process and the move towards more measurement and optimization of running processes all contributed. These factors will still be there, but the steps above are additional tributaries to the eventual river of simulation flow. It's a process not an event. What Steps:

I think a greater awarenes of the benefits of simulation (The reason I wrote the blog), more case studies for people to grasp the potential for business benefits, the drive for lower costs, the drive for scenario planning and finally some press. There is no receipe, but these are some of the ingredients. The vendors and solutions providers actually help here as well.

The 5% to 25% increase:

It was the new epmhasis on process improvement (BPM), the scope and importance of the processes attempeted, the need for material facts before buidling a process and the move towards more measurement and optimization of running processes all contributed. These factors will still be there, but the steps above are additional tributaries to the eventual river of simulation flow. It’s a process not an event.

]]> By: Gary http://blogs.gartner.com/jim_sinur/2009/02/12/optimizing-costs-try-simulation/comment-page-1/#comment-1151 Gary Mon, 16 Feb 2009 09:30:36 +0000 http://blogs.gartner.com/jim_sinur/2009/02/12/optimizing-costs-try-simulation/#comment-1151 That's an interesting statistic, Jim. What steps would you recommend to increase that 25% to a higher figure? Any thoughts on that? Also what has caused the 5-fold leap from 5%, do we know? Gary That’s an interesting statistic, Jim.

What steps would you recommend to increase that 25% to a higher figure? Any thoughts on that?

Also what has caused the 5-fold leap from 5%, do we know?

Gary

]]> By: Jim Sinur http://blogs.gartner.com/jim_sinur/2009/02/12/optimizing-costs-try-simulation/comment-page-1/#comment-1147 Jim Sinur Fri, 13 Feb 2009 16:44:03 +0000 http://blogs.gartner.com/jim_sinur/2009/02/12/optimizing-costs-try-simulation/#comment-1147 It is common sense for folks who have exposure to simulation and have used succesfully, but our inquiries indicate that it is not as widespread as you or I would like. It's grown from about 5% of our client base to near 25% in the past few years, so there is still lots of folks who are not using simulation. It is common sense for folks who have exposure to simulation and have used succesfully, but our inquiries indicate that it is not as widespread as you or I would like. It’s grown from about 5% of our client base to near 25% in the past few years, so there is still lots of folks who are not using simulation.

]]> By: Gary http://blogs.gartner.com/jim_sinur/2009/02/12/optimizing-costs-try-simulation/comment-page-1/#comment-1146 Gary Fri, 13 Feb 2009 16:35:04 +0000 http://blogs.gartner.com/jim_sinur/2009/02/12/optimizing-costs-try-simulation/#comment-1146 Jim - A lot of this is common sense: "Use something that can identify costs and waste to drive out costs and waste". The question I would ask is "If this is something that can help in the current economic environment, why is it that common sense isn't being applied?". Is there a reason companies (large and small) are not falling over themselves to simulate their existing processes and drive the costs out? It would seem to be a no brainer to me. So why isn't it happening? Jim – A lot of this is common sense: “Use something that can identify costs and waste to drive out costs and waste”.

The question I would ask is “If this is something that can help in the current economic environment, why is it that common sense isn’t being applied?”. Is there a reason companies (large and small) are not falling over themselves to simulate their existing processes and drive the costs out?

It would seem to be a no brainer to me. So why isn’t it happening?

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