ARIS Strategy Platform

www.ids-scheer.com

ARIS Platform - White Paper

White PaperNovember 2007

ARIS Strategy Platform

White Paper

Table of Content

1 Business Process Management with the ARIS Platform for Process Excellence . . . . . . . . . 3

2 The integrative approach to strategy implementation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

2.1 Why do companies need a process strategy? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

2.2 Which tools can be used to represent and evaluate business process strategy?. . . . . . . . . . . . . . . . . . . . 5

3 ARIS Business Optimizer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

3.1 Top-down and bottom-up procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

3.2 ARIS Business Optimizer usage scenarios. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8Process cost management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8Resource planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8Key Indicator Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9Balanced Scorecard. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

3.3 Working with ARIS Business Optimizer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10Workshop . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10Requirements definition and adaptation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10Training . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

3.4 Interaction with other applications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10Data sources. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10Creating added value with ARIS Business Optimizer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

4 ARIS BSC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

4.1 The ARIS BSC approach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12Designing the Balanced Scorecard with ARIS BSC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12Company-wide evaluation with ARIS Business Optimizer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12Controlling with ARIS Process Performance Manager . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13What-if analyses with ARIS Business Optimizer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13Change management with ARIS Design Platform . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

5 ARIS Business Simulator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

5.1 Determining and exploiting optimization potential in business processes . . . . . . . . . . . . . . . . . . . . . . . . 13

5.2 The purpose of simulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

5.3 The ARIS Business Simulator approach. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14Provision of statistics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14Graphical display and visualization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14Full integration into ARIS Business Architect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

5.4 Using ARIS Business Simulator. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

6 Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

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Business Process Management with the ARIS Platform for ProcessExcellenceAll companies have business processes, regardless of their size or the industry in which they operate. Internaland inter-company processes are comparable to a body’s nervous system. When they are maintained and opti-mized, business processes will lead to competitiveness and assure survival in the marketplace. Optimizedprocesses allow a company to reach customers with products and services faster than competitors and torespond with agility to changes in market requirements. Companies must also satisfy constant pressure to cutcosts and to meet customers’ quality demands in today’s market economy.

In order to manage new and rapidly changing business areas, it is absolutely vital to link business processesto corporate strategies. The loop of Business Process Management (BPM) can only be completed throughcontinuous change management, and reassessment and re-alignment of business processes. In this context,BPM is the continuous adaptation of business processes, the organization, and the IT landscape to meet therequirements of the market.

The ARIS Platform for Process Excellence provides all the tools for the BPM loop that companies need to man-age a culture of continuous change. It does this for all involved target groups in the company – from manage-ment and the organizational, technical, and IT departments to controlling.

Fig. 1:ARIS Platform forProcess Excellence

Implementing new business strategies demands that companies have not only flexibility in business process-es, but also the ability to transfer process optimization and innovation to the world of IT systems: “AligningBusiness Processes and IT”. With ARIS Platform, IDS Scheer seamlessly links business and IT. The highlyscaleable product range offers solutions for the entire business process lifecycle – from Web-based descrip-tion, analysis, and optimization of business processes and software engineering to SAP NetWeaver integra-tion and continuous process controlling. IDS Scheer promises to support each customer in every aspect of theBPM cycle. With ARIS Platform, companies can set up individual architectures via the Web, structure and pub-lish their business processes faster, and implement them in executable information systems.

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2 The integrative approach to strategy implementationBPM should always begin with the definition and implementation of corporate strategy, followed by continu-ous monitoring of the target systems. With ARIS BSC, companies achieve a consistent implementation of com-pany strategy, from key performance indicators (KPIs) to processes, whereby data is stored in a central com-pany repository. ARIS Business Optimizer analyzes KPIs, for example, for cost calculations in various areas,such as process cost management. It also performs target costing and sets up BSC systems as part of ARISBSC. Various source systems can be accessed as a data source For example, an ARIS repository or SAP sys-tems may be used. ARIS Business Simulator enables the early detection of weaknesses in business process-es and the implementation of cost-effective processes. Based on the KPIs calculated in ARIS BusinessSimulator, various process strategies can be evaluated and the “best” selected before any costly processmodifications are made.

2.1 Why do companies need a process strategy?Research shows that companies operating in industries that are subject to rapid changes adjust their strate-gies twice a year. However, strategy adaptations must be applied all the way through to business processes.Therefore, every strategy adaptation should include a thorough reassessment of the process strategy. Severalmanagement approaches provide continuous and successful strategy management, such as the BalancedScorecard (BSC) approach and IDS Scheer’s integrated ARIS Value Engineering (AVE) approach.

In addition to BPM and Business Process Reengineering, the BSC is one of the most widely distributed man-agement concepts of the last decade. The originally KPI-driven approach was primarily geared to designing acontrol system with a balanced ratio between financial key indicators and business-specific, generic valuedrivers. However, the BSC has developed into a strategic management tool that requires a company to focuson strategy implementation, therefore increasing its long-term effectiveness and efficiency.

Many companies, having learned from past errors, are aware that significant improvements in performanceand competitive edge can only be gained by optimally designing business processes. With AVE for BusinessProcess Excellence (BPE), IDS Scheer has proven that potential for increased sales, time savings, cost reduc-tion, and quality improvement can be achieved not only in the short term, but also in the long term. Thisachievement requires internal processes to be strongly aligned with market and customer demands and aprocess-oriented company organization.

By combining the methodological and practical strengths of the BSC application with excellent businessprocess models, companies can achieve a number of synergy effects. Companies that have already imple-mented a BSC know that BSC potential can only be partly achieved without a control system to connect cus-tomer values with corporate strategy, strategy with value drivers, value drivers with processes, processes withstrategic initiative, and strategic initiative with responsibility and motivation of employees. Strategy adapta-tions and the resulting new or modified processes should be simulated in advance to fully tap any potential.The simulation of such processes prevents wrong decisions.

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Which tools can be used to represent and evaluate business process strategy?The understanding that an action can be properly evaluated only with knowledge of intent can also be appliedto corporate processes. There is an objective behind every business process. The strategic direction must bevisible to achieve optimal process design, plausible implementation, and accurate interpretation of the resultsdetermined by controlling.

ARIS Strategy Platform provides various tools to support the corporate strategy and goals. These tools supportthe approach followed by the Kaplan and Norton strategies.

ARIS BSC from IDS Scheer supports the implementation of the BSC approach with different tools throughoutvarious phases represented. Defined goals can be presented to management through strategy managementsystems. The use of BSCs decreases the complexity of such systems and leads to shorter project times whenimplementing and reorganizing company-wide BSC systems. BSC systems can be set up with the integratedARIS Strategy Platform tools. They are designed with the ARIS methods provided in ARIS BSC. A variety ofanalysis procedures enables the evaluation and visualization of BSC data for a fast and up-to-date overview ofongoing developments (e.g., target-actual analyses and presentation via management views).

To enable changes to the strategic direction of companies and make sound decisions backed by KPI analyses,the ARIS Strategy Platform offers the ARIS Business Optimizer tool. Senior and middle management should beable to rely on accurate information material for their strategic and tactical decisions. In times of intense com-petition, the consequences of incorrect decisions are serious.

ARIS Business Optimizer’s flexibility and the option to perform different what-if analyses allow you to definebest practices in corporate procedures, thus providing a sound basis for decision making. Many topical appli-cation scenarios exist, including:

• Process cost management

• Product calculation

• Personnel requirement planning

• KPI management

• Setup of BSC systems

• Benchmarking

Fig. 2:ARIS BusinessOptimizer –Usage scenarios

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Business processes can only be redesigned or improved with regard to specified targets if the underlying con-texts and the effects of certain design decisions are understood. A retrospective analysis of business process-es that have actually been executed may be useful here. In addition, suitable forecasting tools, such as simu-lation, are required in order to evaluate potential design alternatives for future use.

The ARIS Business Simulator tool enables exactly this type of business process simulation. It allows you toanalyze and compare actual processes and planned processes from the ARIS Repository in terms of exe-cutability and time, cost and resource factors. ARIS Business Simulator provides various simulation and eval-uation options for this purpose.

Simulation detects weak spots in business processes and provides support for the implementation of cost-effective processes. ARIS Business Simulator collects a range of information that allows you to assess thebehavior of processes and to present this as the results of a simulation run. The tool provides you with variousstatistics, including information about the various object types and process instances, which can be stored orcopied for further processing in other programs. Statistical data can also be visualized within ARIS BusinessSimulator in the form of bar charts, line charts or pie charts.

3 ARIS Business OptimizerIDS Scheer developed ARIS Business Optimizer to support KPI-based strategy definition and process opti-mization. Like all ARIS Platform solutions, ARIS Business Optimizer uses the central ARIS Repository and thedata saved there for various evaluations. The tool can also access operational systems in the company as datasources. As a strategic company management tool, ARIS Business Optimizer answers the following questions:

• What are the process costs and the costs of products or services?

• Which processes are particularly cost-intensive?

• Which products/services should we produce in-house and which should we purchase (make-or-buy deci-sions)?

• What is the actual contribution margin of the products/services?

• What resources are required for a planned quantity of products/services?

• What is the impact of restructuring initiatives on process costs?

• What effects have process improvement initiatives really had over time?

• What effects have process improvement initiatives had over time?

ARIS Business Optimizer offers the following services:

• Use of any ARIS model as a basis for KPI analyses and evaluations

• Open interface (XML) for import and export of data

• Transfer of mass data from other source systems

• Aggregation of cost types and cost centers

• Various calculation methods for different data

• Calculation across process hierarchies

In addition to transferring operational data from any source system, it is also possible to directly record andmanipulate KPIs and structures in ARIS Business Optimizer. This allows for what-if analyses to assess theeffects of changes to the system or the structure.

Thanks to the high level of integration with the products of the ARIS Platform, ARIS Business Optimizer’s manyanalysis and evaluation options can be combined with structures and values from ARIS Business Architectwithout any information being lost. Process or structural changes can be used directly in ARIS BusinessOptimizer for further processing. Since both components are database-supported, data will not be redundant.This offers a considerable advantage over other KPI analysis tools or Excel solutions.

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Top-down and bottom-up proceduresKPI-based processes are optimized using target and actual data. There are two principal approaches that cancomplement one another: top-down and bottom-up. In the top-down approach for process cost management,costs are based on actual data and allocated to cost centers in line with their respective output. In the bottom-up approach, however, “optimal values” are determined for budget or target calculation. Using ARIS BusinessOptimizer, the two methods can be combined and therefore complement one another.

In practice, industry-specific requirements may necessitate individual customization. For example, differentviews of the data (e.g., a product view, in addition to a process or cost center view) enable a broader range foranalysis. The elements to be considered in process cost management can also differ from customer to cus-tomer. IT systems, cost centers, and materials can all influence the costs of a process and need to be takeninto account. Therefore, a performance indicator analysis tool must be adaptable to meet customer needs. Thetool must provide the customer with an extremely flexible resource for obtaining the right answers to issues athand.

Fig. 3:KPI managementwith ARIS BusinessOptimizer

The data that the customer wants to use for analyzing processes often exists in different programs and sys-tems.

For example, companies often have process models in graphical form. In turn, the process hierarchy, theassignment of organizational units to functions or of functions to products, and all relevant structures alreadyexist in a database and can therefore be used as a basis for calculation. Since ARIS Business Optimizer is inte-grated with ARIS Design Platform products, no information will be lost at any interface.

In addition, actual data from operational systems can be used for integrated process controlling. For example,cost rates from SAP HR or material costs from SAP CO can be processed in ARIS Business Optimizer.

This high level of flexibility enables the system to be easily extended to different approaches (e.g., target cost-ing, product calculation, personnel requirement planning, etc.).

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3.2 ARIS Business Optimizer usage scenarios

Process cost management

The motivation for using process cost management lies in the disadvantages of traditional costing methodsand changes in companies’ cost structures, particularly in the growing block of overhead costs. The high pro-portion of overhead to a company’s value is mainly due to the greater scale of planning, managerial, and mon-itoring activities in the fields of research and development, purchasing and logistics, production planning, qual-ity assurance, order processing, and sales and after-sales service. By contrast, direct labor costs have fallen.They can therefore no longer be viewed as an accurate allocation basis, as this results in allocation rates ofseveral hundred percent on the direct labor costs. For example, if a positive labor cost variance of EUR 1occurs during production at an allocation rate of 300%, an unfounded additional overhead charge amountingto EUR 3 is automatically applied. In order to generate and utilize competitive advantages, knowledge of the“correct” costs is essential.

While the potential for optimization in production has been exhausted in many companies, there is still muchroom for improvement in terms of overhead. The problem lies in identifying weak points. Process cost man-agement makes it possible to evaluate processes across cost centers (process controlling). Through quanti-tative comparisons of various scenarios, benchmarking provides precise information about the optimal sce-nario for the company. Planning future quantities, based on costs determined by process cost management,also enables budget planning within the framework of the scenarios.

Knowing the precise process costs opens the way to a further field of application: accurate budgeting for pro-duction costs. This is particularly relevant in the service sector (banks, insurance companies, public adminis-tration) because processes often represent the product itself and material or production costs are minimal ordo not exist. An evaluation is necessary to make important strategic decisions, for example, whether a prod-uct or a service should be made in-house or purchased (make-or-buy decision).

Resource planning

Closely related to the cost evaluation is the question of whether resources are reasonably utilized within theprocesses or whether there is room for improvement. Recorded or measured times, amounts, and consump-tion are the basis for resource planning. However, other factors must be considered to proceed precisely.Existing capacities must be checked for various restrictions. For personnel resources, it cannot be assumedthat capacities can be fully allocated to the processes.

Only precise determination of all necessary conditions enables exact planning. Areas of application for ARISBusiness Optimizer include reorganizing existing processes and planning capacities needed for new products,sites, or service areas. ARIS Business Optimizer can provide an exact forecast for logistics and productionprocesses, and with other ARIS Platform tools, one can also measure (ARIS PPM) or model (ARIS DesignPlatform) all data and structures required for the forecast.

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Key Indicator Management

Fig. 4:Key Indicator Management

Management of KPIs, assessment ofthe historical development of differ-ent indicators, and trend forecastsbuild the basis of very different opti-mization projects. For example, riskmanagement demands not only qual-itative monitoring of actual risks, butalso an exact observation of differentindicators to predict possible risks inthe form of an early warning system,alerting the appropriate contacts.Thus, counter-measures can beplanned and taken in time to avoiddamage.

The monitoring of indicators within the framework of an early warning system is important not only for riskmanagement, but also for quality management of the BSC. Measures and their impact on KPIs can be simulat-ed by what-if analyses. Therefore, a strategic decision can be justified, if necessary.

Balanced Scorecard

Many companies do not transfer their corporate strategy into operative standards or do so inadequately.Although executive management unanimously agrees on the strategic direction of the company, the strategyis often not communicated to the lower hierarchy levels and thus cannot be implemented.

In addition to extensively communicating the strategy and defining target specifications for different corporatedivisions within the framework of the budgeting process, companies need a tool to measure strategic goals.Measuring the achievement of goals with conventional financial key indicators does not enable companies torecognize an impending failure to reach these strategic goals. Financial key indicators from the past cannotpredict what the future will bring. Such KPIs are also referred to as “lagging indicators”.

Fig. 5:Monitoring strategicobjectives

To detect at an early stagewhether a selected strategycan be realized, a company-wide, strategic KPI systemmust be integrated, indicat-ing the future development ofa company. The leading indi-cators (performance drivers)record strategy-relevantfacts. Although these factsdo not offer concrete finan-cial information, they are stillimportant for the future prof-itability of a company.

BSC integrates lagging andleading indicators into one goal-oriented KPI system and thus continuously monitors the achievement ofstrategic goals. For example, if integrated with strategic corporate planning through a link to budgeting and aconnection to an incentives system, BSC additionally supports the implementation of the corporate strategy.

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3.3 Working with ARIS Business OptimizerTo set up continuous KPI management, various applications must be integrated. Data origin and calculationmethod must be defined. IDS Scheer provides templates for established calculation methods for various top-ics, so that the product is ready to be used out of the box. If any adaptations are necessary, they are definedand implemented in cooperation with the customer. To do so, a workshop is held to develop a technical con-cept. This concept forms the basis for customization. Lastly, the end users are trained on the configured sys-tem.

Workshop

ARIS Business Optimizer is designed to cooperate closely with the ARIS Design Platform products. Informationthat is stored in ARIS models is used to specify the structural information in ARIS Business Optimizer. Usersselect the models, objects, and attributes as the basis for each project and determine the interrelations. Thiscan be done by using connections between objects or by assigning a model to an object. Of course, model con-tent and structure are different for each company It is therefore essential to analyze and define the customer’smodeling conventions, to identify the origin of the relevant information from the ARIS Design Platform products,and to determine how that information is to be represented in ARIS Business Optimizer. An additional part ofthis step is to specify the other systems to be used to supply the data and how the data is to be transferred toARIS Business Optimizer.

In addition, the calculation standards are defined: Which attributes are allocated with others? What are theKPIs? The result of these calculations is represented in tables: The table structure is another factor to bedefined (Which attributes of which objects should be included in the table? What is the sequence of columns?Which KPIs can be manipulated? Which KPIs are calculated from other KPIs?).

The terms that appear on the user interface for navigation and evaluation can also be defined individually.

Requirements definition and adaptation

The result of the workshop is a requirements definition describing all configuration settings specified for theproject. This document provides a basis for making adjustments to ARIS Business Optimizer. The software willbe customized by IDS Scheer or a partner.

Training

The end users are trained on the configured system. They will already recognize all concepts and terms, min-imizing training time.

3.4 Interaction with other applicationsThe configurability of ARIS Business Optimizer and the possibility of using different sets of rules with differenttopics enable end-to-end process optimization. Results of the process cost calculation can also be used in aBSC. The structural information (process hierarchy, cost center hierarchy, cost type structure, etc.) can befound in business process modeling tools. Operational systems can be relevant as source systems for actualdata. The way in which ARIS Business Optimizer interacts with other selected applications is described below.

Data sources

Two different types of data are required in ARIS Business Optimizer. Structural data can be transferred, whiledifferent values (e.g., monthly or quarterly values) pertaining to the structural data can be imported.Combinations of these two data types are also possible.

ARIS Business Architect, ARIS Toolset, and other ARIS Platform products supply structural information.Process, organizational, cost type, or other models are used to represent the structural dependencies betweenfunctions, cost centers, roles, etc. This information is prepared for a specific target group in ARIS BusinessOptimizer, so that only data relevant to the controller is presented.

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Fig. 6:Flexible data transfer

Product cost management example:In ARIS Business Architect, processmodels represent the chronologicaland logical sequence of individualfunctions. They also represent whichfunction is carried out by which role,and which systems are used to exe-cute the functions. In addition, ARISBusiness Architect contains infor-mation about which tasks belong towhich sub-processes and what thecorresponding process hierarchylooks like. An organizational chartcontains information about cost cen-ters to which the roles are allocated

and which cost rates apply. In addition to structural information, ARIS Business Architect can also contain datavalues in object attributes. This data can be transferred to ARIS Business Optimizer.

Both structural information and actual data can be transferred to ARIS Business Optimizer from tools such asARIS Process Performance Manager (ARIS PPM).

Using ARIS PPM, users can generate process models from operational systems, across system boundaries.These models are transferred directly to ARIS Business Optimizer. ARIS PPM can also provide aggregatedactual data, such as execution times or the cost centers involved (and thus, the cost rates). All of this data isused and further processed as input values in ARIS Business Optimizer. ARIS Business Optimizer can thus useactual data to control costs.

Operational systems may also supply data. All data can be transferred into the process cost management mod-ule for analysis and further processing via open interface. Structural information can also be present in oper-ational systems. For example, different cost types, along with their structure, can be transferred from SAP COor the cost center hierarchy from SAP HR.

Creating added value with ARIS Business Optimizer

The KPIs calculated in ARIS Business Optimizer can be further processed with other products in the ARIS fam-ily or transferred to other systems. This normally involves values rather than structural data. This data then actsas target or planning data.

Based on the values calculated, users can publish process models using ARIS Business Publisher or ARISWeb Publisher as target models, or process them further using ARIS Simulator.

Fig. 7:Optimal communication ofresults

ARIS PPM is a tool for meas-uring and monitoring process-es in a company. It requirescritical values (e.g., for func-tions or processes). Thesecan be transferred from ARISBusiness Optimizer.

Likewise, operational systemsalso serve as recipients of tar-get data, planned data or oth-er comparative data fromARIS Business Optimizer.

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4 ARIS BSCMost companies consider the BSC approach extremely useful. However, most tools do not adequately supportimplementation because they pursue just a few aspects of a BSC project, instead of a complete solution. WithARIS BSC, IDS Scheer provides a one-stop solution that contains the right tools for all phases of a BSC proj-ect. ARIS BSC offers the following advantages:

• Fast implementation and communication of the corporate strategy in all areas through integrated software

• Support in all phases of strategy projects (design, implementation, controlling, and re-alignment)

Five different phases are defined in detail, covering the entire lifecycle from initial design to execution of meas-ures, and finally adaptation. These phases are described below.

Fig. 8:The ARIS BSC approach

4.1 The ARIS BSC approach

Designing the Balanced Scorecard with ARIS BSC

The first step is determining the area to which the BSC method will be applied. Usually, a BSC is defined fororganizational areas, but processes, products, systems or services may also serve as a basis. These structuresare created with ARIS BSC. For example, the source model could be an organizational chart. A cause-and-effect chain is assigned to each organizational element. The chain contains the strategy, goals, and interrela-tions between the goals for this organizational unit. The goals themselves are backed up with KPIs andassigned owners and measures to be taken if goals are not achieved.

The BSC is best represented hierarchically; for example, a complete system includes the cause-and-effectchains of subordinate organizational units too, so that the corporate strategy can be evaluated consistentlyacross all levels.

Company-wide evaluation with ARIS Business Optimizer

ARIS Business Optimizer supports the analysis and evaluation of target systems based on KPIs. It is not onlypossible to represent the relations between objectives and KPIs, but also to calculate the achievement ofobjectives and KPI values by distributions throughout different levels in the company. In particular, the logicallink established through calculations allows competing objectives to be monitored. ARIS Business Optimizeralso considers responsibilities for goals and indicators.

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Controlling with ARIS Process Performance Manager

Goals and KPIs are monitored continuously. Monitoring may vary from permanent monitoring to time-relatedobservations (e.g., monthly or quarterly values, etc.). Depending on the BSC’s perspective, not only process-related KPIs, but also other values can be included in monitoring (e.g., financial KPIs or evaluations from cus-tomer or employee surveys). ARIS PPM measures the KPIs, and the relevant results are depicted in thePerformance Cockpit, which generates target group-oriented representations and content.

Fig. 9:ARIS Performance Cockpit

What-if analyses with ARIS Business Optimizer

The KPIs recorded and measured during controlling enable the BSC system to be used as an early warningsystem. If problems arise or goals can no longer be achieved, what-if analyses can determine if the set goalcan be achieved at the end of the observation period by taking various measures, or whether the strategicdirection needs to be adapted to the actual situation. Trends are then calculated and the impact of results andchanges is determined, enabling companies to make key decisions.

Change management with ARIS Design Platform

The change management phase closes the loop. Measures are defined to help achieve goals, or budget fig-ures are adapted to suit the strategy, so that continuous monitoring is possible. At that point, the change man-agement process leads back to the design phase (i.e., the phase in which the cause-and-effect chain has tobe adapted or redefined).

ARIS Business Simulator 5

Determining and exploiting optimization potential in business processesEnd-to-end business process management should examine the complete business process lifecycle, fromstrategy definition through modeling, implementation and monitoring. Strategy determines objectives, which,in turn provide a basis for process design and implementation. However, business processes can only beredesigned or improved with regard to specified targets if the underlying contexts and the effects of certaindesign decisions are understood. A retrospective analysis of business processes that have actually been exe-cuted may be useful here. In addition, suitable forecasting tools, such as simulation, are required in order toevaluate potential design alternatives for future use.

5.1

The purpose of simulationThe objectives defined by the corporate strategy determine the necessary processes and the criteria thesemust satisfy in terms of efficiency. Key considerations in this regard range from the effectiveness and exe-cutability of process and structural design measures to the influence of time and cost factors. Simulation cansupply the answers to these questions. Simulation allows you to verify the executability of business process-es, detects bottlenecks and weak points in processes, helps you to determine the resources and personnelrequired, sheds light on maintenance and process runtimes and plays a role in assessing process and productcosts.

5.2

White Paper

5.3 The ARIS Business Simulator approachARIS Business Simulator enables business process simulation. It allows you to analyze and compare actualprocesses and planned processes from the ARIS Repository in terms of executability and time, cost andresource factors. ARIS Business Simulator provides various simulation and evaluation options for this purpose.

Fig. 10:ARIS BusinessSimulator

Process models from ARIS databases serve as input data for the simulation. These can be adjusted to reflectthe current situation by maintaining various object attributes. Some of these settings enable the specificationof random values, for example, for function execution times or process folder management based on rules. Thisallows you to map the effects of variance, which is often the norm in practice. Simulation runs based on thisinput data can be executed in interactive or non-interactive form.

Interactive simulation allows you to observe the dynamic behavior of processes in the process model directlyand thus enables visually supported analyses. ARIS Business Simulator provides visual support in the form ofanimation of active model objects and the display and continuous updating of output values, such as the num-ber of functions executed, the number of process folders waiting or resource utilization. To provide moredetailed information, each simulation step can be called up and viewed separately.

This interactive component often works in the background for simulations in large-scale process landscapes.In this case, animation can be deactivated, i.e., a non-interactive simulation executed, which saves time.

Provision of statistics

Regardless of whether interactive or non-interactive simulation is used, ARIS Business Simulator produces anextensive range of status and transaction data about the simulation run in the form of statistical tables. Thisdata includes process-based and object-based information about quantities, costs, resources and mainte-nance and processing times. This data can be displayed and analyzed directly in ARIS Business Simulator.However, you also have the option of exporting the data and processing it in other programs, such as statisti-cal applications. By providing both cumulated and detailed data, right down to the level of the individualprocess instances, these statistics enable in-depth analyses and serve as the main basis for these.

Graphical display and visualization

All information presented in statistical tables can also be presented in graphical form in bar charts, line chartsor pie charts. This form of visualization and continuous updating of the charts during an interactive simulationrun also makes it easier to detect weak points and bottlenecks.

Process models from ARIS databases serve as input data for the simulation. These can be adjusted to reflectthe current situation by maintaining various object attributes. Some of these settings enable the specificationof random values, for example, for function execution times or process folder management based on rules. Thisallows you to map the effects of variance, which is often the norm in practice.

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Full integration into ARIS Business Architect

As part of the ARIS Platform, ARIS Business Simulator is fully integrated into ARIS Business Architect and canbe called directly from there. The user interface unites the functions described above. In addition to the ani-mated model view and a status display, statistics and diagrams are also displayed. Buttons on the toolbar areused to control a simulation run. Despite the extensive range of configuration and evaluation options available,simulation runs with ARIS Business Simulator can be executed quickly and easily thanks to the user-friendlyinterface.

Using ARIS Business SimulatorARIS Business Simulator allows you to test the executability of process models and to use the test results toimprove modeling quality. The possibility of evaluating existing and planned process variants makes ARISBusiness Simulator a key instrument for supporting decision making with a view to achieving efficient corpo-rate processes in terms of both time and resources. Organizational decisions can be analyzed and appropriateprotective measures put in place prior to implementation. In addition, the possibility of analyzing variousprocess variants enables the implementation of benchmarking analyses within and across organizations tooptimize and standardize processes. By mapping the dynamics of processes when fluctuations occur inprocess instantiations, you can determine which resources are required when and where. These dynamics arenot taken into account in conventional calculations.

5.4

SummaryARIS Business Optimizer is the tool for calculating KPIs and conducting what-if analyses. Its results are usedto support strategic company decisions. The KPIs supplied help evaluate alternatives, allowing well-foundeddecision making. The solution accesses the information objects modeled in ARIS Design Platform, such asprocesses and organizational structures, and allows versatile analyses, as well as evaluations of KPIs. Thevaried configuration options ensure that the customer’s modeling conventions and different approaches aresupported. It also allows the use of actual data from source systems.

A speedy implementation of a company-wide performance management system in accordance with the prin-ciples of the Balanced Scorecard promises many potential benefits for many companies. ARIS BSC supportsboth the documentation and analysis and the implementation and integration of all strategic objectives, criti-cal success factors, KPIs and measures for corporate controlling. By providing clarity in relation to the cause-effect relationships of strategic goals, the company strategy can be implemented and communicated consis-tently at all levels.

Business process management strives to design and implement efficient, cost-effective and high-qualityprocesses. ARIS Business Simulator provides an ideal tool for the dynamic analysis of procedural and organi-zational structures. Simulation detects weak spots in business processes and provides support for the imple-mentation of cost-effective processes. Based on the KPIs calculated in ARIS Business Simulator, various alter-natives can be evaluated and the “best” selected before any costly process modifications are made.

Optimized interaction between the ARIS Platform products, ARIS Business Optimizer, ARIS BSC and ARISBusiness Simulator, based on the ARIS Repository, ensures efficient planning and configuration of processstrategies. The supplementary ARIS Platform products provide tools for efficient implementation, design andcontrolling of these strategies.

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© Copyright IDS Scheer AG, Saarbruecken, 2007. All rights reserved. The contents of this document are subject to copyright. Any changes, modifications, additions or amendments require prior written con-sent from IDS Scheer AG, Saarbrücken. Reproduction in any form is only permitted on the condition that the copyright notice remains on the actual document. Publication or translation in any form requiresprior written consent from IDS Scheer AG, Saarbruecken. “ARIS”, “IDS”, “ProcessWorld”, “PPM”, ARIS with Platform symbol and Y symbol are trademarks or registered trademarks of IDS Scheer AG inGermany and in many other countries worldwide. “SAP NetWeaver” is a trademark of SAP AG, Walldorf. All other trademarks are the property of their respective owners.

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