Process simulation provides a graphic representation of processes, people, and technology in a dynamic computer model. A model, when simulated, mimics the operations of the business, by stepping through the events in compressed time while displaying an animated picture of the flow.

Because simulation software keeps track of statistics about model elements, Performance metrics can be evaluated by analyzing the model output data. Like Activity Based Costing, process simulation embodies the concept that a business is a series of interrelated processes, and that these processes consist of activities that convert inputs to outputs. Business Process Simulation manifests this concept, and builds on it by organizing and analyzing cost information on an activity basis.

One of the primary reasons for the low success rate in re-engineering processes is that the analysis that lies behind the Performance estimates of re-engineered processes have been prepared with flowcharts and spreadsheets. Business processes are much too complex and dynamic to be understood and analyzed by flowcharting and spreadsheet techniques alone. Even though flowcharts and spreadsheets are adequate in answering what questions, they are inadequate for answering how, when or where questions. This has resulted in overly optimistic Performance benefits such as cost savings, throughput and service level increases that were promised by BPR.