Business Intelligence vs. Enterprise Performance Management

December 10, 2010
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Here’s my response in “The Culture of Performance” LinkedIn Group on the question of Business Intelligence being confused with (Corporate) Performance Management:

Here’s my response in “The Culture of Performance” LinkedIn Group on the question of Business Intelligence being confused with (Corporate) Performance Management:

I would agree with Tricia that BI tools are used for managing data (as are MDM tools, data warehouse tools, and so on), but I would respectfully argue that Business Intelligence (not just the tools) is also part of managing performance and some consider BI to be part of CPM (and EPM as Oracle, SAP, E&Y, PwC, etc. call it). Howard Dresner (the guy who coined the term ‘business intelligence’) has called CPM “BI with a purpose.”

One way to look at it is to consider CPM (and EPM and the unfortunately named Business Performance Management – the other BPM) as the management processes and technology (ie: not OLTP) that help you execute on strategy. I look at it in 4 distinct major processes:

DEBATE
* given your strategy, what’s the best way to make your numbers (and operational targets)? Organic growth? M&A? divestiture? product extension? price/mix adjustments?

* this includes financial & operational modeling, scenario planning, target setting and so on

DECIDE
* once the best scenario is identified, how will you deploy your resources (cash, people, equipment, time) to make your targets – by business unit, product line, geography, etc.

* this includes budgeting, planning, & forecasting – essentially documenting commitments in the organization

GATHER
* as you are busy making widgets, delivering services, and acquiring customers, how are you doing?

* this includes financial, operational, management, and statutory consolidation and reporting

ANALYZE
* why did you get the results you got?

* this includes financial & operational analytics, data mining, variance analysis, benchmarking, and so on.

And all of your analyses (which are based on the information you gathered and the variances to commitments) go on to feed the DEBATE as you optimize your resources.

The last two: gather & analyze, are traditionally considered BI. All 4, when integrated and aligned with strategic objectives, are Corporate/Business/Enterprise Performance Management.

So, to Ken’s points, these categories have already converged and it’s now called EPM. Unfortunately, there is a lack of leadership in this space for propagating a consistent definition, and software vendors have their own product agendas to pursue.

You can find more on this in my blog post at
http://businessfoundation.typepad.com/bf_blog/2008/02/what-enterprise.html