When business performance management (BPM) was first introduced into the vocabulary of business intelligence (BI), confusion existed as to what the actual differentiators were between both sets of terms. Was performance management the next generation of BI – a next-generation approach to gleaming value from a data warehouse - or were there more valuable differentiators between the two? How did both differ from and overlap with one another? And how has that changed now that business intelligence encompasses more than data warehousing, reporting and OLAP cubes?
Consequently, this debate never brought clear focus to the benefits of using both performance management and BI to increase an organization’s efficiencies. Alternatively, it never showed the benefits of using BPM to manage financial or other processes, while implementing audit functions to ensure organizations have a way of tracking accountability to help meet compliance and other requirements. In reality, both set of terms and how they differentiate is not as important as understanding the value one or both bring to the organization.
This article identifies the differences and similarities between business intelligence and performance management and how both intersect. Aside from developing an understanding of how both sets of applications have evolved, this article highlights the real differences between BI and BPM and how those differences play out in an organization’s use of one or both.
What is business performance management?
According to BPM Magazine, the technical definition of business performance management is “a set of management and analytic processes, supported by technology, that enable businesses to define strategic goals and then measure and manage performance against those goals. Core BPM processes include financial and operational planning, consolidation and reporting, business modeling, analysis, and monitoring of key performance indicators linked to strategy.” In many cases, BPM software is tailored to address the needs of those responsible for planning, budgeting, activity-based costing and the like. In addition, with acquisitions and the need to consolidate multiple businesses into one, BPM aids in merging company data or in properly articulating the relationships between parent companies and their subsidiaries.
With the goal of BPM being the ability to support business processes (i.e., financial or operational) through the use of technology, solutions developed focus on moving through a set of steps to enable the completion of those processes. For instance, when planning specific initiatives or projects and allocating budgets, many people may be responsible for the overall planning of the organization. With performance management solutions, each person’s responsibilities can be built into the overall design by taking into account dependencies (such as person B not being about to start their task until they receive the required information from person A). Also, overall collaboration enables end users to communicate with one another at each stage of the process, whether to approve or deny an employee’s actions, or simply to comment on an action taken. The idea surrounding the concept of performance management is to create a more holistic approach to the way financial and other processes are handled within the day-to-day tasks of decision makers within the organization.
Where does business intelligence fit?
When looking at how both business intelligence and business performance management fit with one another, it becomes important to look at their roles within the organization and not at how each is defined. Instead of a focus on the intellectual debate about the differences of each and how they work with one another, the overall significance is the focus on each one’s role and how they can be used to help companies become better.