Sunday, 30 September 2007

The difference between Business Intelligence and Performance Management

Where does business intelligence stop and performance management start? In fact what is the difference between the two? Isn't business intelligence an umbrella term that includes the concept of performance management?

There is an interesting Cap Gemini article posted on the Microsoft BI site which talks about PM and BI.

Gartner in 2001 described "corporate performance management" as:
All of the processes, methodologies, metrics and systems needed to measure and manage the performance of an organization.
From reading up on the subject the "confusion" or should I say "debate" about CPM and BI seems to quite widespread. Vendors of BI/PM software certainly don't help clarify the distinction. BI is often seen more as the enabling technology and CPM is more the implementation of that knowledge in a business context.

I've found a couple of interesting blogs that discuss the difference:
I particularly like the article on the "Manage by walking around" blog that comments on a distinction between scorecards and dashboards. Much of the difference is just semantic, however it's suggested that dashboards have more of tactical use and scorecards are more strategic, the latter being more goal focused. The example used is to think about the type of information provided by a golf scorecard as opposed to a car dashboard. This seems to be a key distinction, that CPM is more implementation and goal focused whilst BI is more tactical and monitoring focused.

I disagree that business intelligence is just enabling technology; both BI and CPM are processes. BI focused on data preparation, data presentation and data discovery whilst CPM uses the BI foundation to affect business change.

All this discussion brings me on to Microsoft PerformancePoint: BI or CPM software? I think that is is both, the analysis capability more of a BI flavour and the planning capability more CPM. Microsoft breaks the functionality down like this:
PerformancePoint Monitoring - Define and use scorecards, dashboards, and key performance indicators (KPIs) to drive accountability and alignment across your organization.
PerformancePoint Analysis - Easily analyze and identify trends, opportunities, and threats in your data. Capture and share that information using the intuitive and collaborative environment of the 2007 Microsoft Office system.
PerformancePoint Planning - Simplify the process of business planning, budgeting, and forecasting—all through the familiar and easy-to-use environment of the 2007 Microsoft Office system.
I guess the debate will continue, but at least I now have a better understanding of the arguments!

1 comment:

Jonathan said...

Jonathan: Thanks for the mention and I'm sad to say that there's been very little advancement in the debate as to whether PM and BI are the same thing since I wrote that post. While I won't claim that BI is just enabling technology, I still wonder how BI tools would solve the problem I posted here: http://alignment.wordpress.com/2007/05/13/pm-saves-lives/