Business intelligence and corporate performance management software: What's the difference?

Business intelligence and corporate performance management are not the same thing. Learn the differences between BI and CPM -- and how they're related -- from expert Rick Sherman.

What is the difference between business intelligence (BI) and corporate performance management (CPM)? What is the difference between BI and CPM vendors? The answer to the second question is that they are the same. And, the fact that the vendors are the same clouds the answer to the first question. Marketing literature and industry articles further confuse the issue by using the same terms, applications and benefits for both BI and...

CPM.

BI has become the term describing the technology used to access, analyze and report on data relevant to an enterprise. It encompasses a wide spectrum of software including ad-hoc query, reporting, on-line analytical processing (OLAP), dashboards, scorecards, search, visualization and more. These software products started as stand-alone tools, but BI software vendors have incorporated them into their BI suites. BI software is always part of an overall CPM solution.

CPM, however, is not just about technology. CPM involves the processes, methodologies, metrics and technology (applications and software tools) used to monitor, measure and manage a business. The business processes may include financial, marketing, sales, customer relationship management, supply chain management or others.

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Read part II of this series: Business intelligence and corporate performance management software: Build vs. buy

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A business typically implements CPM first for financial processes such as budgeting, forecasting and planning, though CPM may be applied to other domains, such as sales marketing, customer support or HR. Often, CPM solutions support specific business processes such as supply chain management (SCM) for manufacturing or merchandise planning for retailers. Many organizations build CPM programs around a business methodology, such as Activity-Based Management (ABM), Economic Value-Added (EVA) or others. But the most common, particularly in the US, is balanced scorecard (BSC). Using a business methodology provides an overall business approach for your CPM solution rather than merely generating a series of tactical, process-specific reports divorced from a strategic and enterprise-wide perspective of your business.

Once you've selected the business processes you want to improve, and the business methodology you'll implement, you need to select the metrics to measure, monitor and manage. These metrics are often referred to as key performance indicators (KPIs). It's up to the business (not IT!) to select and define them. A lot of attention is often given to having the business agree on business data definitions, but it is just as crucial that they select and define the KPIs. They should use a data governance process for both data definitions and KPIs. This is a critical first step for any CPM initiative.

Finally, you get to point of choosing CPM technology. Marketing literature and industry articles typically start with the discussion of CPM software and assume it is a single "package" -- but it's often a set of bundled components. To facilitate the success of the CPM program, make sure you understand what is really being bundled in these packages.

A CPM package often includes both application-specific components and software tools to develop or integrate those components.

The application-specific components can include:

  • A business application such as budgeting, planning or forecasting
  • A template or set of recommended KPIs and data definitions supporting the business application
  • A data model implemented as a data mart or data warehouse
  • A set of reports, cubes or analytics
  • A group of ETL (extract, transform and load) routines to move data from source systems to the application data mart or data warehouse

The software tools used to implement the business application are often part of the CPM package and can include:

  • BI suite
  • ETL tool

The big question you should ask when evaluating these CPM package components is if they fit all of your business requirements, including processes, metrics and methodologies. Or are you going to have to change your business processes to fit the technology? (And is that something you really want to do? In my experience, that's a recipe for CPM failure.) In part 2 of this article series we'll discuss this issue more, along with the decision of building versus buying a CPM solution.

Don't miss part two of this series, "Business intelligence and corporate performance management software: Build vs. buy."

About the author
Rick Sherman is the founder of Athena IT Solutions, a Boston-based consulting firm that provides data warehouse and business intelligence consulting, training and vendor services. In addition to over 20 years in the business, Sherman is also a published author of more than 50 articles, an industry speaker, a DM Review World Class Solution Awards judge and a data management expert at SearchDataManagement.com. Sherman can be found blogging at The Data Doghouse and can be reached at rsherman@athena-solutions.com.

 


 

This was first published in September 2007

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