Business Intelligence &

Corporate Performance Management

Business Intelligence ( BI ) or Corporate Performance Management ( CPM )?

Both business intelligence ( BI ) and corporate performance management have changed dramatically over the past decade, and this change has made both terms nebulous and challenging to define. However, regardless of the definitions used, there are some core differences between business intelligence and corporate performance management.

Business Intelligence ( BI )

The term business intelligence ( BI ) was first coined by the Gartner Research Group in the early 1990s. It can be seen as a method of analyzing the business environment (markets, competitors and economic issues). On the other hand, BI refers to an analytical process that produces insights, suggestions, and recommendations for the management and decision-makers by transforming internal and external data into information.

As business intelligence ( BI ) has evolved based on the breadth of data analyzed and the increasing analytic maturity of businesses, a wide variety of technologies have been wrapped into the term business intelligence ( BI ), ranging from workflow and application development platforms to analytic reporting to visualization. These tools tend to be general and horizontal in nature and can provide guidance to operational trends throughout the business. In addition, business intelligence (BI) can be used both as an internal and external tool for partners and market-facing functions.

For example: KPIs can be monitored and represented by using BI techniques such as scorecards and dashboards. The data needed in to calculate the KPIs – like the real delivery date – also comes from a back-end business intelligence ( BI ) solutions, namely from a data warehouse (DW). DW is a relational database in which data is aggregated from several operational source systems. DWs enable an effective reporting and analysis without affecting the performance and functionality of the operational systems.

Corporate Performance Management ( CPM )

CPM is a consolidation of concepts that companies have been practicing for some time already such as PM, DW, BI and total quality management. Still much confusion remains as to what comprise Corporate Performance Management ( CPM ). The most used definition is from Gartner who defines Corporate Performance Management ( CPM ) as an umbrella term used to describe the “methodologies, metrics, processes and systems used to monitor and manage the business performance of an enterprise”. Corporate Performance Management ( CPM ) is targeted at the corporate level.

In this context, corporate performance management (CPM) can be seen as a subset of business intelligence focused specifically on the health of the company. Traditionally, this "health" has been defined purely in financial terms to support core performance functions, such as forecasting, budgeting and planning, and has only been shared internally with key financial stakeholders and investors.

However, as business leaders realized that reputation, morale, strategy and innovation are also key leading indicators of corporate success, they have sought to integrate these non-financial characteristics in Corporate Performance Management ( CPM ), such as strategic planning, process efficiencies, brand equity, risk management and employee performance.

Similarities

Although many use the terms BI and CPM synonymously, they are distinctly different. CPM enhances BI in two directions: first, CPM is more targeted to support processoriented organizations than BI. Second, CPM aims at providing a closed-loop support that interlinks strategy formulation, measurement, process design and execution with BI. CPM also evaluates its progress over time toward goal attainment by using CSFs and KPIs. CPM as a concept represents the strategic deployment of BI solutions, since BI provides the backbone to implement CPM.

Conclusion
BI is a subset of CPM, and CPM brings in new concepts and areas where traditional BI falls short. Both are needed: BI is more targeted at transforming data into information while CPM provides a means of combining business strategy and technological structure to direct the entire organization towards accomplishing common organizational objectives. Together, BI and CPM form the bridge that connects data to decisions.
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