BI vs. PM

I thought the debate as to whether business intelligence (BI) and performance management (PM) were the same thing had long since been settled. Imagine my surprise when Mark Smith points out in “BI Is Not Performance Management” that the discussion is alive and well.

Rather than spill more ink documenting the differences between business intelligence and performance management, here is a handy table that categorizes the most important ones:

Business Intelligence

Performance Management

Understand

Align, understand, and adjust

Monitor and measure

Motivate, manage, monitor, measure

Metrics

Goals, initiatives, and metrics

Structured quantitative data

Structured and unstructured qualitative data

Automated data loading

Automated loading and manual data entry

BI might be an enabling technology used in some PM applications but, in general, they serve different purposes.

Still not convinced? Read this story of performance management in local government and tell me what it has to do with business intelligence. 

12 Responses to BI vs. PM

  1. […] The recent resurfacing of the BI vs. PM controversy got me thinking about the longstanding confusion between financial, workforce, and IT performance […]

  2. Gary Cokins says:

    Jonathan,

    My organization has also debated the difference between BI and enterprise performance management (PM). Is BI a subset of PM or vice-versa? I interviewed many colleagues and concluded the two are linked together, but PM deploys the power that resides in BI. As an analogy, just as coal has potential energy, heat deploys it into kinetic energy. PM is that heat.

    Gary

    Gary Cokins

  3. Muthu Ranganathan says:

    From my view point, one of the most important difference is similar to the difference between a dashboard and a scorecard.

    Business Intelligence is reactive vs Performance Management is Proactive. In Performance management the business managers set forth with some goals and objectives, create plans against the objectives and then monitor/track the results/performance against the objectives. This goes back to the principles of management which starts with Planning and then goes on till monitor the plans (refer to Henri Fayols 14 principles of management). Whereas Business Intelligence is laying out the results in a very useful way, and therefore it covers only the monitoring aspects. So in Business Intelligence – intelligent business information (past) is provided to the business managers/decision makers.

  4. If we assume that management prominently features Planning at the front end of the cycle of “management performance” (i.e., exercizing good competency in the discipline of “management”)…

    …and if we assume that planning uses intelligence in the form of research that provides indicators of the potential for future success and risk…

    … then to establish that business intelligence (BI) is part of performance management (PM), it is necessary to go no further than the concept of forecasting. The important view of this involvement is that neither effort (BI nor PM) wholly includes or excludes the other; rather, they logically intersect, co-operatively.

    BI manages the perception of the operational environment. PM manages investment in the operational dynamics.

    Perhaps there will be comments from the readers on the idea that strategy manages the relationship of BI and PM for a target group of stakeholders…

  5. […] BI/PM vendors will have to deal with in the future.   Aside from my longstanding quibble that BI and PM aren’t the same, there are some interesting thoughts here so I’ve reproduced his list with my own […]

  6. Peter Thomas says:

    Isn’t this essentially semantics? BI and PM are both used to mean different things by different people in different organisations (and even by the same people at different times).

    ‘The question is,’ said Alice, ‘whether you can make words mean so many different things.’

    ‘The question is,’ said Humpty Dumpty, ‘which is to be master — that’s all.’

    • Jonathan says:

      Actually, I don’t think this is semantics. EPM is a series of applications that might use BI as an enabling technology but they are targeted at very different use cases.

  7. Peter Thomas says:

    You say potato and I say potato I guess…

    • Jonathan says:

      It’s certainly possible that I’m overzealous on the differentiation and maybe even pedantic (wouldn’t be the first time). From the what it’s worth, most market analysts (including Gartner and IDC) also separate the two. Perhaps the difference is what you consider EPM. In my lexicon (and the analysts as well), a financial consolidation application is considered part of EPM. I’m hardpressed to call that BI. Does that make sense?

  8. Peter Thomas says:

    I guess I use BI in a broader sense than the earlier terms OLAP or multidimensional analysis to mean what it says, delivering intelligence about the business to the business. Maybe the ISO should take a line on this sloppy taxonomy?

    • Jonathan says:

      There is then the potential challenge of where to draw the line. CRM delivers intelligence about your business. So do portals. I’ll agree that the taxonomy is far from perfect but I don’t see an easy way out. If you have a recommendation, that’s worth a post.

  9. Peter Thomas says:

    But wouldn’t your argument cut the other way round – where do you draw the line with EPM, what does it not include? I think in business and (especially) IT we get caught up with having precise definitions for essentially imprecise things. This is not science; a Latin name is not required for each species to differentiate it from all others. Some people will use BI in a narrow sense, some in a broad one. People will mean different things by EPM. Until there is some arbiter for these things (and no Gartner doesn’t count!) then we are probably better recognising that many of our cherished definitions apply only to a subset of people – sometimes that subset has a cardinality of one.

    But anyway I am turning your blog into a bulletin board and so will gracefully retire from the field.

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