Business Intelligence vs Corporate Performance Management

by Cătălin Giurca

When evaluating corporate performance management (CPM) software, people are often confused between Business Intelligence (BI) and Corporate Performance Management (CPM) solutions. The fact that both sets of software solutions frequently include graphical dashboards and interactive analytical capabilities may have caused this question. While they may appear to be comparable on the surface, CPM and BI are actually quite distinct.

Here’s a short overview of these concepts and technologies, what differentiates them, and how they work together to clear things up.

What is BI?

One of the most in-demand software solutions nowadays is business intelligence software. BI tools examine the data you’ve gathered and then utilize it to uncover patterns and trends that might help you make better business decisions.

These systems also include reporting tools that provide data visualizations. Data visualizations are visual displays, such as charts and graphs, which help people comprehend the outcomes of data analysis. Many BI systems include a data warehouse, which stores your data and allows you to access it while conducting analysis. Others include a more condensed version for business reporting, a more analytics-focused version, large data processing modules, and some can even be integrated into other applications!

BI features include: Data Collection, Data Visualization, Data Lineage Tracking, Interactive Visualizations, Reporting, Analytics, Dashboards, Predictive Modeling, Workflow Collaboration, OLAP, Document Management, Decision Services, Big Data Integration.

What is CPM?

Corporate Performance Management (CPM), also known as Business Performance Management (BPM) or Enterprise Performance Management (EPM), is an instrument for evaluating how well a company operates. “An umbrella term that describes the methodologies, metrics, processes, and systems used to monitor and manage the business performance of an enterprise” according to Gartner.

To put it another way, CPM aids in the tracking of your success by monitoring the key performance indicators (KPIs) and performance metrics you’re aiming for. Most of the CPM software does this through planning, forecasting, and budgeting.

CPM features include Goal Management, Performance Evaluation, Employee Lifecycle Management, Succession Management, Compensation Management, Reporting/Analytics.

Similarities

As you can see from the above feature lists, BI and CPM serve very distinct purposes. Both are utilized as a part of a company plan to streamline everything from day-to-day operations to annual events, and both focus on enhancing your business processes.

Both systems are capable of handling data management. They enable users to combine various forms of data to create a picture and obtain a better understanding of a business topic. In a few areas, such as reporting and analytics, their capabilities overlap as well. Both systems have the ability to generate reports based on predefined metrics.

Differences

Visualizing your data

The first main difference between CPM and BI is in their output. BI is mainly used to create visualizations, from simple graphs and charts to interactive graphics. Businesses who require a quick way to visualize their data, putting it into a format where it is easier to spot trends, can use BI tools.

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CPM software can be used to create dashboards that have graphs and charts, but the main use is creating financial plans, budgets, and reports. Businesses who wish to visualize their data, understand what drives their revenue, and then use that data to budget, can use CPM software.

Decision-Making

Even though they both play a part in decision-making, they do it in very different ways. While BI assists you in making decisions, CPM tracks your progress based on those decisions. Advanced analytics are used in BI to detect trends in your data. However, you may not know what you’re searching for when you put your BI solution to work doing data analysis. The capacity to analyze data through exploration, drill-down, and other tools is highly valued in BI.

Because of the research conducted by their BI software, firms frequently uncover trends that they didn’t expect to observe. They may use this data to set quantifiable goals and targets to pursue, as well as anticipating how alternative courses of action would affect their future metrics.

Getting Context Behind Your Numbers

While BI can assist users in creating charts and graphs on their own, there are several situations where it falls short. BI tools don’t have the context to explain why the data they’re anticipating is the way it is. It describes what occurred but does not explain why. BI tools are mostly descriptive in nature; they may depict a current or previous condition, but they are not intended to assist users in discovering the rationale for their figures or doing further research beyond visuals.

A controller can generate a graphic to display the trend of a business’s revenue using a BI tool. When it came to revenue, key decision-makers would be able to observe when it was high and low. BI tools, on the other hand, would not offer the data required to explain why revenue was exceptionally excellent or bad during a certain month or quarter. To figure out what transpired at that location, the further effort would be required.

Businesses instead use CPM software to contextualize their budgeting, reporting, and forecasting. CPM tools take your business data to the next level, allowing you to monitor and measure your company’s development based on historical data, planned and predicted data, and actual outcomes.

Analyzing Historical Data vs Predicting Future Performance

The goal of BI tools is to see and analyze data that is now kept in several departments. BI technologies let teams see the performance of one component of the company and its influence on other departments by connecting those departments.

BI tools, on the other hand, might be argued to give a better picture of previous data rather than future performance. Accounting departments can utilize business intelligence (BI) technologies to examine the company’s finances with marketing data to determine which initiatives resulted in a revenue increase. BI is more concerned with what has actually occurred in an organization than with possible consequences.

CPM software, on the other hand, makes driver-based budgeting easy for a company. Teams may utilize CPM software to examine the influence of a variety of different factors. For instance, the effect of exchange rates, inflation, or the cost of specific commodities. The use of driver-based budgeting to estimate future outcomes can reveal new opportunities.

Umbrella and Subcategory

BI, in general, encompasses a wide range of software solutions, including CPM in some circumstances. CPM is a niche of HR and BI software that focuses on data collection for the goal of enhancing company performance. A BI solution could encompass CPM capabilities, but it’s unlikely that a CPM software platform would match all of a BI platform’s criteria.

Which should you use?

So, which of these two methods should you utilize? Many companies prefer to employ just self-service business intelligence software. For one thing, investing in one solution rather than two is less expensive. Furthermore, BI software is frequently sufficient for reviewing your KPIs and performance measures.

Many businesses, on the other hand, employ CPM solutions as a supplement to their BI software. They do so in order to stay on track with their goals and ambitions. This helps keep every goal on track, ensuring that everything from project management to distribution and sales reaches or approaches optimum efficiency.

In the end, it comes down to what your company needs and how many resources (money, headcount) you have to support these software solutions.

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