In this series of posts, I will examine how organisations are making the journey from Business Intelligence to Corporate Performance Management. As this is the first in the series let's examine the obvious question 'what is the difference between BI and CPM?'
During my time with a market and thought leader in this field, Cognos, there were a number of views which give us a useful way of examining this question;
Firstly, that BI and CPM are the same thing. I have already given away my own view on this with the title of this post. Let's start with what BI is. A reasonable definition is that BI is the use of information for the purpose of decision making. It is distinct and different from 'reporting' which has an operational focus. BI systems are used by managers across the enterprise to drive informed and accurate business decisions. Strategic BI, using scorecards and dashboards for example, is used by the senior management team as a strategic decision making tool and come close to the definition of CPM. However, not close enough.
Secondly, that Enterprise Planning and CPM are the same thing. This is a view held by some Planning, Budgeting and Forecasting (PB&F) specialists that think of BI as 'just reporting'. Understandably, they hold the view that driving organisational behaviour through the planning process by making it more frequent than the traditional annual 'spreadfest' is at the heart of CPM. If we also consider that PB&F systems do make it easy for profit and cost centre managers up and down the organisation to take an active part in the process then we are certainly getting close to CPM. They are not the same thing though.
Thirdly that BI and Enterprise Planning combined are the same as CPM. An organisation that implements systems for measuring performance, for adapting the plan and for managing the impact on forecasted revenues is clearly looking to both measure and change performance. Implementing the systems to report, analyse, plan and monitor is certainly critical to CPM. However, BI plus PB&F is still not CPM.
Finally, the view that I subscribe to, is that CPM involves the systems (BI and PB&F) but also the business processes and strategic approach to performance management as characterised by methodologies such as Economic Value Add (EVA) or the Balanced Score Card (BSC). An organisation that implements the systems, adapts the strategic decision making process and changes business processes is truly executing on the CPM vision.
CPM is often described as a 'journey'. It is a fundamental change to the way in which many organisations manage themselves today so there are no magic bullets, applications or software features. CPM does not come 'out of a box'. Instead the change may begin with a series of BI implementations that cause an organisation to challenge 'established wisdom' and manage with a much deeper organisational insight. Alternatively it may begin with a corporate initiative to adopt the Balanced Scorecard aligning, at the highest level, strategic direction with organisational activity. What is interesting to me is that many such initiatives are described as failures because they 'didn't make CPM happen' Of course many of these are poorly executed implementations but occasionally they are, in themselves, as successful as they can be. Take a step back, look at them again and they may well be a perfectly reasonable step forwards on a CPM journey that is rarely short or simple but often worthwhile.
In the next post I will describe some of the steps that might be made on the CPM Journey wherever you are today.
