In the 6 years I am running Mirror42, many people have asked me to explain the difference between performance management (PM) and business intelligence (BI). All BI And PM vendors talk about Dashboards, Analytics, KPIs, Reporting and yet there seem to be big differences between the different products and solutions.
The fundamental difference between Business Intelligence and Performance Management lies in the approach. Where Performance Management starts top-down, translating strategy in key measures before worrying about data collection. Business Intelligence starts bottom up with the available data in business applications and databases trying to turn this into meaningful management information.
Successful companies use both BI and PM.
Some more differences: PM is hardly ever ad-hoc, nor real-time. PM is measuring your business in key area’s at regular intervals as often as possible so you can identify trends and area’s for improvement. PM is therefor a strategic management tool and provides direction to a company.
BI on the other hand is often ad-hoc and real-time. Reports are used to figur out to answer questions as: what exactly went wrong? What happened? What do we need to do next?
Often BI is used to produce reports on an ad-hoc basis after an abnormality in the has occurred. For instance to explain negative publicity or slow sales: “Create me a report that shows me all the incidents related to product X in region Y in the past 6 months”.
This makes BI an important tool for the workforce to make the right decisions and implement improvements.
Business intelligence and Performance management complement each other.
The most successful companies are able to analyze tons of data and make informed decisions. They will have true strategic dashboards showing trend of key performance indicators, correlations between indicators and will use Business Intelligence to get to the bottom of the root cause when abnormalities in performance occur. Performance Management Dashboards should process data in regular intervals so you can compare periods and identify trends (last 7 days, last 30 days). Performance Management should help executives to determine the key area’s for improvement.
Business Intelligence should be able to produce reports to explain abnormalities based on the available data and should assist operational managers to make the right decisions during their workday.
Hope this article was useful for the reader.
Karel van der Poel
Thank You Karel , It is a good article , as you said both PM and BI are complement each other but I believe without PM the business in real threat ,we can’t not wait for the abnormalities and then take an action and I can.t say to a system as BI without PM . so PM comes firest in order to be BI
Very well expressed. You have taken a complex and often confused language and have refined it to its most logical form. My Compliments!
We at Eyeson Digital have clearly divided the two elements and have added the dimension of Video which corroberates and elevates the Performance MGT to another level.
You have hit the bullseye with this!
Agree, both compliment each and equaly essential in biz, yet PM fire prevents and BI Fire fights
Very well put indeed. However, Software AG has a tool that monitors, tracks and predicts in real-time with real-time alerts that are sent for any deviations from the normal. The software establishes what is normal and then alerts for any deviations.