There seems to be a blurry line between business intelligence (BI) and business performance management (BPM) applications. Some software vendors offer solutions that actually incorporate BPM and BI within the same application, which makes it harder to distinguish between these two software solutions. The following are some—certainly not all—key differentiators between BI and/or BPM functionality that could help you have a better understanding of BI and BPM tools.
The Defined Line Between BI and BPM
BI: BI tools enable organizations to analyze high volumes of information in order to have effective support during the decision-making process. In a way, BI tools are meant to be used as analyzers of historical and daily operations data. BI can deliver valuable information regarding the current status of a business, based on specific measures and reports.
BPM: BPM is used to help organizations improve their business performance by putting a set of processes in place: planning, strategizing, and measuring against goals. BPM not only delivers valuable information, but it also has functionality that can plan, monitor, and take action in order to improve business performance.
Still not clear, huh? Based on these definitions we will try to define some key differentiators to help you distinguish between BI and BPM.
1. Which Comes First (BI or BPM)?
In general, the main difference between BI and BPM is that BI contains all the framework and/or infrastructure to gather big volumes of data and analyze it by using specific tools like OLAP cubes, data and text mining, specific analytics etc., and delivering this information using advanced reports, dashboards, or any other advanced visualization tools (charts, maps, gauges, etc.).
On the other hand, BPM uses this same BI framework to support other capabilities to define and manage business strategies. BPM tools help during the process of developing a strategy, plan, and a set of objectives to be accomplished. Normally, BPM does this by creating scorecards or establishing key performance indicators (KPIs).
So, considering the previous ideas, it’s common that the BI framework comes first, followed by the BPM platform, which takes advantage of the current BI set to establish a managerial methodology to monitor and improve business processes.
2. Reactive vs. Proactive
It’s evident that BI tools are reactive, while BPM tools are proactive. Here’s why:
BI is focused on bringing relevant information about daily operations so managers can react and make decisions based on a specific business opportunity or risk in the daily process. BI tools are often used to analyze historical data; however, nowadays this process is evolving due to the implementation of operational real-time BI.
The BPM goal is to improve business processes through specific tools that serve to establish a strategy, to plan processes and to compare business processes results against objectives/goals. With this approach, BPM tools are proactive because they enable organizations to measure performance and take corrective actions if necessary.
3. Technology vs. Framework
This last key differentiator refers to the original definition behind both BI and BPM. BI is meant to be a technological platform as a means to deliver valuable data analysis using reporting, visual tools, and others. BPM is based on a managerial approach, that is, to create a framework that can leverage business performance measurement (i.e. the use of a managerial framework like a balanced scorecard, the six sigma strategy, or even total quality management frame). BPM uses BI as a technological base to apply performance methodology.
So, when should you apply for a BI or BPM solution? If you want to ensure your organization has the ability to analyze high data volumes to obtain valuable information and deliver it in an effective way for decision making, BI is what you need. If you also need a way to plan, follow a strategy, and track the performance of business processes, you will need a BPM system. Most mega vendors already have solutions that comply with these two functionalities but there are still niche vendors for BI- and BPM-specific areas.
In two years (perhaps less) I will have to rewrite this blog and redefine this set of differences. The BI and BPM spaces are evolving and changing so fast that is hard to know which changes will happen in the near future regarding these two solutions.
I welcome your thoughts—leave a comment below, and I’ll respond as soon as I can.