The key to success is to understand how effective your business processes are. We’re not just talking about the ones that revolve around your main revenue stream, whether that’s making diapers or fixing solar panels. We’re talking every single one of your processes, from recruiting to marketing to supply chain management. In order to gain insights into the performance of these processes, businesses use two types of software: corporate performance management (CPM) and business intelligence (BI). What the average person doesn’t know, however, is what actually differentiates CPM vs BI. Let’s start by quickly defining each of them:
What is BI?
Business intelligence software is one of the most sought-after software solutions today. BI software analyzes the data you’ve collected and finds the patterns and trends that inform business decision-making. In addition, these systems come with reporting features that create data visualizations. Data visualizations are visual reports such as charts and graphs that make the results of the data analysis easy to understand. Many BI systems also feature a data warehouse, which stores your data and provides access to it when you perform an analysis.
What is CPM?
Corporate performance management, also known as business performance management or enterprise performance management (EPM), is used to gauge how a business performs. As Gartner puts it, CPM is “an umbrella term that describes the methodologies, metrics, processes and systems used to monitor and manage the business performance of an enterprise.” In other words, CPM helps track your progress towards the key performance indicators (KPIs) and performance metrics you’re working towards. Your average CPM software does this using planning, forecasting and budgeting.
CPM vs BI: The Differences
There are, of course, some similarities between corporate performance management and business intelligence. For example, both focus on improving your business processes. They’re both commonly used as a part of a company strategy to streamline everything from day-to-day operations to annual events. That said, you came to this page to learn what the differences are, not the similarities. So, onto the important part: what actually differentiates CPM and BI?
There’s one phrase that helps identify the difference between the two: business decision-making. Although they both play a role in decision-making, they play entirely separate ones. While BI helps you decide what decisions to make, CPM monitors your progress based on those decisions.
BI uses advanced analytics to find trends in your data. However, as you’re putting your BI solution to work performing data analysis, you don’t necessarily know what you’re looking for. Oftentimes, businesses discover trends that they didn’t expect to see as a result of the analysis performed by their BI software. With this information in hand, they can create quantifiable goals and objectives to achieve.
CPM takes the reins after that to track the progress towards those goals and objectives. After defining specific KPIs and performance metrics, a CPM solution helps you see how close or how far away you are to reaching those goals. Planning, forecasting and budgeting features help create a timeline for reaching them. You can then use a CPM to check if you’re keeping up with that timeline. If you’re not, you can use it to help find out why you’re falling behind and fix the problem until you reach your goal.
In an ideal world, the process would end there. However, you know that we don’t live in an ideal world. Therefore, people continuously use BI during the process. BI has real-time data analytics capabilities with which you can run an ad-hoc query in real time, at any time. Occasionally, this discovers a new trend that reveals a new goal for you to achieve. This could very well mean shifting slightly, or even completely, away from your old goals. At this point, new KPIs and performance metrics are developed, you use a CPM to track the new goal and the whole process continues.
CPM vs BI: Which Should You Use?
So which of these two systems should you use? If you want to go with the popular trend, you can stick to BI only. Most businesses choose to use exclusively self-service business intelligence tools, such as Tableau, Qlikview and Microsoft Power BI. For one thing, it’s less expensive to invest in one solution rather than two. And additionally, BI software is oftentimes adequate for evaluating your KPIs and performance metrics.
However, there are also plenty of businesses that use CPM solutions as complements to their BI software. They do so to help maintain focus on their goals and objectives. This helps keep every goal on track, meaning everything from project management to distribution and sales either reach their peak efficiency, or are headed in that direction.
Neither solution presents a bad choice, as both are very useful in achieving a more effective business. Ultimately, it depends on what your business needs and how much money you have to invest in business software.