The difference between Business Intelligence and Corporate Performance Management systems

A frequent question we get asked is, “What’s the difference between Business Intelligence tools and a Corporate Performance Management system? Can’t I just do my annual budgeting and forecasting in my BI tool?” The short answer is, “No, you can’t.” The reasons for which I’ll explain below.

Fundamentally this is a ‘square peg, round hole’ situation. But I can understand how many people arrive at this conclusion. A cursory glance at the online reading material about this topic blurs the line too much and leaves the reader with more questions than are answered, so let's try to distinguish between the two systems below.

Two systems with two different purposes

Corporate Performance Management

Corporate Performance Management systems (also known as Enterprise Performance Management - EPM) were principally developed for the purposes of better managing Long Range Planning, Strategic Planning, Modelling or the Annual Operating Plan, Budgeting, Forecasting, Reporting and Analysis. This includes process automation, driver-based planning, scenario modelling, workflows & collaboration capability etc.

Business Intelligence

Business Intelligence tools were primarily designed for the purposes of data visualisation. Essentially, they bring together large sets of ‘unstructured’ data from various source systems and allow users to gain insight from that data visually.

What would happen if I tried to produce an Annual Budget or a detailed Forecast in a BI system??

In a BI system you cannot model, calculate, forecast or scenario plan the data, beyond very simple ad-hoc analysis i.e. ‘A minus B’; but calculations more complicated than that will be out of reach because the purpose of the BI system is to gather data from source systems and enable easy visualisations, not specifically bring in a Chart of Accounts, Trial Balances, remap account codes, and drive a Profit and Loss, Balance Sheet and Cash Flow – this is what the CPM will do for you. Now you might be able to visually display a forecast in a BI system but that’s not the same as automating and driving efficiency around the process in a structured, repeatable way, which again is one of the fundamental purposes of a CPM system.

What about using a BI system to do detailed analysis?

In terms of analysis in a BI system, it’s difficult to have a consistent approach because licensing allows users to build their own reports in their own way based on how they choose to perform different queries. So whilst you can, for example, do a variance report in BI, users can effectively be cross-referencing different datasets and querying in different ways, which can result in errors or completely different outcomes.

This is because, typically in mainstream BI tools, the output is dependent on the skill and knowledge base of the end user to query the data in a correct and logical manner – as with anything data related, this may not always be straightforward especially when cross-referencing different data sets and performing multi-dimensional data modelling (it’s not simply rows and columns like in Excel). The key difference is that CPM is focused on end user usability and generally speaking end users’ familiarity with their specific dataset e.g. financial information, whilst the integrity of BI output is dependent on the knowledge of multiple data sets, how they are cross-referenced and the ability to run queries against that datastore.

It may well be that BI tools generally have ‘drag and drop’ functionality and so creating an output in and of itself is simple. However, creating a meaningful and accurate output requires greater knowledge and skill.

Moving Forward – what about BI execution as part of Business As Usual

BI within any business should not be a stagnant exercise. KPIs can change all the time dependent on daily micro business level changes or in response to macroeconomic factors, and real-time reporting and data visualisation is key in supporting dynamic business change. With this in mind, every report that comes out of your BI tool, if going through a proper change control process should itself go through User Acceptance Testing to verify output accuracy; in effect you are building new queries each time. Crucially, the difference in a comprehensive CPM system is that outputs don’t need to go through constant UAT because this was carried out up front as part of model setup and rigorous calculation testing. So over time there can develop an ever-growing discrepancy in the difference in time to value between BI and CPM outputs because of necessary re-build and testing required in a BI tool.

Boiling it down

Let’s think of a fairly sensible, albeit simplified, real-life scenario where a company could go wrong in attempting to do a plan in a BI system. One individual is calculating bottom line profit i.e. revenue items minus cost items. Another user, assuming correct +/- signage for revenue and costs, adds revenue items and cost items. In this scenario the two individuals arrive at two massively different outcomes. This kind of miscalculation can easily happen, and in more sophisticated examples than that given above. Furthermore, what should be of greater concern, is that the discrepancy is not always easily identified or so immediately apparent as a clearly incorrect bottom line profit mistake.

In conclusion, I asked Christina F. VP at Anaplan for her view on the key differences between the two given Christina had a successful career at Tableau and is now leading the Commercial UK/I operation at Anaplan:

“Having worked at Tableau just short of 4.5 years, I was fortunate to have roles across Commercial as well as SMB businesses. What was common across both was helping new companies that wanted to see and understand data in their journey to becoming data literate. I’ve seen first hand that the specific goals and aims of BI and CPM software differ and what companies want to do with them differs largely too.

It's clear that the business aims or needs really do determine which route to go. Simply put - I believe they complement one another versus picking one over the other. With Anaplan, the native ability to combine analytics with sophisticated planning enables businesses to make better business decisions every day. Its data agnostic approach to other core business applications further enables businesses to realise true connected planning – absolutely critical in today’s macroeconomic environment.

We see it day in and day out with the customers we work with, all wanting to plan ahead and make impactful business decisions looking at a range of possible scenarios - it's become the foundation for many of our customers to be able to survive, keep up and scale.”

Peter Dixon & Catherine Hubbard - Anaplan UK

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