BI, EPM, data analysis: what's the difference?
Today, many terms are used to designate notions relating to data and the way in which it is used. "Data management" is a relatively apt term. But what about business intelligence (BI), data analysis and Enterprise Performance Management (EPM), also known as Business Performance Management (BPM)?
What do these terms mean in the context of organizational data? What are the differences between them? And what factors should organizations take into account when deciding on the type of software best suited to their needs?
The choice between Business Intelligence, Analysis and EPM is made all the more difficult by the fact that some software publishers offer solutions integrating EPM, Business Intelligence or Analysis within the same application. This makes it difficult to distinguish between the functionalities offered by these software packages.
In this article, we explore these different concepts in a business context, and suggest some differentiating factors that will give you a better understanding of what Business Intelligence, Analysis and EPM tools and processes represent, and what they can do for you.
Contents
- Business Intelligence and Analysis: two aspects of the same concept
- The boundary between Business Intelligence/analysis and EPM
- Which concept to use first: Business Intelligence or EPM?
- Reactive versus proactive measurement
- Technology vs. strategy
- Choosing the right intelligence tools and solutions
The difference between Business Intelligence and data analysis
First of all, let's take a look at Business Intelligence and Data Analysis, two concepts at the heart of the use of organizational data. Both terms refer to the collection and processing of data generated within a company, and are often used interchangeably. They do, however, imply a few different aspects of data processing and use.
While Business Intelligence is primarily seen as the process of obtaining, collecting and formatting data before delivering it to end-users, data analysis is a much broader concept. Analysis involves not only generating and processing data, but also manipulating and detailing that data in order to understand current trends and obtain answers to specific questions.
A Business Intelligence tool enables basic reporting, analysis and manipulation. Analysis goes a step further to identify and explore the implications of the trend, including how its integration with other trends might affect a given department, forecasts, etc.
The frontier between Business Intelligence/Analysis and EPM
Let's now take a look at EPM, a concept that also concerns data processing and is used to help a company achieve its objectives, while going further than Business Intelligence and data analysis.
Business Intelligence is developed at the level of business analysts, insofar as intelligence tools enable organizations to analyze large volumes of information in order to obtain the necessary support during decision-making processes. On the contrary, EPM is used at operational, organizational and planning levels to enable companies to improve their business performance.
Business Intelligence can provide valuable information on the current situation of individual company units, based on specific measurements and reports. Analysis can drill down into these results to answer specific questions.
EPM uses the results of business intelligence and analysis to implement processes that will improve corporate performance, involving planning, strategizing and benchmarking.
EPM systems offer functionalities for planning, monitoring and taking action to improve business performance.
Organizations using EPM solutions have understood these key differences, and have also discovered that, to deepen their EPM practices, they need a solid Business Intelligence foundation. Business Intelligence and analytics therefore form the basis for the deployment of effective EPM initiatives.
Which concept to use first: Business Intelligence or EPM?
For the sake of clarity, it's worth explaining the difference between data processing tools such as Business Intelligence, Analysis and EPM: Business Intelligence/Analysis is the foundation of EPM. Business intelligence/analysis tools contain the framework and/or infrastructure needed to gather large volumes of data and analyze them using specific tools, such as OnLine Analytical Processing (OLAP) cubes, data and text mining, specific analyses, etc. These tools are involved in the communication of data to the customer.
These tools are involved in communicating this information to end-users, using advanced reports, dashboards and other visualization tools (flowcharts, maps, graphs, etc.).
EPM systems, on the other hand, use this Business Intelligence framework to provide additional skills for defining and managing corporate strategies. EPM tools are useful during the strategy development, planning and goal-setting process. Typically, such a tool creates dashboards or establishes key performance indicators (KPIs).
As a result, the Business Intelligence framework is usually the first to appear, followed by the EPM platform, which has the advantage of being able to establish a Business Intelligence-based management method aimed at overseeing and improving business processes.
Reactive versus proactive measures
There's another important differentiating factor between Business Intelligence and EPM: Business Intelligence and data analysis tools are generally reactive, whereas EPM tools are more proactive.
This can be explained by the fact that Business Intelligence focuses on gathering information relating to day-to-day operations, so that managers can react and make decisions on the basis of a specific business opportunity or risk.
Analysis tools go a little further with the data, but remain reactive by nature. They process data that has been collected with the aim of answering specific questions. Even when real-time data is preferred to historical data, and forecasts are stated, the tools react insofar as they explain, but do not instigate change.
The aim of EPM is to improve business processes by using specific tools to set strategy and compare process results with objectives and goals. With this approach, EPM tools can be considered proactive, as they enable organizations to measure performance and take corrective action where necessary. Ensuring that a direction or plan can be modified as a result of new information is therefore what differentiates EPM from Business Intelligence/analysis.
BI versus EPM: technology versus strategy
The final differentiating factor we'll look at relates to the initial definitions of Business Intelligence, Analysis and EPM. Business Intelligence is designed to be a technological platform for producing analyses of valuable data, using reporting, virtual tools and so on. Analysis works on the same basis, delving deeper into the data to achieve the desired results.
EPM is based on a management approach, with the aim of creating a framework that can provide a measure of business performance (using tools and strategies such as balanced scorecards, Six Sigma strategy or even a total quality approach).
But how do you integrate the platform with strategic frameworks? By its very nature, EPM uses Business Intelligence as the technological foundation for applying a performance methodology. Thus, EPM can be seen as a way of translating technology into activity, and linking data (information) and decision-making (action).
These concepts are now clearer, but the reality is that not all companies have, or wish to install, an EPM solution. So how do you know what type of solution your company needs? Should you use a business intelligence solution, a data analysis solution or an EPM solution, or all of the above?
Choosing the right intelligence tools and solutions
In principle, if you want to ensure that your organization has the ability to analyze large volumes of data, obtain valuable information and communicate it effectively to enable decision-making, you need to choose the right intelligence tools and solutions.to enable decision-making, but you haven't yet reached the level where complex performance strategies are required, Business Intelligence is what you need. If you also need to plan for the future by following group- or department-wide business strategies developed on the basis of the latest available data, and monitor the performance of business processes, you'll need an EPM system.
Most modern EPM platforms integrate business intelligence and analysis tools, which can be used to analyze the data collected by the EPM application. There are, however, a number of independent business intelligence and analysis tools that are not integrated with an EPM system.
If your organization requires Business Intelligence tools that can access data sources external to your EPM system, for example data obtained from your enterprise resource planning system, sales data or data from your business intelligence system, we recommend that you use these tools.enterprise resource planning system, sales or marketing data, or supply chain data, then a simple dBusiness Intelligence or independent analysis tool will suffice, rather than one integrated with an EPM solution.
Indeed, integrated systems won't necessarily offer you all the resources you need to communicate with external sources, especially if you have a large number of them. Nevertheless, an integrated EPM system can be an easy way of ensuring that your performance analysis and business intelligence tools communicate with each other, and thatthere are no data bottlenecks, which are frequently found in stand-alone systems.
The most important thing to bear in mind is that Business Intelligence is the foundation of enterprise performance analysis and management, and that having an effective solution and implementing good Business Intelligence practices is always a good idea, whether or not other EPM solutions are added to it.
As Jorge Garcia, TEC's leading analyst on business intelligence and data management, pointed out in his report on EPM, published a few months ago: "organizations now perceive that one of the fundamental aspects of improving EPM practices is to complement, not replace, their existing data management systems.not replace, their solid Business Intelligence base, which serves as a platform for deploying effective performance initiatives".
Article translated from French