BI, BPM: how to combine Business Intelligence and Performance Management?
There is widespread confusion about the difference between Business Performance Management (BPM) and Business Intelligence (BI). In this article, we'll look at the difference between BPM and BI, and how these two technologies work together.
Business Intelligence and performance management: differences and similarities
The difference can be described this way: if BPM is the goal, BI is the means to that end. Combined, they measure business performance, enabling organizations to align strategies by tracking and analyzing Key Performance Indicators (KPIs).
Definition of Business Performance Management (BPM)
BPM stands for Business Performance Management. It refers to a corporate dashboard designed to help decision-makers by providing accurate, detailed, real-time information on the company's situation.Business Intelligence (BI) is used to measure business performance management.
Definition of Business Intelligence (BI)
BI refers to all the techniques, methods and tools used to transform data into actionable information. BI is positioned upstream of BPM: it transforms data into information, and BPM uses this information to make appropriate decisions. BI technologies and analyses have enabled performance management to evolve significantly in recent years. As a result, organizations are now using performance management components such as financial consolidation and management reporting, planning, budgeting, dashboards and charts to define their strategies.
Financial management at the heart of BI and BPM
Financial management systems are an integral part of any performance management strategy. According to some analyst reports, between 60 and 70% of performance indicators are based on financial measures. As a result of this strong demand, a new area of application is developing: financial performance management. Financial performance management integrates data from various financial areas, such as human resources, budgeting and forecasting systems, for analysis and reporting.
The integration of enterprise-wide BI tools with financial management is becoming increasingly important for accurate budgeting and financial reporting, which is crucial for top managers such as CEOs and CFOs. BI focuses on the nature and trends of businesses and business transactions, rather than on business transactions or processes. For example, BI also focuses on finance, rather than business transactions, in the same way that it works in financial services sectors such as banking, securities and international finance. Thus, integration between BI and financial management is important for better performance management. Leading software providers such as Cognos, Hyperion and Systems Union have expanded into this new arena of financial performance management.
Systems Union offers an all-in-one solution
Systems Union Inc. is a European company of international dimension, based in Hampshire, England, with a portfolio of financial management, performance management and BI. The company has two operating divisions: Financial Management and BI. The Financial Management division comprises the Pegasus Software, RED Technology and Sun Systems subsidiaries. In 2003, the company launched its BI operation with the acquisition of MIS, headquartered in Germany. It expanded its BI division in 2004 with the acquisition of Australia-based Lasata. Systems Union currently has offices in 19 countries and operates with 500 resellers in 73 countries.
Thanks to its recent acquisitions, it has developed a global approach to acquiring more medium-sized businesses, and sells its full range of products to customers regardless of whether they currently use Pegasus or Sun Systems solutions. It is pursuing an aggressive strategy in a tactical and practical way, to establish a "global" end-to-end solutions platform for all facets of corporate financial transactions. Rather than creating a single, monolithic brand, it appears to be totally absorbing businesses, taking an integrative approach to consolidating a set of best-of-breed point solutions. To maximize the opportunities of its range of integrated solutions, Union Systems' organizational focus is on geographic regions rather than product families or legal structure.
The Union Systems solution integrates with finance and other existing applications such as Enterprise Resource Planning (ERP), Customer Relationship Management (CRM), Supply Chain Management (SCM), BI, and more. In addition, its consolidated packages offer a complete range of BI tools on a global scale. It has a solutions platform for many types of integrated enterprise financial solutions. Systems Union's MIS, for example, integrates complete financial solutions and covers legal and management consolidation, risk management, balanced scorecards, strategic planning and subsidiary management.
The importance of application integration and rationalization
As technology develops, systems need to integrate to create better performance. Recently, some suppliers have turned to consolidating their systems to better meet users' needs through joint collaborative working. The importance of integrating business applications becomes clear when answering questions such as:
- Does your accountant enter the same HR information into your management system as your sales department does?
- Do your finance staff have to re-enter information from printed spreadsheets?
- Are there discrepancies in financial data from different departments?
Unfortunately, if these situations occur within an organization, its applications are not integrated into a coherent system. Given that the basis of all business functionality is finance, financial management is at the heart of the performance management strategy, and it is important to establish an accurate financial balance sheet in order to have a global and consolidated view of financial performance.
Nevertheless, different systems and technologies have developed over time, and there are now many tools on the market (which has become even more complicated due to the recent proliferation of mergers and acquisitions, global expansion strategies and the development of e-business). As a result, the lack of BI standards makes it difficult to combine and centralize real-time information from a variety of sources across the enterprise. Such disparities further exacerbate inconsistencies in data and analysis. Given the serious consequences of inaccurate financial reporting, as evidenced by recent industry scandals, the government is stepping in to impose regulation and compliance requirements on financial reporting. For example, the US Sarbanes-Oxley Act (SOX) puts more pressure than ever on companies to ensure the accuracy of financial information.
The most important parts of SOX for BI and BPM are sections 302, 404 and 409, which deal with reporting procedures and internal control. Many companies implement SOX using spreadsheets, a temporary solution that works; but compliance is an ongoing process that companies face every year, and spreadsheets aren't very sophisticated when it comes to data sharing and reporting, for example.
Some BI providers (though not all) automate their processes to comply with SOX, and then, thanks to automation and integration of most financial information, the audits they carry out enable them to reduce costs and meet the terms of the law even more accurately. However, not everyone accepts BI standardization and consolidation. Smaller vendors in particular are reluctant, because standardization implies abandoning many tools in favor of one, or at least a few, but all dependent on a single platform. With its international presence, Systems Union tries to solve the problem of regulation and compliance by dividing the world into regional groups. However, large BI vendors such as Business Objects, Hyperion and Cognos are competing to become a standard BI provider, which will push smaller, entrenched vendors such as Systems Union to face real challenges.
A single BI solution or consolidated BI solutions
In fact, you can't manage what you can't see or measure. As many large organizations use more than one BI application, management does not perceive a single panoramic picture of the company's activities. Seen in this light, a single BI solution is better than fragmented or consolidated BI solutions. Some say that a consolidated, single-owner BI solution is better, as it helps avoid duplication and overlap (this is the approach taken by Systems Union). However, each system has its advantages and disadvantages. Fragmented BI is cheaper in the short term but expensive in the long term, while consolidated BI is cheaper in the long term. However, department-specific, fragmented BI solutions provide unbundled views of the corporate structure, and have lower maintenance and training costs, as they are already implemented and operational. Although consolidated BI solutions provide a single view, they are costly, especially at the outset. However, in the long term, they can save money, especially on staff and training. A consolidated solution also requires a collective license for the software, which is cheaper than having several licenses for different solutions.
In any case, no system is perfect, and there's no single supplier that has all the features customers expect to meet all their needs. If you mix and match different tools or modules from different suppliers, the system might do a better job. But in reality, you can't force a supplier to create a single system, but one that's modular enough to provide different solutions. Systems Union tries to leverage the advantages of different tools from different suppliers, while bringing the consistency that comes from a single service provider. It has consolidated packages of BI solutions under a single authority, leaving the brand entity and functionality unchanged. It is not alone in this strategy, as companies such as Hyperion Software, Business Objects and Cognos are attempting to offer consolidated solutions. Hyperion has acquired Brio and several other small private companies such as Appsource, Business Objects has acquired Crystal Decisions, and Cognos has absorbed Adaytum, among other examples. Again, these big players will also represent challenges for Systems Union, as long as they offer a more competitive environment, presenting users with more options.
BI & BPM: user recommendations
Customers of a company that has been absorbed face uncertainty. However, as Systems Union is creating a consolidated group of service providers, customers will not be forced to switch to a new system. Customers will have their licensed solutions extended and integrated into a larger feature set. Despite the competition it faces from large suppliers, System Union appears to be a "safe bet" for customers looking for solutions. Based on continuous, solid growth, it is likely to be on the market for a long time to come, which is a good sign if you organize your business processes around a software platform. Systems Union's biggest market is in North America, but its presence in Europe and Asia is very strong and growing. It also seems that new customers will be able to bring together a series of easily integrated point solutions, with an open architecture covering both national and international markets.
Systems Union is ideal for small and medium-sized businesses. It is also suitable for large organizations, although the company seems to be losing market share to competitors in this field, such as Hyperion, Cognos and Microstrategy. Users can combine and couple tools from the Systems Union product range according to business needs. For many companies, budgeting is time-consuming, and the main objective of performance management is to improve budgeting. Systems Union's budgeting system is fully integrated with performance management, providing planning and forecasting capability in a shorter time. Although reasonably flexible and customizable for reporting across a number of industries, Systems Union's offering is particularly well suited to the insurance and hospitality sectors. For example, Systems Union offers Sun System's Hotel Performance Management (GPH) solution. Sun Systems is a Systems Union subsidiary and provides an integrated front and back-office analysis solution for the sector. By adopting Systems Union's component integration approach, organizations can leverage their existing IT infrastructure investments and get the answers to the "how?" and "why?" questions with a robust, scalable solution, without extravagant financial outlay or the adverse consequences of intrusive or disruptive implementation.
Article translated from French