BI, EPM, data analysis: what's the difference?
Today, many terms are used to describe notions relating to data and the way in which it is used. "Data management" is a relatively relevant expression. 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 organisational data? What are the differences between them? And what factors should organisations take into account when deciding which type of software is 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 that integrate EPM, Business Intelligence or Analysis within the same application. It is therefore 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, analytics 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 that are central to the use of organisational data. Both terms refer to the collection and processing of data generated within an organisation, and are often used interchangeably. However, they 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 it is delivered 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 to be carried out. Analysis goes a step further to identify and explore the implications of the trend, particularly in terms of how its integration with other trends could 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 organisations to analyse large volumes of information in order to obtain the necessary support during decision-making processes. In contrast, EPM is used at the operational, organisational and planning levels to enable companies to improve their business performance.
Business Intelligence can provide valuable information about the current situation of different business 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 put in place processes that will improve the company's performance, involving planning, defining strategies and benchmarking against targets.
EPM systems provide functionality to plan, monitor and take action to improve business performance.
Organisations using EPM solutions have understood these key differences, and have also discovered that, in order to deepen their EPM practices, they need a solid foundation in Business Intelligence. Business Intelligence and analysis 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 is 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 analyse them using specific tools, such as OnLine Analytical Processing (OLAP) cubes, data and text mining, specific analyses, etc.
These tools are involved in communicating this information to end users, using advanced reports, dashboards and other visualisation tools (flowcharts, maps, graphs, etc.).
EPM systems, for their part, use this Business Intelligence framework to offer other skills that help to define and manage corporate strategies. EPM tools are useful during the process of strategy development, planning and target setting. Typically, such a tool creates dashboards or establishes key performance indicators (KPIs).
As a result, the Business Intelligence framework is usually the first to emerge, followed by the EPM platform, which has the advantage of being able to establish a Business Intelligence-based management method for monitoring and improving business processes.
Reactive versus proactive measures
There is 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 is because Business Intelligence focuses on gathering information about day-to-day operations so that managers can react and take decisions based on 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 made, the tools react insofar as they explain, but do not instigate change.
The objective of EPM is to improve business processes through specific tools that are used to establish a strategy and compare the results of processes with objectives and goals. With this approach, EPM tools can be seen as proactive, enabling organisations to measure performance and take corrective action where necessary. Being able to modify a direction or plan 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 will 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, etc. Analysis works on the same basis as Business Intelligence. Analysis works on the same basis, taking a more in-depth look at 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 strategies 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 method. In this way, 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 organisation has the capacity to analyse large volumes of data, obtain valuable information and communicate it in an effective way to enable decisions to be made, you need to choose the right intelligence tools and solutions.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 based on the latest available data, and monitor the performance of business processes, you need an EPM system.
Most modern EPM platforms incorporate business intelligence and analytics tools, which can be used to analyse the data collected by the EPM application. However, there are some standalone business intelligence and analysis tools that are not integrated with an EPM system.
If your organisation 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 other systems, these tools can be used to analyse the data collected by the EPM application.If your organisation requires Business Intelligence tools that can access data sources external to your EPM system, such as data from your Enterprise Resource Planning system, sales or marketing data, or supply chain data, then a simple standalone Business Intelligence or analysis tool will suffice, rather than one of these tools integrated with an EPM solution.
Indeed, integrated systems will not 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 business 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 principal analyst for business intelligence and data management, pointed out in his report on EPM, published a few months ago: "Organisations now realise that one of the fundamental aspects of improving EPM practices is to complement, not replace, their existing business processes.complement, not replace, their strong Business Intelligence foundation, which serves as the platform for deploying effective performance initiatives".
Article translated from French