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 as follows: if BPM is the goal, BI is the means to that end. Combined, they measure business performance, enabling organisations to align strategies by tracking and analysing 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 about 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 enable appropriate decisions to be taken. BI technologies and analyses have enabled performance management to evolve significantly in recent years. As a result, organisations are now using performance management components such as financial consolidation and management reporting, planning, budgeting, dashboards and tables 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. So integration between BI and financial management is important for better performance management. Leading software vendors 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 financial management, performance management and BI portfolio. The company has two operating divisions: Financial Management and BI. The Financial Management division includes subsidiaries Pegasus Software, RED Technology and Sun Systems. 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.
Through 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 are currently using 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 fully absorbing businesses, taking an integrative approach to consolidating a set of best-of-breed point solutions. To maximise the opportunities of its range of integrated solutions, Union Systems' organisational 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 integrating and rationalising applications
As technology develops, systems need to integrate to create better performance. More recently, some suppliers have turned to consolidating their systems to better meet user needs through collaborative working. The importance of integrating business applications becomes clear when you answer 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 in an organisation, its applications are not integrated into a coherent system. Given that the foundation 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 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 strategy and the development of e-business). As a result, the lack of BI standards makes it difficult to combine and centralise real-time information from a variety of sources across the business. 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 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 part 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 are not very sophisticated in terms of data sharing and reporting, for example.
Some (but not all) BI vendors automate their processes to comply with SOX, and then, thanks to automation and integration of most financial information, the audits they conduct allow them to reduce costs and comply with the terms of the law even more accurately. However, not everyone accepts the standardisation and consolidation of BI. Smaller vendors in particular are reluctant, because standardisation implies that they abandon many tools in favour of one, or at least a few, but all dependent on a single platform. With its international presence, Systems Union is trying 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 vendor, which will present smaller, more entrenched vendors such as Systems Union with 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 organisations use more than one BI application, management does not see 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 because 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, whereas consolidated BI is cheaper in the long term. However, fragmented BI solutions specific to each department provide dissociated views of the company's 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 enable you to make savings, particularly on staff and their training. A consolidated solution also requires a collective licence for the software, which is cheaper than having several licences for different solutions.
In any case, no system is perfect, and there is no supplier that has all the functionalities that 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 can be modulated to provide different solutions. Systems Union is trying to take advantage of the benefits 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 present 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 with a larger feature set. Despite facing competition from large suppliers, System Union appears to be a 'safe bet' for customers looking for solutions. Based on continued solid growth, it is likely to be in the market for a long time, which is a good sign if you are organising your business processes around a software platform. Systems Union's largest market is in North America, but its presence in Europe and Asia is very strong and growing. It also appears that new customers will be able to bring together a range of point solutions that can be easily integrated, 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 organisations, although the company appears to be losing market share to competitors in this area, such as Hyperion, Cognos and Microstrategy. Users can mix and match tools from the Systems Union suite of products according to business needs. For many companies, budgeting is a time-consuming process, 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 customisable for reporting across a number of industries, Systems Union's offering is particularly suited to the insurance and hospitality sectors. For example, Systems Union offers Sun System's Hospitality Performance Management (HPM) solution. Sun Systems is a subsidiary of Systems Union and provides an integrated front and back office analytics solution for the sector. By adopting Systems Union's component integration approach, organisations can leverage their existing IT infrastructure investments and get the answers to the 'how' and 'why' questions with a robust and scalable solution, without the extravagant financial outlay and adverse consequences of an intrusive or disruptive implementation.
Article translated from French