The Difference Between BI and Performance Management

Below is the transcript of a Webinar hosted by InetSoft on the topic of Current Trends in Performance Management. The presenter is Mark Flaherty, CMO at InetSoft.

At an individual level, at a departmental level, and at an enterprise level, we’re holding ourselves accountable for that. So that’s a big part of what performance management is all about. Performance management takes what you know about business intelligence and what we value about business intelligence, and it marries it to the planning and control cycle of the enterprise.

What Is The Difference Between BI and Performance Management?

Business Intelligence (BI) and Performance Management are closely related concepts but serve different purposes within an organization's decision-making and operational framework. Here's a breakdown of their key differences:

1. Definition:

• Business Intelligence (BI) refers to the technology, tools, and processes that gather, analyze, and present business data. It focuses on extracting actionable insights from data to help organizations make informed decisions. BI involves activities such as reporting, data visualization, and querying.

• Performance Management (PM) is the process of monitoring, measuring, and managing the performance of an organization or its employees against set goals and objectives. It's a more structured and goal-oriented approach that involves defining key performance indicators (KPIs) and ensuring that business strategies are aligned with performance outcomes.

2. Primary Purpose:

• BI: The main purpose is data analysis and reporting. It aims to provide a clear view of the organization's current and past performance through dashboards, reports, and analytics.

• Performance Management: The goal is goal setting and strategy execution. PM ensures that the organization's performance aligns with its strategic objectives by setting goals, monitoring progress, and making adjustments to improve outcomes.

3. Focus:

• BI: BI focuses on what happened or what is happening in the organization by analyzing historical or real-time data. It looks at data patterns, trends, and insights to support decision-making.

• Performance Management: PM focuses on why things are happening and how to improve them. It's concerned with ensuring the organization is moving in the right direction, meeting goals, and optimizing processes to achieve better results.

4. Tools and Techniques:

• BI Tools: Tools like Power BI, Tableau, QlikView, and InetSoft are used for data visualization, reporting, dashboards, and querying data from various sources. BI platforms integrate data from multiple systems to provide insights.

• Performance Management Tools: PM systems like Balanced Scorecards, KPIs dashboards, and Enterprise Performance Management (EPM) tools (e.g., Oracle Hyperion, SAP EPM) focus on goal tracking, performance monitoring, and aligning organizational goals with actual outcomes.

5. Data Usage:

• BI: BI relies on a vast amount of data from multiple sources—such as transactional databases, spreadsheets, and cloud-based data systems. The focus is on aggregating and analyzing this data to produce actionable insights.

• Performance Management: PM uses the data and insights provided by BI to track progress toward specific goals. It also integrates organizational processes, strategies, and targets to measure performance against these benchmarks.

6. Scope:

• BI: BI has a broader scope when it comes to gathering and analyzing data. It can be used across different departments (e.g., finance, marketing, operations) to make data-driven decisions and understand various aspects of the business.

• Performance Management: PM has a narrower scope, specifically focusing on monitoring the performance of the organization, employees, departments, or processes relative to strategic goals and objectives.

7. Output:

• BI Output: BI produces reports, dashboards, and data visualizations that show trends, anomalies, and data correlations. The insights generated by BI inform managers and executives of what actions to take next.

• Performance Management Output: PM produces performance reviews, KPI metrics, scorecards, and actionable feedback. It helps in adjusting strategies, aligning resources, and determining whether goals are being met.

8. Examples of Use:

• BI Example: A retail company uses BI to analyze sales trends across different regions, identifying which products are performing well and which aren't. BI helps them to optimize inventory and forecast future demand.

• Performance Management Example: The same company uses Performance Management to set sales targets for each region and monitor progress toward achieving those targets. It continuously reviews the performance against these goals and adjusts strategies, such as increasing marketing efforts in underperforming areas.

9. Decision-Making Role:

• BI: BI is a decision-support system. It provides valuable information and insights that guide decision-making but does not necessarily set goals or enforce performance improvements.

• Performance Management: PM is a goal-oriented system. It actively manages and adjusts the business strategy based on performance metrics and enforces corrective actions to ensure goals are met.

10. Example of Integration:

In practice, BI and Performance Management often work together. For instance, a company might use BI tools to gather and analyze sales data, and then use Performance Management processes to set future sales targets based on this data. BI provides the insights, while Performance Management ensures that the goals and strategies are in place to improve or maintain those results.

Why don’t companies pursue performance management?

A lot of it has to do with existing belief systems, culture, politics, skills, and a whole host of things. It has to do though with people. It’s not the technology. The technology is pretty advanced and fairly evolved at this point. So why don’t people want to do it. Well, sometimes it’s just plain inertia. It’s like “well, you we don’t like the status quo, but we know it,” and nobody likes change. Human beings basically don’t like change.

For the most part there aren’t a lot of nefarious types out there who are trying to avoid detection. Now, there are some of those, too. People with hidden agendas, politics, standing in the way of things like performance management. But mostly, I think it’s inertia. It’s just hard to change what we’re currently doing and do something different.