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HOW DO BUSINESS INTELLIGENCE, BUSINESS ANALYTICS AND ENTERPRISE PERFORMANCE MANAGEMENT FIT TOGETHER?

The late Nobel Prize-winning nuclear physicist Richard Feynman learned a valuable lesson as a child. His father showed him a picture of a bird species and told Feynman its name in several different languages. Then his father noted that regardless of the bird’s various names, it did not in any way affect the reality of the bird’s existence or its physical features. The lesson for Feynman was that no matter what name people use for something, it does not alter what that something is. We can apply that lesson to the confusion today about the difference between mainstream business intelligence (BI),¹ business analytics (BA) and enterprise performance management (EPM).

Are BI, BA and EPM different words for the same species or two different species ... or animals? Are BI and BA part of EPM? Or is EPM part of BI and BA?

It is an ambiguous question because the underlying inputs, processes, outputs and outcomes of an organisation, whether a public sector government agency or a commercial business, may arguably have some parts that belong to BI and BA, whereas others belong to EPM. The key word in that sentence is arguably. This argument arises because IT-centric people often see an enterprise as a ravenous consumer of billions of bytes of data intended to manage the business (a BI view). In contrast, leaders, managers and employee teams typically view the same enterprise as an organism with a purpose and mission (an EPM view). They desire solutions and applications that achieve results. How can BI and BA be reconciled with EPM? The enterprise is like that single species of bird—nothing can change its existence in reality.

THE RELATIONSHIP BETWEEN BUSINESS INTELLIGENCE, BUSINESS ANALYTICS AND ENTERPRISE PERFORMANCE MANAGEMENT

EPM puts BI into context. BI reporting consumes stored data that first must be cleansed and integrated from disparate source systems and then transformed into information. Analytics produces new information. EPM then leverages and deploys the information. EPM requires BI as a foundation. When analytics are added to BI and EPM, organisations gain insights for better and timelier decision making. That is, in this context, information is much more valuable than data points because integrating and transforming data using calculations and pattern discovery results in potentially meaningful information that can be used for decisions.

The greater the integration of the EPM methodologies and their various types of analytics, especially predictive analytics, the greater the power of EPM. Predictive analytics are important because organisations are shifting from managing by control and reacting to after-the-fact data, to managing with anticipatory planning, so they can be proactive and make adjustments before problems arise.

For example, a car manufacturer’s warranty claims can be globally analysed to detect a design problem. In another instance, the history of an individual’s credit card purchase transaction data can be converted to information that, in turn, can be used for decisions by retailers to better serve the customer or provide customised offers to sell more to them.

A survey by the global technology consulting firm Accenture reported that senior U.S. executives are increasingly more disenchanted with their analytic and BI capabilities.² Although they acknowledged that their BI (regardless of how they personally define it) provides a display of data in terms of reporting, querying, searching and visual dashboards, they felt their mainstream BI still fell short. An organisation’s interest is not just to monitor the dials, it is, more importantly, to move the dials. That is, just reporting information does equate to managing for better results, but what is needed are actions and decisions to improve the organisation’s performance. Having mainstream BI capability is definitely important, however, it often comes about as the result of departments needing advances that their IT function could not provide. Extending BI across the organisation so that mini-BI applications can talk is a mission-critical differentiator for organisational success and competitiveness.

Managing and improving are not the same things. Improving is how an organisation wins. To differentiate BI and BA from EPM, EPM can be viewed as deploying the power of BI and BA, but all three are inseparable. Think of EPM as an application of BI. EPM adds context and direction for BI. For example, in physics, BI is like potential energy, whereas BA and EPM is the conversion of potential energy into kinetic energy. Coal, when heated, provides power to move things. To use a track and field analogy, BI is like the muscle of a pole vaulter, and BA and EPM is that same athlete clearing higher heights. BI is an enterprise information platform for querying, reporting and much more, making it the foundation for effective performance management. BA and EPM drive the strategy and leverage all the processes, methodologies, measurements and systems that monitor, manage and, most importantly, improve enterprise performance. Together, BI, BA and EPM form the bridge that connects data to decisions.

With EPM, the strategy spurs the application of technology, methodologies and software. As methodologies, which are typically implemented or operated in isolation of each other, are integrated, the strength and power of BA and EPM grow. Technologies, such as software, support the methodologies. Software is an essential enabler, but the critical part is in the thinking. That is, one must understand the assumptions used in configuring commercial software and, more importantly, have a vision of the emerging possibilities to apply the new knowledge that BI, BA and EPM produces.

OVERCOMING BARRIERS

Many organisations have already begun with basic levels of EPM. Their challenge now is to move up to higher stages of maturity that include integrating EPM’s methodologies and imbedding analytics into them. A key consideration to expanding an organisation’s journey is to recognise that the barriers and obstacles are no longer technical ones, but rather social and cultural. These include human nature’s resistance to change, fear of being measured and held accountable and weak leadership. Hence, behavioural change management is a key to realising value from EPM. A consideration for the executive team is to create a culture for measurements and analytics and to remove any fear that employees have of reprisals from what is discovered.

Like the bird that Feynman’s father described, we should not waste valuable energy debating BI versus BA versus EPM—we may get caught up in semantics. Rather, we should progress to where BA and EPM deploy the power in BI with its enterprise information platform so that organisations can advance from managing to improving.

Endnotes

1 The IT community distinguishes between ‘little’ business intelligence for query and reporting and ‘big’ business intelligence for the platform where information is stored and managed. This chapter’s emphasis is on the latter.

2 2005 News Release, ‘Companies Need to Improve Business Intelligence Capabilities to Drive Growth, Accenture Study Finds,’ www.Accenture.com.