We have been doing some thinking around the essential differences between BI and CPM solutions so as to more effectively communicate the value to each to our clients. A colleague directed me to two insightful white papers from Prophix on the nature of and differentiation between BI and CPM software packages.
PROPHIX and Corporate Performance Management
This white paper describes the benefits of Corporate Performance Management software and attempts to answer some of the commonly asked questions. It also illustrates PROPHIX’s expertise in CPM software and OLAP database technology and its flexible offerings to mid-market companies.
I think there is some good thinking in this CPM article around differentiating CPM from BI. This list of 5 types of software applications which a CPM Software product consists of are helpful in identifying what functions are specific to CPM, as opposed to BI.
- Budgeting, Planning and Forecasting Software
- Software used for Financial, Statutory and Management Reporting
- Applications used for formal Financial Consolidation
- Software used for Profitability Modeling and Optimization
- Strategy Management Software
I take issue with #4, only in that I have yet to see a CPM product with as robust an optimization algorithm as that found in Data Mining tools such as SSAS Data Mining. If you would like to do predictive analysis in order to optimize profit margins, I suggest you consider doing this outside of the CPM suite.
Also, this statement on Page 11 struck a chord: “What CPM really does is automate processes that otherwise are performed with spreadsheets.” A simple statement, but underneath is a universe of multi-user collaboration, potentially intense financial calculations, and a manageable process for getting to an elusive compliance and reporting outcome.
PROPHIX and Business Intelligence
This white paper explains the difference between BI and CPM software and describes how PROPHIX fits in the BI software category. Being an open system, PROPHIX can be accessed by any BI tool capable of reading data from Microsoft SQL Server Analysis Services.
The second article on BI does not meet the same standard; in my opinion, it includes some flimsy assertions about what BI is and is not. In particular, the assertion that CPM software offers “structured” data and BI offers “un-structured” is an over-simplification. Also, many of the observations about BI seem to be heavily influenced by the Microsoft BI Vision. 10 years ago, Cognos dominated the BI market: therefore, BI was OLAP. Now, Microsoft has influenced the perception and BI is Collaboration. I’m not sure what is next.
While Business Intelligence continues to evolve, but I think we can say that it has some core tenets:
1. Data Visualization
2. Flexible and Rich Data Models (optimally supported by OLAP)
3. Reduced dependence upon Technology to extract information from business systems
I think the definition of CPM is a much easier thing to get your arms around. There is much overlap in terms of tools with Business Intelligence. However, CPM means a much more specialized and complex thing.
Brian Berry is a Director of Technology Consulting with BlumShapiro, focusing on Microsoft Business Intelligence solutions, with a strong focus on Systems Integration, Master Data Management and PerformancePoint Services. He has been helping companies optimize their investments in Microsoft technology for over 12 years.