There is some industry banter <Industry Debate on BI and Performance Management> in the blogosphere on the question of whether business intelligence (BI) is the same as performance management. Even many of the vendors confuse the terms as the same thing, hoping to grab your attention and potentially increase new business. In some case just the approach suggested – BI is for IT and performance management for Finance – is not accurate either.

In fact, bottom-line, all of this is nonsense. They are not the same, and the difference should matter to you.

Business intelligence is both a business concept and an information technology that facilitates the transformation of data into meaningful information through an iterative process, with the purpose of serving business objectives. This process provides more effective access to actionable information. BI includes traditional reporting and analysis as well as newer capabilities such as providing access to information through portal and search technologies.

Performance management, on the other hand, is a discipline and process for managing a business; it links people, processes, information and technology as a bridge between business units and IT support. Its goal is to improve results – that is, performance.  While BI can enable and support performance management, other applications, tools and technologies also support it. Ventana Research conceptualizes the performance management process in three steps – align, optimize and understand – that set the business context and capabilities to manage and improve performance. In this context, you should set goals, plans for how to achieve them and metrics that can track and compare your historical, present and potential future performance based on your current path.

I have seen BI used for a broad variety of purposes beyond managing performance, such as providing self-service access to information. And while IT groups definitely are focused on BI, they are beginning to understand the broader business context that is required to enable performance management. My point is that it does no good to confuse two distinct but potentially complementary strategic tools. Separately, and more importantly together, BI and performance management are important for every organization and provide greater benefit when they are more tightly linked.

Let me know your thoughts or come and collaborate with me on Facebook, LinkedIn and Twitter.

Regards,

Mark Smith
CEO & EVP Research