Corporate Performance Management (CPM) is a subcategory of Business Intelligence (BI). CPM is about monitoring the effectiveness of individuals and projects by comparing key performance indicators (KPIs) against projections based on corporate strategies and goals. There’s a process element to CPM and a technological element to it. The idea is that in addition to developing a business plan you also establish a system for measuring how closely everyone is adhering to that plan and how close the outcome is to your projections. So CPM software is designed to help you create budgets, forecast returns, and track progress. BI is a category that encompasses a broader range of information gathering and data analysis so you can make more informed decisions.
CPM: Measuring Progress toward Goals
CPM could, for example, be used to monitor supply chains. A business could undertake an initiative that involves changes in suppliers and shipping routes. The updates should lead to some predictable gains in efficiency, but you’ll need to monitor shipment dates, travel times, and drivers’ adherence to the newly planned routes. If, after the changes go into effect, you notice you’re not getting the forecasted returns, then you can drill down into the data and see precisely where the problem is. CPM is basically the monitoring system you use to ensure that a strategy is successfully implemented. You can think of it as sort of a corporate Fitbit that helps you track your progress toward your business’s fitness goals. But where do the strategies come from originally?
BI: Deciding What Goals to Set?
That gets us back into the realm of Business Intelligence more generally. BI can be broadly defined as data-driven decision-making. As with CPM, there’s a process element to BI—since it’s vital to make sure terms and recording practices are applied consistently—and a technological element. Instead of tracking progress toward a specified goal, however, with BI you’re usually analyzing information from multiple parts of your business to get a sense of what goals you could or should be setting. While BI often takes information from CPM into account, you can think of it as basically more open-ended and forward-looking. When you sign in to your CPM dashboard, you have a pretty good idea what it is you’re hoping to see. When you’re using BI tools, you don’t necessarily know what you’re looking for.
Examples of how BI works include the retailer that analyzes sales figures and sees that certain products move more quickly in one store location than another. That gives the company insight into how to manage inventory. And, with the cloud and more information being made publically available with Big Data tools, it’s becoming much easier to analyze data from sources beyond your own company’s firewall. A healthcare network, for instance, might be able to see what kind of new facility to invest in based on the volume of specific treatments sought by region.
Financial Leaders Then and Now
Traditionally, CPM was mostly used in finance departments, and the KPIs they focused on were overall revenue, ROI for specific projects, overhead, and operations costs. But over the past ten years or so, the role of financial leaders has been undergoing some pretty drastic changes. Technology is making both data collection and data analysis more efficient and at the same time more critical. So, instead of focusing on managing accounts and budgets, the finance people are more involved in decisions that affect the whole company. In other words, a lot of financial people are moving beyond the world of CPM and into the world of BI. One effect of this ongoing development is that it’s more frequently the CFO who’s taking the lead in new technology initiatives.