Difference Between BI and BAM

A Dashboard Spy reader wanted to know the difference between BAM (Business Activity Monitoring) and BI (Business Intelligence). He caught part of a BAM software presentation from an enterprise software vendor and was hard-pressed to see the difference between what he saw and what BI systems as he knew them offered.

Let’s do a little research and look at a BAM dashboard to see if we can explain the difference.

First off, let’s look at a Business Activity Monitoring dashboard to see what type of metrics might be on it. Here’s the iWay Activity Monitor:

iway activity monitor dashboard

It would appear that BAM is about real-time event monitoring. It targets the status and results of business operations, processes and transactions from data surfaced from automated processes.

A description from iWay Software:

iWay Activity Monitor was designed to integrate business activity monitoring (BAM) and business intelligence (BI) technology in a simple yet powerful way by enabling administrators to view, monitor, and report on iWay Software processes. This BI/BAM solution captures end-to-end transaction and workflow data across multiple applications and business units, summarizing and displaying trading partner metrics to help managers make informed decisions.

Hmm. Even the vendor’s description seems to blend BAM and BI. We’ll have to do some more research to tease out the differences.

Let’s take a look at the origin of the term Business Activity Monitoring.

From the Hindu Business Line article titled “BAM for the Buck” authored by Patni CIO Vinod Sadavarte (back on May 22, 2006):

The other day, as I watched my friend in his office going through a heap of paperwork, figuring out his workday, I mentioned to him that he should deploy a BAM solution to help sort out his life.

My friend had not heard of BAM and wanted to know more. “What is this BAM? Yet another tech term that promises to revolutionise the way business is conducted,” he asked.

In today’s competitive environment; businesses must accelerate the flow of information, analysis and decision-making in order to become more responsive to fast-moving events. This is what drives the next-gen business intelligence. It forces augmentation of schedule-based technologies with event-based technologies, that is, event-based business intelligence (BI). BAM thus is an extension of traditional business intelligence, adding event monitoring to scheduled batch-based reporting.

Beyond BI

So what was the difference between BI and BAM, my friend wanted to know.

BAM is a Gartner Dataquest term, which has been defined as the concept of providing real-time access to critical business performance indicators to improve the speed and effectiveness of business operations. At its broadest level, BAM is the convergence of operational BI and real-time application integration aimed at business goals but enabled through advances in IT.

Conventional BI systems are based on a data warehouse architecture designed to get the information: extracting, transforming and loading it into a data warehouse; having business analysts run reports and do the analysis; and having this presented in a suitable context for business users. It is more an analysis of data — past (such as revenue, profits, attrition) or future (sales funnel, budget and so on) to assist decision-making. This enables business users to react to business situations after they occur. To that extend, traditional BI is static and does not react to the intermediate events, which could be dangerous. BAM takes cognisance of these discrete events and sends signals to the appropriate stakeholders to take corrective actions.

Technically speaking, BAM eliminates these intermediate events and takes transactions directly from the operational systems, correlates it with other information from data warehouses or planning systems and then presents them in the form of an operational dashboard. Process models typically drive BAM. This is very different from data-driven ETL applications, which have little or no knowledge of business processes. BAM extends the use of business intelligence system beyond strategic and tactical decision-making to the management of day-to-day business operations.

So, are people already using BAM, my friend asked. BAM has been used for a large vehicle leasing company in the US, resulting in better fleet performance and lower cost of operations.

Sophisticated Watchdog

BAM sounds more like a sophisticated watchdog, observed my friend. Yes, operational processes can be monitored and exceptions acted on in near real-time.

For example, any event-based support for customer-related analytics enables companies to optimise live interactions with customers and prospects. A retail-banking customer who suddenly makes an unusually large deposit may be a prospect for another financial instrument offered by the bank. On the other hand, multiple ATM transactions in a short period of time should be an input to an effective fraud management by the same bank.

Even in a job profile, most CFOs and their teams feel the pressure to deliver financial information on a timely basis. Sarbanes-Oxley compliance requirement has added to the expectations from information management processes. CFO teams can no longer remain tied to lengthy period-end financial closing processes or cumbersome, manually-intensive report preparation processes that precede actual performance reporting and analysis. Now the potential reporting of corporate exposure depends on events.

The best example would be the requirement to notify shareholders whenever a material deviation is anticipated from stated goals such as acquisition or loss of a major customer.

Even airlines can use BAM in taking dynamic pricing decisions based on the real-time demand for services.

BAM has still not found a strong foothold in India. Companies are still struggling with disjointed applications. Their priorities today are consolidation, integration, conventional BI, BPM, etc. This will help them become mature enough to adopt BAM. But companies need to be watchful before deciding on another tool for BAM. They must look at their overall IT strategy in an integrated manner, leveraging the investments in the EAI, BPM, and NSM areas.

What is the current status and appetite for BAM applications? Let’s take a look at a current article.

This is from Dashboards, Decisions and Wall Street, a column from Intelligent Enterprise (September 16, 2008):

Dashboards showing current (or at least near-real-time) business metrics have never been hotter. We’re seeing these types of interfaces from BI vendors, BAM vendors and complex-event-processing (CEP) vendors alike. It’s a healthy sign of a meeting of the minds between business and IT.

In the BI camp, most vendors want to highlight their ability to deliver “real-time” (a.k.a. operational) insight. Information Builders Inc., for instance, is helping many customers move toward “near-real-time” deployments through data warehouse trickle feeding and hard-wired integrations offered by its iWay unit. iWay also has an iWay Activity Monitor business activity monitoring (BAM) tool, though Michael Corcoran, Chief Marketing Officer at IBI, admits that “BAM” can be a tough sell.

“We can’t sell BAM to a BI audience, but we get better traction if we talk to operational folks about having a BI monitoring engine and dashboard as part of our integration technology,” Corcoran explains.

Part of the problem, Corcoran says, is that the people who buy, implement and use conventional BI technology are not generally interested in business processes. “There’s interested in ‘real-time,’ but they’re not hung up on “BAM” — the latter being a term that has more currency among process managers.

At least one vendor here in Stamford says he’s seeing signs of convergence between CEP and BI. The BI tools and batch-oriented processes are just too slow, says John Morrell of Coral8, so he foresees event processing engines integrated with the BI stack to provide real “real-time” insight into what’s happening now. That could be through analytic services as well as human-facing dashboard displays.

Whatever camp they are coming from, dashboards are a good sign of progress. Whether built on BI tools, BAM tools or CEP implementations, dashboards are broadly understood to be timely displays of actionable business metrics. The timeliness of the insight is all relative and varies by application, but the important psychological shift is to stop thinking about reporting information and to start thinking about supporting decisions.

Hope this helps.

The Dashboard Spy.

Note: Did you see The 6 Ways to Business Intelligence Scalability video? It’s good.

Update: The reader who was interested in the definition of BAM sent me this link from see why .com:

 

Sandy Kemsley’s blog on business process management on eBizQ reports on a Presentation given by Gartner Analyst Bill Gassman hilighting the difference between BI and BAM. She comments that

“So what’s the difference between BI and BAM? According to Gassman, BI is used for insight and planning, and is based on historical — rather than real-time — data. BAM is event driven, and issues alerts when events occur. Personally, I think that there’s a spectrum between his definitions of BI and BAM, and it’s not clear to me that it’s a useful distinction; in many cases, data is trickle-fed from operational systems to BI systems so that the data is near-real-time, allowing dashboards to be driven directly from the BI system. True, traditional BI tools will typically see update intervals more like 15 minutes than the near-real-time event alerts that you’ll find in BAM, but that’s not a problem in some cases.” 

The problem with definitions such as “BI” and “BAM” is that real life is inevitably more grey and less black and white. Bill does a good job at classifying vendors to provide separation and distinction between vendors, but perhaps I can add a twist to the definitions which may help.

In the context of BPM, it’s useful to think about an additional dimension which has not been discussed here: when do you need to do the analysis: design time vs run time?

Rather than trying to look at what is real time and what is ‘near real time’ which is think is less useful, I always suggest that a good starting point in optimizing processes is to consider when the optimization needs to be done. Is the requirement to do it while the process is running on a continuous basis, or are you seeking to understand how well your processes executed so that future instances can be tuned?

Querying process logs to produce reports and dashboards can help business analysts to tune processes, but is an “after the fact” (design time) activity. This is traditional BI applied in a BPM context and there are several notable examples of BI vendors collaborating with BPM vendors to facilitate this.

If you ask users what they think BAM is, then they will describe a process oriented dashboard that can give visibility into processes executing in real time. There is real value for process analysts to get visibility of bottlenecks of processes modelled in BPM tools.

When you want to optimize processes on a continuous basis, based upon the process instance in flight, then this needs to be done automatically, and in real time. For example, you might want to reconcile both supply and demand in real time in order to adjust service levels or adjust prices dynamically.

A real time dashboard alone won’t achieve this goal, and part (or all) of the processes and the data needed to do this are often not modelled in a BPM tool. So these types of systems tend to be data centric (not necessarily BPM centric), and event driven.

The characteristics also are of more sophisticated analytics which are automating an analysis process to detect exceptions, calculate risks and forecast, say, delivery times. In order to do this often a significant quantity of both real time and historical data is required, but processing this in real time is beyond the capability of a BI tool or even database. The results of these analytics are used to then initiate processes, or provide information to modelled processes as an analytic process step. Oh, and of course this all has to happen in real time.

Building ‘business intelligence’ (in its broadest definition) into processes is clearly an obvious way of making your processes smarter. Is it 5th generation BAM?  Well maybe, but the use of deep analytcs and historical data has characteristics reminiscent of BI, but applied in an event driven, closed loop way. A long way from traditional BI.

8 thoughts on “Difference Between BI and BAM

  1. Pingback: BI and BAM « Charlie Maitland’s Blog

  2. So if I’ve got this right, essentially BAM is distinguished by receiving a constant data feed and focussing on the flow of current events rather than KPIs, history etc.

    I can see the use of up to the minute information, e.g. “x of our planes are currently flying with their autopilot turned off”, but suspect that for most purposes it really is unnecessary.

    Flow is useful and has appeared on a number of my dashboards any way as a view of activity.

    I guess I’m just wondering whether there’s really (technologically speaking) much of a difference. I presume that there will be some sort of internal database even if they don’t use something they refer to as a warehouse, otherwise how would they manage slowly changing dimensions etc where the source data systems are, shall we say, sub-optimal.

    I would expect a BAM product to do anything a BI product can, and in all likelihood (although real-time might be a problem) vice versa, so are they really just different focusses of the same thing?

    Not a conclusion – more of an invitation to debate…

  3. I thought as much, but I looked up business analytics on wikipedia, and they agree with what I thought – that business analytics was a subset of business intelligence. They also name reporting and data access as subsets.

    The architectural structure I have in mind has BI at the top with various focuses below it. They all add up to BI, but focus on different crucial elements.

    Business analytics focuses on quantitative analysis, predictive modeling and decision making.

    In my work environment (trading systems), the various modules have algos and models at their core for quant analysis. They produce what I would call business analytics (portfolio level).

    Above that (at the department level), they use classic business intelligence apps to keep track of performance metrics.

    Just my contribution.

    Marsha

  4. @Marsha – I had done the same and come to similar conclusions, but it feels like I’m operating in a vacuum without knowing of any authority on the subj. It looks like that’s because there is none 🙂

    I’m thinking of the following (borrowing from Philosophy)

    State of Nature

    Parts of BI (which BAM Is one) help us understand current state.

    State of Knowledge

    The Analysis we can derive from the current state. The Business Analytics part of BI lives here. Bayesians would call the probabilities established our “measure of knowledge.”

    State of Wisdom

    The Synthesis from the analysis. It’s what follows in the sentence we start with “So…” Depending on the depth of the model used, this may or may not be able to be done automatically.

    So for example, the current Wall Street failure could have been at any of the above 3 points. There could have been failings at the State of Nature – our inputs were somehow faulty and to blame. There could have been failings at the State of Knowledge – our models were bad. There also could have been failings at the State of Wisdom – the decisions were terrible (either because of an error in the previous two states, or an independently bad decision even though the prior two states gave us valid information).

    Back to BI – I think BI is the “umbrella” term and that anything or everything that contributes to our ability to create a State of Wisdom is Business Intelligence.

  5. I think that from an operational point of view, the BAM definition given by Gassman – ” BI is used for insight and planning, and is based on historical — rather than real-time — data. BAM is event driven, and issues alerts when events occur” – makes more sense.

    Imagine BAM as a mechanism for managing-based-on-exceptions. i.e if the parameters are within the acceptable range, do nothing – and issue alerts whenever the parameter exceeds the range value. This could be pretty useful for managers.

    I further think that a personalised BAM – meaning a place where the user can put his/her “watch list” for parameters and can define acceptable ranges for the day/week/month may make even more sense.

    The personalised alerts then can be delivered on the users desktop as visually changing dials or some such metaphor- though it could easily be e-mail alerts or phone alerts as well.

    I can imagine BAM being pretty useful in this kind of scenario.

    -Sangeeta
    Extensio Software

  6. I can’t tell you the difference in BI and BAM, but I bet the company I work for can sell you either one of those you want! 😉

    I always take these fancy names with a grain of salt. I find that the software companies will usually listen to what the latest buzzwords are, and what the customers are asking for … and re-name/re-badge whatever software they’ve already got and start calling it by that name.

    So, as a general rule, when I’m trying to code something that somebody’s asking for (such as a “dashboard”, a “heatmap”, a “data warehouse”, etc), I ask for them to describe what they’re wanting using plain-english and maybe a hand-drawn sketch, rather than relying on mine and their definition of a buzzword to be the same.

  7. I agree wholeheartedly and yes, that’s also my approach.

    The problem is that leads you straight to the next problem – the fact that most people don’t know what they want but are sure they’ll “know it when they see it”………….

    I’ve never yet managed to get a picture out of anybody, but I have started drawing pictures for them. My desk has two pen pots on it – one with some pens and then colouring-in pencils, the other with kids’ chunky style felt tip pens and highlighters in it.

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