You can use a value driver tree (VDT) to visualize the entire value chain of your business, instead of looking at isolated KPIs.
Why Use Value Driver Trees?
Value driver trees use story calculations and dimensions formulas to help visualize:
- Graphical planning simulations
- Entire value chains
- KPI relationships
- Driver-based planning
- Anytime granularity
You use value driver trees to take a driver-based approach to planning, where you identify key driver values and models their impact on top-level metrics.
The drivers are usually figures that you can influence directly, like product prices, headcount, or travel expenses. They could also be external factors such as tax rates or raw material costs. Say you’ve modeled how these factors will impact the value of your business, for example, net revenue, gross margin, and total expenses.
In this case, you’ll need to see how value flows through your model. Like a table, a value driver tree shows numeric values, and supports data entry so that you can adjust the plan.
Value driver trees also show hierarchical links between different values, and how the values are interconnected. For example, if you increase marketing expenses, you’ll expect your overhead costs and your sales volume to increase. In turn, you’ll see an increase in your sales revenue, and the cost of goods sold. A value driver tree lets you visualize these different links and see how your changes affect the bottom line.
VDTs are available for planning models and analytic models only. They aren't available for live models.
Value driver trees can be built based on formulas in the account dimension.
Value driver trees can be based on account dimension hierarchies or member formulas.