6 Use Cases For Value Driver Tree

by | Feb 26, 2018 | Value Driver Tree

In the preceding blogs, we took a quick look at the origins of Value Driver Tree and a few reasons why they are making a comeback. Let’s now take a look at some of the key business use cases for Value Driver Tree.

Note that Value Driver Tree models facilitate not only the analysis but also stakeholder discussion & communication in all these use cases.

1) Business Modeling:  Simulate an executive’s view of the business through dynamic modeling; Understand how drivers impact outcomes; Evaluate business initiatives such as new product launch or new market entry; Identify opportunities for efficiency & improvement; and more.

2) Strategic Target Setting: Incorporate changes to external & internal drivers and simulate fully costed scenarios based on current forecast, budget or actuals. Share justified clear targets to businesses for bottom up planning process.

6 Use Cases For Value Driver Tree

An example of a firm setting sales targets to all its divisions

3) Budgeting & Planning: Compare budget versions; Understand variations in budget drafts. Identify opportunities for cost savings by playing through unlimited scenarios rather than basic percentage cost savings.

4) Sensitivity Analysis: Understand the impact of changes to one or more value drivers to operational or financial outcomes.

6 Use Cases For Value Driver Tree

Sensitivity Analysis generated by Visual BI’s ValQ

5) Periodic Reforecasting & Variance Reporting: Compare budget vs forecast. Identify root causes for variances. Play through scenarios for the rest of the year to identity remedial actions.

6 Use Cases For Value Driver Tree

Periodic Reforecasting & Variance Reporting – An Illustrative Example. Note that forecasts are applied from June till December, with outcomes (Net Profit) reported for the full year.

6) Executive KPI Dashboards: Leverage the calculation engine to calculate KPI’s. Use value driver trees to visualize and analyze performance, and drill down to the details.

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Visual BI’s ValQ helps you address all the use cases listed above. Reach out to us here if you are interested to learn more.

 

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