Sales management with the help of value driver trees

Sales Management with the help of value driver trees

The challenge

Achieving a transparent sales management across different business units continues to be a major challenge for many companies. This blog article offers a possible approach and details the selected procedure for it.

The company presented in this example operates internationally in the field of complex lighting solution projects, its national subsidiaries have great independence and the individual branches and offices are mostly self-sufficient.

Therefore, the idea was to develop a system that, on one hand, would provide more transparency in sales activities, success rates, success drivers and processes. On the other hand, the company operates in a highly competitive market. The business mainly consists of project work in which many participants are involved: architects, lighting planners, property developers, building owners, craftsmen and official institutions. So, in many cases you don’t know “the end customer”. For example, it has not yet been possible to measure customer profitability.

Due to the complexity of the lighting solution projects, it is crucial for the company to push only those projects that will actually be implemented. When the hit rate is high, the sales department works effectively.

Long project durations will make traceability even more difficult. Long after the order has been booked, employees of the company and their partners – often from different national subsidiaries or offices – are still busy implementing projects. The invoicing then takes place with a corresponding delay. How is the performance of the sales department to be controlled considering the many different participants and times at which services were provided that are necessary for success? Everyone works on a project at a certain percentage and in a different phase.

In this case, performance in sales does not only mean measuring profitability based on incoming orders. The subsequent processes and work – i.e. the traces that an employee leaves in the system – should also be taken into account when determining performance. This is because, often, credit notes are granted, or complaints processed during implementation, and even payment defaults may occur.

The solution

In the early phase of the project, a sophisticated technical concept emerged, in which the nature of the presentations, analyses and reports was described in detail. There was a very clear idea of ​​what the system should do later. Particularly important was the ability to capture performance at a glance. How good is Munich compared to Berlin, how successful are teams, what explains the differences in EBIT, why do some products achieve higher margins than others? What was the overhead cost and what is it that participants can learn to be even better on the next project?

In order to answer these questions, it had to be possible to consolidate key figures and compare performance directly at various levels: national company, region, branch, from the team to the individual employee.

The foundation for the technical part is the concept of Value Driver Trees. In a nutshell: with the help of a hierarchical structure, it is possible to analyse very precisely which levers need to be moved in order to be even more successful. A value driver tree can be used to identify dependencies on which adequate measures can be based, for example to better exploit customer potential.

Therefore 2 examples:

Example 1: From Quotation to Order


Each element of the driver tree always contains 4 values: minimum, maximum, average and the value of the selected organizational unit in relation to the unit to which it is compared. The green bar emphasizes that the selected organizational unit has a better performance than the average of the comparison units, the red bar indicates that the organizational unit is worse than the average.

The selection is made for: a specific period, the unit to be considered and the unit to be compared.

From the individual sales employee to the sales office, region, national subsidiary and the entire company, all values can be compared with each other.

Example 2: EBIT Analyse

EBIT Analysis value drivers trees

A special feature of the EBIT analysis is the consideration of wholesale and net sales. Gross sales are the sales invoiced in SD, while net sales also include the actual incoming payments, bad debt losses, discounts granted subsequently, etc. in the calculation.

The evaluations were presented in the enterprise portal using a JAVA application developed especially for this purpose, which displays the data of the underlying OLAP query results of the BW server. The data was transferred from the BW server to the enterprise portal using XML, which was generated by a specially developed function module on the BW server and then transferred to the portal.

The procedure

As part of the project procedure, an in-depth analysis of the technical requirements was initially carried out together with the department involved in the process.

The characteristics and key figures in the technical requirements were broken down into a set of more than 100 basic key figures and characteristic structures, which was verified together with the IT staff of the company and compared with existing data structures. Among other things, these basic key figures and feature structures formed the basis for the elements of the driver tree structures.

This was followed by the parallel development of the info providers and transformations in the BW backend system as well as the frontend JAVA application for the enterprise portal. The required key figures were largely pre-calculated to minimize OLAP runtimes. At the same time, the corresponding frontend application was designed.

After extensive tests and data verification, the application was handed over to the department and IT. As part of the Post Go Live Support, last errors were eliminated, and various optimizations were carried out.

If you have any questions regarding this topic, please do not hesitate to contact us. We at Inspiricon are looking forward to hearing from you!

Sources of the images: SAP SE

Oskar Glaser Lead Consultant BI Reporting
Phone: +49 (0) 7031 714 660 0