Operational Drivers
This article focuses on operational drivers in Model Reef.
You will learn:
What counts as an operational driver.
How to express operations as time series.
How to connect operational drivers to revenue, cost and staffing variables.
Patterns for modelling funnels, capacity and utilisation.
Operational drivers describe the internal activity and capacity of the business rather than external economic conditions.
What is an operational driver
Operational drivers typically include:
Volumes and units
Units sold, orders, shipments, transactions, bookings.
Customer or user counts
Active users, subscribers, logos, patients, visitors.
Headcount and hours
Full time equivalents, shift hours, contractor hours, billable hours.
Pipeline and conversion metrics
Leads, opportunities, quotes, win rates at each stage.
Capacity and utilisation
Maximum throughput per plant, per store or per team.
Utilisation percentage or load factor.
These drivers translate operational assumptions into financial outputs through variables.
Storing operational drivers in the Data Library
Examples of operational driver names:
Driver - Volume - Orders - Online.Driver - Active Users - Enterprise.Driver - Headcount - Engineers - Global.Driver - Pipeline - Qualified Leads.Driver - Utilisation - Support Team.
When creating an operational driver, define:
Name and description.
Frequency (weekly, monthly, etc.).
Units (for example units, customers, FTEs, hours, leads).
Tags such as
Volume,Headcount,Pipeline,Capacity.
These series become reusable building blocks for many variables.
Linking operational drivers to revenue
Operational drivers often drive revenue through simple or layered formulas, for example:
Unit based
Revenue = Units * Price.Units are an operational driver, price may be an economic driver.
Customer based
Revenue = ActiveCustomers * ARPU.Both ActiveCustomers and ARPU are drivers.
Pipeline based
New Contracts = Leads * ConversionRate * AverageDealSize.Leads and conversion rates are operational drivers.
The variables that represent revenue reference these drivers in their formulas and take care of timing and accounting logic.
Linking operational drivers to costs and staffing
Operational drivers also underpin:
COGS and variable costs
COGS = Units * UnitCost.Delivery Cost = Orders * CostPerOrder.
Staffing models
Required Headcount = Workload / HoursPerFTE.Staff Cost = Headcount * Salary * OncostFactor.
Capacity driven costs
Maintenance Cost = CapacityUnits * CostPerCapacityUnit.Rent = Locations * RentPerLocation.
This creates clear relationships between operations and financial outcomes.
Modelling funnels and utilisation
You can use operational drivers to model funnels and utilisation:
Funnel stages
Drivers:
Leads,Qualified Opportunities,Proposals,Closed Won.Drivers:
Conversion Rate - Stage A to B, etc.Variables: new revenue from each cohort.
Utilisation
Drivers:
CapacityHours,BookedHours.Driver:
Utilisation = BookedHours / CapacityHours.Variables: revenue and staffing costs that depend on utilisation level.
Capturing these relationships makes the model more explainable for non finance stakeholders.
Scenario work with operational drivers
Scenario examples:
Base Case: planned headcount growth and stable conversion rates.
Downside: slower pipeline growth and lower conversion, same staffing.
Upside: higher conversion and better utilisation with moderate extra headcount.
Because operational drivers are scenario specific at model level, each scenario can express a different operating plan while reusing the same structure.
Good practice for operational drivers
Guidelines:
Avoid mixing financial units and operational units in the same driver. Keep them separate.
Use simple, descriptive units such as
customers,units,orders,hours.Check that driver scales linearly make sense relative to capacity and constraints.
Document key operational drivers so non finance users can understand and challenge them.
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