Drivers

A driver is a quantifiable measure of a business activity or external factor that directly influences financial or operational results. They form the core of a cause-and-effect relationship within a planning model, translating operational inputs into financial outputs.

Drivers are the foundational elements of driver-based planning, a methodology that creates more dynamic and realistic financial plans. Instead of manually inputting static values for revenue or expenses, planners model these outcomes based on their underlying drivers. For instance, a company might forecast its support costs based on the 'number of active customers' driver multiplied by the 'average support cost per customer' assumption.

By linking financials to the operational metrics that influence them, drivers make it easier to perform scenario planning and understand variance. This approach provides a clearer understanding of business performance and helps align financial plans with strategic objectives across the organization, a key goal of any modern budgeting and forecasting process.