This article contains the following topics:
- What is a hierarchy
- What's an example of a hierarchy
- Best practices
- Types of hierarchies
- How to create a hierarchy
- Managing your hierarchies
- When not to use a hierarchy
What is a hierarchy?
In Catalyst, a Hierarchy is a categorization tool that exists on top of data dimensions, which enhances the analytical capabilities for your instance. Generally speaking, a Hierarchy is an arrangement of items that are represented as being "above", "below", or "at the same level as" one another. They provide order to your data in ways that allow for intuitive, progressive, and quick-hitting data consumption from the highest level to the most granular. See more definitions in our Catalyst Glossary here.
What's an every day example of a hierarchy?
Let's use a common concept everyone will understand: Geography. In this example, the Hierarchy is built to describe increasingly more specific levels of geographical location. Each Level within the Hierarchy is a grouping of data moving from the gross to the granular.
So if we were to create a geographical Hierarchy, we could break it down in the following order: Geography > Continent > Country > State/Province > City/Town > Address. Notice how each level becomes more granular than the previous level. Here's the same example in Catalyst:
Call-Out: Notice that each level within the Hierarchy has a direct relationship to the other levels. This is very important when creating your structures. It wouldn't make sense to include levels that don't have a 1:1 relationship with the preceding or subsequent levels. In other words, this isn't just a long list of account attributes from your ERP. For example, you wouldn't want to put Customer or Product levels under Geography because it wouldn't follow the relational logic.
A typical structure of Hierarchies in Catalyst will consist of Account, Company, Customer, Item, and Profitability Account. These are the most common Hierarchy types we see Catalyst users set up. Below is a brief description of each:
- Account: The Account Hierarchy is going to be the financial hierarchy structure. For example, your Income Statement, your Balance Sheet, with varying levels of granularity.
- Company: A Company Hierarchy will include individual entities. For example, Company A, Company B, Company C, etc.
- Customer: The Customer Hierarchy will consist of levels of granularity for your customers, such as Master Customer, Parent Customer, Sales Reps, and any additional distinctions like Brand, etc.
- Item: The Item Hierarchy will show you data at the SKU level, which you can use to group items into product categories.
- Profitability Account: A Profitability or Operational Account Hierarchy will include data such as Quantity, Gross Sales, Cost of Goods Sold, and Gross Margin. These relate to Calculated Accounts and Calculated Measures.
As noted above, there are commonly used Hierarchy types or dimensions, and your Catalyst instance will come with most of them ready to go. You likely won't need any more, but if you do, just submit a ticket. Think of Hierarchy Types as the main categories for your data structures. When creating a new Hierarchy you can usually name it after the Hierarchy type you're using (e.g., if Hierarchy Type = "Company" then Hierarchy Name also = "Company").
Creating a new hierarchy
Adding a new Hierarchy is a relatively simple process. From the Administration tab, click Hierarchies to get to the screen below. Then select Add Hierarchy at the bottom right.
This brings you to the New Hierarchy page. Complete each step in the form below:
- Hierarchy Type: See above. Choose the most relevant dimension for your new Hierarchy, based on the type of analysis you'd like to observe on your data (e.g., Customer, Company, Location, etc.).
- Hierarchy Name: Give your Hierarchy a name. Commonly this is the same word or phrase as the Hierarchy Type (i.e. Account is named Account).
- Description: Optional. Include any additional contextual detail.
- Enable Security: If checked, it allows you to assign permissions to individual users or groups in order to limit access for use in the Cubes. If left unchecked, it is available to all users. Example: Say you only want a user or group to be able to analyze data about a specific Region or a certain Company. You would enable security on the Hierarchy that observes Region or Company.
- Available in Cube: If checked, allows the Hierarchy to show up in the Excel Cube files for analysis. Leaving unchecked is a good way to develop a Hierarchy prior to exposing it into the Cubes for broad consumption to your users.
- Company Attribute: Rarely used, but can be useful in certain circumstances. Select this for Hierarchies that will only ever need a single level. Example: Color will likely only ever need a single level beneath it, like Blue, Red, White, Yellow, etc. Same with Flavor (Vanilla, Chocolate, Strawberry, etc.).
- Available in Reports Filters: Allows for the addition of this new Hierarchy into existing Reports.
- Enable Report Category: Use this Hierarchy to create a new set of Reports.
- Element Display Options: For certain Hierarchies, such as the Profitability/Operational Account Hierarchy, the ID and Description can be the same. The Element Display options allow you to choose how the leaf level data is displayed for that specific Hierarchy.
The Hierarchy management tool, which exists under Administration > Site Management, allows the creation and management of Hierarchies and reporting structures within the Catalyst system. It supports many different actions, including renaming Hierarchies, creating data structure over existing data elements, adding new data elements, changing the display order of groups, and providing Hierarchy specific access to non-admin users. These tools enable the administration and management of data to be done by a Client Administrator (i.e., super-user) from the business, without taxing the Technical or IT resources of your organization.
Much of this might be managed by EBM, but you'll always have the ability to add, edit, or manage your Hierarchies. Below is more detail on managing Hierarchies that already exist.
- Details: Allows changes to the hierarchy name, the default group for new elements, security, and various cube and reporting options. Includes all options from the creation process.
- Levels: Allows for the renaming and adding/removing levels from a hierarchy. Max is 9.
- Tree View: Allows elements (item, account, company, etc.) or a group of elements to be created, modified, and/or moved within the hierarchy.
- Export/Upload: Allows for the export of a hierarchy to Excel for changes to a large number of elements or groups. Functions as a great way to map unassigned nodes (accounts, items, companies, etc.).
- Calculated Accounts: Allows for the definition of Standard Calculated Accounts (Gross Margin, EBITDA, Net Income, etc.) as well as the creation of User Defined Calculated Accounts (e.g. Net Sales, Product Margin, etc.). When a new Account is added, a Leaf will be added to all Account Hierarchies for each Company in the system. These leaves are not visible in Planning, but are available in both the Cubes and Reports.
- Configuration: Allows the for the definition of hierarchy-specific configuration and is necessary for several sections of the software to function properly.
- Sign-Flip: Allows the user to upload data in the format in which it is generated from the ERP system without manual manipulation and still present an output that is consistent with the internal financial statements. For example, standard general ledger detail shows revenue as a credit and expenses as debits, however, the most common P&L presentation is to show both as positive numbers. Thus, to accommodate that presentation, the user needs to flip one of the signs. Sign-flip within the Catalyst software allows the user to do this without having to manually adjust the data inputs. Allows the user to specify specific Account Groupings or Accounts for which the values displayed in the cubes and reports should have the opposite sign shown (e.g. Revenue appears in the data as a negative (credit) amount, but you want it to appear in the reports as a positive amount.). Sign-flip only applies to Actuals Scenarios, it will have no effect on Forecast or Budget Scenarios.
- Calculated Measures: Allows the user to view data on a percentage basis or per numeric basis, such as a % of Sales.
- Business Owners: To give users access to manage this hierarchy they must be added as a Business Owner. You can also add Groups instead of individual users. This section allows for specific hierarchy level security to enable easier management and control of hierarchy maintenance. Business Owners can choose to automatically receive email notifications when unassigned accounts are created, so that they can be mapped to a given hierarchy.
- Currency: Allows the user to indicate the currency that the data is stored in, and the exchange rate type used to convert to other currencies. Both can be assigned by Company and by Node or Leaf. Please note that certain node and leaves will only become clickable once background processing has completed.
When not to use a hierarchy
Each transaction that arrives in Catalyst is unique. It has a unique transaction type underneath it, it has dimensions, and it has an amount. Think of dimensions as column headers in a table, such as ID, posted date, location, account, department, customer, company, etc. When there are 1:1 relationships between a dimension and a category or a definition, hierarchies work great. But sometimes, we don't have simple 1:1 relationships in data. We may actually have 1:many relationships. For 1:many relationships, hierarchies aren't enough. For these types of relationships, rather than using hierarchies we'll want to use transaction attributes.