oracle crystal ball for workforce planning and...

An Oracle White Paper

April 2013

Oracle Crystal Ball for Workforce Planning And Analytics

Oracle Crystal Ball for Workforce Planning and Analytics

1

Introduction

Organizations of all sizes and across every industry are constantly coming up against

workforce issues, leading them to ask questions like the following:

• How can I make hiring plans when I can’t anticipate customer demand?

• How can I plan for attrition when I don’t know how many employees will leave the company?

• What is the likelihood we will be short-staffed or overstaffed?

It’s critical that organizations address these issues because the cost of poor workforce

planning can be extremely high. Oracle Crystal Ball can help. This white paper shows how

organizations of all types can use Oracle Crystal Ball to assist them in the development of a

data-driven, fact-based approach to deal with organizational workforce planning issues.

Such an approach takes into account the uncertainties around customer demand as well as

the likelihood of employee turnover. In addition, the Monte Carlo simulation capability built into

this approach is ideal for simulating thousands of customer demand and attrition scenarios to

give business managers a complete picture of the demand and capacity combinations that

pose risks to their organizations. Further, by using sophisticated optimization capabilities,

managers can not only evaluate workforce risks, but also establish hiring and back-fill

strategies that ensure coverage of customer demands at specified confidence levels—at

minimum cost and headcount.


2

Workflow Planning Issues and Challenges

When profitability and margins are high, revenue streams are growing, and little or no competition

exists, companies can afford a steady-as-she-goes approach to managing their workforces.

Unfortunately, most companies today face challenges that call into question not only their financial

performance but also their very ability to survive. The recent financial downturn caused many

companies to reduce their workforces to subsistence levels. Today, many of these organizations

continue to work with over-lean workforces due to uncertainty about the timing and strength of the

global recovery, as well as the uneven nature of the recovery. In addition, the globalization of many

markets has introduced competition to industries that heretofore faced little.

This competition is forcing companies to optimize their workforce size and makeup so that they can

maintain margins and continue to offer world-class service. Consequently, these workforces have very

little capacity to deal with unforeseen demand spikes and unplanned attrition of their skilled workers.

This forces business owners to use expensive and relatively inexperienced outside labor sources, or

contend with poor customer service or missed revenue and profit opportunities. This situation is

further exacerbated when a company’s skilled workforce is not spread across age groups, since older

workers approaching retirement may constitute a large and critical percentage of a company’s labor

pool.

To compound this frustration, most organizations have a lot of data on worker demographics but little

idea how to put that information to use to predict worker attrition (due to retirement or other reasons).

Likewise, such organizations generally base their forecasts on the average expected workforce demand

over the planning horizon—with no way to estimate how much that demand is likely to exceed or fall

below the average. Such organizations are likely to find out the hard way that the average forecast

(even when accurate) provides no way of anticipating extreme demand swings in any intervening time

period.

Workforce Analytics with Oracle Crystal Ball

To demonstrate how organizations can apply Oracle Crystal Ball to workforce planning and analytics,

the following example workflow describes a series of critical capabilities that address the issues and

frustrations outlined above:

• Create a predictive model. Using employee demographic data and employment history from a

system like Peoplesoft HCM, an HR manager uses Oracle Crystal Ball with Microsoft Excel to

derive a predictive model forecasting the likelihood that department personnel will retire in the

coming year.

• Forecast demand. Professionals from sales and marketing automatically load historical sales data by

month from a budgeting and planning system like Oracle Hyperion Planning. They then use the time

series forecasting capabilities in Oracle Crystal Ball to generate (in moments) a forecast of demand

that includes trends and seasonal patterns in historical sales. Instead of single numbers (averages),

the forecast shows an entire spectrum of possible demand patterns (and their associated likelihoods)

for each month of the business plan.

3

Figure 1. Sales and marketing professionals can take advantage of the

Crystal Ball to generate demand forecasts.

• Simulate attrition and demand scenarios.

scenarios outlined in the preceding bullets

10,000 different scenarios of attrition and demand. In seconds, the

than 40 percent of simulated scenarios,

Ironically, though, the average shows

• Reduce the probability of understaffing while

the 40 percent probability of being short s

Decision Optimizer to determine the number of new hires required to reduce the probability of

understaffing to 10 percent while minimizing headcount costs. He also considers alternat

strategies involving third-party partners and borrowing resources from

• Incorporate optimized workforce plans and forecasts into tactical and strategic planning.

The general manager loads headcount changes into Oracle Hyperion Planning, along with ranges for

attrition forecasts and sales and demand forecasts.

workforce plans and forecasts

them into the tactical and strategic planning process.


Sales and marketing professionals can take advantage of the time series forecasting capabilities in Oracle

demand forecasts.

Simulate attrition and demand scenarios. Using the predictive attrition model and demand

outlined in the preceding bullets, a general manager uses Oracle Crystal Ball to simulate

10,000 different scenarios of attrition and demand. In seconds, the simulation shows that in

of simulated scenarios, the organization will find itself shorthanded in critical skills.

the average shows the organization to be overstaffed.

probability of understaffing while minimizing headcount costs. Concerned about

percent probability of being short staffed, the general manager uses Oracle Crystal Ball


while minimizing headcount costs. He also considers alternat

party partners and borrowing resources from other divisions.

Incorporate optimized workforce plans and forecasts into tactical and strategic planning.

loads headcount changes into Oracle Hyperion Planning, along with ranges for

attrition forecasts and sales and demand forecasts. Executives at headquarters roll up optimized

workforce plans and forecasts along with similar forecasts from other divisions, and incorporate

tactical and strategic planning process.


time series forecasting capabilities in Oracle

demand

Crystal Ball to simulate

simulation shows that in more

shorthanded in critical skills.

Concerned about

Crystal Ball


while minimizing headcount costs. He also considers alternative

Incorporate optimized workforce plans and forecasts into tactical and strategic planning.

loads headcount changes into Oracle Hyperion Planning, along with ranges for

up optimized

and incorporate


4

Conclusion

The current economy is unforgiving of poor workforce planning practices. However, decision-making

around headcount, skill availability and mix, career progression, and organizational changes entails a

complex process. Even worse, the costs and consequences associated with those decisions can be huge.

Best practices involve using statistical tools to analyze historical data and trends to come up with fact-

based forecasts. Simulation and optimization techniques provide managers with a clear view of the

entire gamut of business scenarios and their likelihoods. Simulation provides for quick and easy

forecasts of future business environments that are rooted in historical data. And optimization guides

management in making the difficult decisions that balance confidence in meeting future demand with

the very high costs of building and maintaining a skilled workforce—decisions that must account for

uncertainties in workforce demand and availability.

Oracle Crystal Ball is a powerful but user-friendly solution ideally suited and field-proven for

workforce planning and analytics. With the ability to utilize information from the top human capital

management tools, it enables managers to understand historical data, simulate future business

environments, and make staffing decisions that account for a wide range of possible business

environments.

Oracle Crystal Ball for Workforce

Planning and Analytics

Updated April 2013

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