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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.
Oracle Crystal Ball for Workforce Planning and Analytics
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.
Oracle Crystal Ball for Workforce Planning and Analytics
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
Decision Optimizer to determine the number of new hires required to reduce the probability of
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.
Oracle Crystal Ball for Workforce Planning and Analytics
time series forecasting capabilities in Oracle
demand
Crystal Ball to simulate
simulation shows that in more
shorthanded in critical skills.
Concerned about
Crystal Ball
Decision Optimizer to determine the number of new hires required to reduce the probability of
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
Oracle Crystal Ball for Workforce Planning and Analytics
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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