Setting Up Models and Scenarios

This chapter provides an overview of models and scenarios and discusses how to define models and scenarios.

Understanding Models and Scenarios

Models enable you to define how to measure performance within your organization and the types of data that you want to review through various reports. For example, you may want to review revenue information on a region-by-region basis—a very high-level scope. Or, you may want to review only those activities that relate to a certain product line for certain types of resources—a very narrow scope. Each analytical application uses models and scenarios differently.

Regardless of the size or scope of your model, you must initially proceed with the same set of steps. Likewise, when you set up models you perform setup steps that are common to all products in the PeopleSoft EPM product line. However, how you complete the process depends on which EPM products you license.

Note. You should refer to your application-specific PeopleBook for more information on models and scenarios in your product.

Modeling Terminology

When using models, you should familiarize yourself with the following terms:

• Parent model: The master model that is used as the basis for an impact study.

• Child model: A child model stores the changes to the master or parent model.

  The child model inherits all the properties from the parent model.

• Scenario: You create a scenario ID for each parent and child model that you want to study.

  This scenario ID is used on all run controls.

Object-Based Modeling

Object-based modeling enables you to simulate various changes in an organizational model and study the impact on costs, revenue, and profitability. Instead of copying the whole model, you can copy only the data that needs to be changed. This reduces the volume of data copied and helps to identify the changes made and any effects the changes may have. Object-based modeling helps to define just the changes for the child model. All the unchanged data for the child model is inherited from the parent model. Enhanced modeling features improve the maintenance, reusability, and flexibility of a model, enabling you to create parent and child models easily.

Object-based modeling can be used not only in PeopleSoft Activity-Based Management but also in other applications in PeopleSoft EPM so that you can use your system to do planning and simulation. Scenarios for planning and simulation can be defined as child models. Child models represent the business decisions and assumptions for the scenarios. Scenarios can be simulated for each child model using various forecast distributions for a given timespan. Results for various scenarios can be compared to select the best case scenario.

Scenarios

Once you establish warehouse business units and setIDs, you create model IDs (where you define the parent and child relationships) and then point to those model ID by means of a scenario ID. Scenarios:

• Serve as a wrapper to run all analytic models.

  When you run the analytical application engines, the engines tie the models together by means of the scenario ID.

• Enable you to work with what-if scenarios by creating more than one scenario with different models attached for what-if comparisons.

There are two types of scenarios:

• Historical.

• Forecast.

To set up scenarios:

1. Complete the Scenario Definition page.

2. Select the type of scenario (historical or forecast) and complete the appropriate pages.

3. Specify the rates that you want to use on the Economic Assumptions page.

4. Assign the scenarios to a business unit using the PF Unit Scenario Definition page.

Defining Models and Scenarios

This section discusses how to:

• Create model definitions.

• Set up historical scenarios.

• Enter historical scenario business rules.

• Enter historical scenario economic assumptions.

• Set up forecast scenarios.

• Enter forecast scenario business rules.

• Enter forecast scenario economic assumptions.

• Assign scenarios to business units.

Pages Used to Define Models and Scenarios

Creating Model Definitions

Access the Models page (EPM Foundation, Business Metadata, Business Framework, Models).

Parent Model ID

For a child model that rolls up to another model, specify that ID of the parent model in this field.

Setting Up Historical Scenarios

Access the Scenarios - Definition page (EPM Foundation, Business Metadata, Business Framework, Scenarios, Definition).

Input Scenario ID	By default, the input scenario ID is the same as the scenario ID. When you run a jobstream, Resolver uses the input scenario ID associated with the run control scenario ID to select data from a scenario-keyed table. This way, you can access data from a scenario other than the one you provide at run time.
Scenario Type	Select the Historical scenario type. The component displays the Historical Business Rules tab. Note. Depending on the scenario type you select, certain fields appear and others are hidden on all tabs within this component.
Consolidated	Select this check box to identify this scenario as one to which other scenarios will roll up.

Entering Historical Scenario Business Rules

Access the Scenarios - Historical Business Rules page (EPM Foundation, Business Metadata, Business Framework, Scenarios, Historical Business Rules).

Default Model ID	If you specify a default model ID, then the rest of the models listed default to that ID. Otherwise you can select specific models for the various applications
ABM Model	Model ID to use for your PeopleSoft Activity-Based Management application.
FIN Model	Model ID to use for financial analytics.
Workforce Analytics	Model ID to use for your Workforce Analytics applications.
KPI Model	Model ID to use for Key Performance Indications and scorecards.
GLMP Model	Model ID for the ledger mapper.
CRM Model	Model ID to use for your CRM analytics applications.
Console Model	Model ID to use for consolidations.

Entering Historical Scenario Economic Assumptions

Access the Scenarios - Economic Assumptions page (EPM Foundation, Business Metadata, Business Framework, Scenarios, Economic Assumptions).

Rate Type

Select from the following: Market Rates: Use current interest rate information. Deterministic Rates: Enables you to select a hypothetical interest rate environment previously created within PeopleSoft Asset Liability Management. Deterministic rates play an integral role in modeling a financial services institution's exposure to interest rate risk. They enable you to model dynamic interest rate environments explicitly. If you define a scenario with either a deterministic rate assumption or a stochastic one, then you must select the term structure model ID to accompany the scenario. Stochastic Rates: Scenarios with this rate type are used to randomly generate interest rate scenarios, and they are used in risk management. If define a scenario with either a deterministic rate assumption or a stochastic one, then you must select the term structure ID to accompany the scenario. Age-Graded Table: Used for PeopleSoft Workforce Analytics. The age-graded table includes effective dates of rate and rating factors (such as age ranges, sex, and smoking status) by employer and employee. The arrays of values used to calculate the cost of a plan to an employee. Rates can be age-graded, service-related, or general, depending upon the benefit plan type. Flat Rate Table: Contains information on where you define rates to be charged per selected frequency for a particular benefit program or plan. The Flat Rate table represents a constant value. For all subsequent years, as well as the first time it is done, flat rate is calculated simply by applying the flat rate percentage to the average balance and allocating this amount among the periods. Salary Percent Table: Used in PeopleSoft Planning and Budgeting, this table contains information related to earnings as a percentage of the base or gross salary amount. Service Rate Table: Used in PeopleSoft Workforce Analytics, this table stores information such as service rate ID, effective date, pay frequency, rate per unit, service intervals, total rate, employer portion, and employee portion. Service rates are employee related rates. For example, a service rate would be an employee's days of vacation accrued per year or per month for a given vacation plan.

Note. You create term structure model IDs as part of your setup for using PeopleSoft FSI applications.

Setting Up Forecast Scenarios

Access the Scenarios - Definition page (EPM Foundation, Business Metadata, Business Framework, Scenarios, Definition).

Entering Forecast Scenario Business Rules

Access the Scenarios - Forecast Business Rules page (EPM Foundation, Business Metadata, Business Framework, Scenarios, Forecast Business Rules).

Specify the model IDs you want to use for each year and period. The selections you make depend on the analytical applications you have installed.

Note. You must specify a prior scenario ID on the Scenario Definition page to select a model of Financial Statement Simulator.

Entering Forecast Scenario Economic Assumptions

Access the Scenarios - Economic Assumptions page (EPM Foundation, Business Metadata, Business Framework, Scenarios, Economic Assumptions).

The fields on this page are the same as those discussed for the Historical Forecast - Economic Assumptions page.

Assigning Scenarios to Warehouse Business Units

Access the Warehouse Business Unit Scenario Definition page (EPM Foundation, Business Metadata, Business Framework, WBU Scenario Definition, Warehouse Business Unit Scenario Definition).

Scenario ID	For each business unit, select the appropriate scenario ID.
Calendar ID	For each business unit, select the appropriate calendar ID. Note. There is a relationship between the calendar ID on this page and the calendar ID on the Scenario Definition page. If you make an entry on this page that associates a calendar ID to a scenario and business unit combination, you can no longer change the calendar ID on the Scenario Definition page (the field is disabled).
Manual Journal Approval	Journal approvals allow specific requirements to be met before the approval is finalized. The system defaults to Pre-Approved for the Manual Journal Approval option. The Approval Required - Security and Approval Required - Workflow options are used by PeopleSoft Global Consolidations.
Business Process Name	If you are using the approval workflow option in PeopleSoft Global Consolidations, specify the business process name for the approval workflow.
Approval Rule Set	If you are using the approval workflow option in the PeopleSoft Global Consolidations analytical application, specify the approval rule set to be used for the selected business process.

See PeopleSoft Global Consolidations 9.1 PeopleBook.