Understanding KPIs

KPIs provide the metrics that are used within PeopleSoft analytic applications such as Scorecard and Workforce Analytics. They are derived from data within PeopleSoft EPM, or they can be based on manually maintained values. You obtain the information that you need to measure by defining KPI metadata and any additional calculations made to it. You also create the rules that control how KPI dimension members are assessed (how their score is determined). KPIs provide the link to PeopleSoft EPM data and enable you to automate the process of accessing key business data and measuring it against your goals.

In the Scorecard application, KPIs are associated with scorecard strategy components or strategic initiatives. However, this documentation describes KPIs before it discusses how to establish strategy components and scorecards. The topics are organized this way because KPIs must be set up before you can associate them with strategy components. Keep in mind that before you define KPIs, you should plan your strategy, because it determines which KPIs you need to create.

The following diagram outlines the steps for establishing KPIs, including: defining KPI building blocks; defining KPIs, including cause and effect relationships, calculation rules, and target rules; processing KPI security; entering values for manual KPIs; processing KPIs; viewing KPI results.

Image: Steps for setting up KPIs

Steps for setting up KPIs

This topic discusses only the setup steps; processing and viewing KPIs are discussed in subsequent topics.

Data elements are a constraint-based subset of PeopleSoft EPM data, and are also referred to as a dataset. They can either result in a single value (a pointer) or retrieve multiple values that are grouped and subtotaled by dimension. They serve as the basis of calculated KPIs and can also be used as the target values upon which assessment results are based. They should be planned and set up in coordination with someone who is familiar with the PeopleSoft EPM database structure.

When you define a data element, the system creates a Structured Query Language (SQL) SELECT statement that extracts data from tables in the PeopleSoft EPM database to use within KPI expressions. For calculated KPIs, the data element is the key component that you must establish.

Data elements are based on constraints, which act as a filter and create the WHERE clause of the SQL SELECT statement that ultimately retrieves the data. Data elements are set up using KPI manager, but they require components that are established in PeopleSoft EPM. This diagram illustrates the relationship between data elements and their related PeopleSoft EPM database components:

Image: Relationship between data elements and Performance Management Warehouse components

Relationship between data elements and Performance Management Warehouse components

Use data elements to:

• Define which EPM data to target and use.

• Specify which dimension, such as product, customer, business unit, and so on, to use for calculations.

• Control how to combine data (for example, sum, count, average, and so on).

KPI dimension members are the individual elements or rows of data that are described by a KPI. In most cases, a KPI returns more data than is pertinent to your scorecard. Therefore, you specify which dimension members to include for a KPI by using the Dimension Members page. The dimension members can be defined by a rule (constraint-based) or can be individually specified. Rules are useful for KPIs that deal with a large volume of data that often changes and is difficult to keep current, such as employee data. For example, by using a rule, you can specify that the KPI should include all employees in department A. The constraints upon which a rule is based are established in PeopleSoft EPM. The rule can be based only on information available about the specific dimension. In other words, the criterion that drives the selection must be associated with the specific dimension of the KPI and might require that you associate the dimension table with other PeopleSoft EPM database tables. You can preview the dimension members for rule-based KPIs to validate what is selected by the constraint. If you are not using a rule to define the dimension members, the system can retrieve all of the dimension members from which you can select the specific ones to include.

You can specify the relative importance of each dimension member by assigning weight factors. During assessment processing, weights are used only when strategy components use an assessment method of weighting. Also, you can't use weights if the KPI dimension members are business units.

Assessments are the "scores" of a scorecard; that is, they indicate to what extent KPI dimension member results achieve their targets. You establish assessment definitions, such as green, yellow, or red, using the Assessment Definition page. On this page you define the image and text that appears for that assessment on the scorecard, and its assigned color in charts. You also define the assessment numeric equivalent— its value is used during scorecard assessment processing to determine actual assessment results, or to compute weights, depending on the assessment method used by the strategy component.

You associate assessments with KPI dimension members by establishing the rules for assessment results—in other words, the value ranges that correspond to each assessment—using the Target Rule page. Think of this as being equivalent to a grade scale. Use this page to define the target value and to establish rules to designate the ranges of actual values that result in a given assessment. Target rules are defined for each dimension member for the KPI. If the dimension members are based on a rule, then a single target rule is used for all the dimension members. If the dimension members are specified individually, then each dimension member must be assigned a target rule.

Target values can be based on:

• Numeric values.

• PeopleSoft EPM database values (using data elements).

• A table of results that you manually maintain.

  This table is referred to as the default target table.

• A KPI.

The target rules compare a KPI dimension member's actual value to a target value or a percentage of the target. If that condition is true, the rule assigns the object the associated assessment. Target rules can:

• Determine whether an object's value is within a specified percentage of the target value.

• Compare an object's value to another data element's value.

• Compare an object's value to a number that you enter.

• Use the value of a dimension member from a different KPI as the basis for the comparison.

For any KPI, you can define target rules for three time frames—current period, quarter-to-date, and year-to-date. To determine quarter-to-date and year-to-date results, you must establish target rules for those time frames.

Using PeopleSoft Workflow, you can automatically send email messages or add items to a worklist based on assessment results. To do this, you establish the individual activities (the emails or worklist entries) using the Activity Definition page, and then associate one or more activities with an action using the Action Definition page. Actions are associated with KPIs on the Target Rule page. When you define the target ranges and their resulting assessments, you indicate what action, if any, takes place.

When you define a KPI, you can control when it is calculated (for calculated KPIs), or assessed, or both. These options are set up on the KPI Definition - Frequency page. If no specific calculation or assessment frequencies have been defined, the system calculates and assesses KPIs every time they are processed. The frequencies that are available are based on the calendar and associated frequencies defined for each business unit.

These settings enable you to control the monitoring of period-sensitive metrics such as earnings per share. For example, the value for earnings per share is reported only at quarter end and should affect the scorecard only at that time. Your organization might want to see the value for earnings per share each month on the scorecard as an indication of business performance. You might or might not want earnings per share assessed each month. However, earnings per share should affect the scorecard only when it is evaluated at the end of the quarter.