I am able to setup Structure and Content/Content Ref Administration so that I can go to an external URL from a PeopleSoft menu item thanks to the excellent tip on this site. I also need to pass the signed-on employee's id to the URL string in order to login to the external app. I have created a Conten Referenct Attribute called EMPLID with the attribute value of %EmployeeId, translate is checked. I set the Portal URL to this:
http://cfatigue2:9090/workforce/SSO.do?%EmployeeId