To begin, when I first heard these words – critical success factor (CSF), I had these questions in mind – What is CSF? Is that for what? How does it work? But that was long time ago. Now that I was asked to identify the steps for CSFs approach, let us first answer those questions.
Critical success factors (CSFs) according to Deborah Muckle are the things that must go right for a business to succeed. And stated in Wikipedia, CSF is a business term for an element which is necessary for an organization or project to achieve its mission. They are the critical factors or activities required for ensuring the success of your business. The term was initially used in the world of data analysis, and business analysis.
Rockart defined CSFs as:
"The limited number of areas in which results, if they are satisfactory, will ensure successful competitive performance for the organization. They are the few key areas where things must go right for the business to flourish. If results in these areas are not adequate, the organization's efforts for the period will be less than desired."
He also concluded that CSFs are "areas of activity that should receive constant and careful attention from management."
Talking about critical success factor, last December 15, 2008, when we had our class in management information system 2 (MIS 2), one of the reported topics was about CSF and we were asked to identify the CSFs of our department which is the Institute of Computing (IC) but I was not able to answer not because I had no idea, but I just could not raise my hand (joke!).
So now that we have those definitions from the different sources, let us now proceed to its significance. After reading quite a few articles, from what I have understood, it is really important to identify the critical success factors of an organization or a project to have focused on things that must be observed all the way through and as what have stated in Wikipedia, key success factors generally include exceptional management. Therefore, identifying CSFs and managing it in an exceptional manner will lead the organization or a project to success.
What are these factors? Here are some of the critical success factors that were identified in Wikipedia:
Critical success factors (CSFs) according to Deborah Muckle are the things that must go right for a business to succeed. And stated in Wikipedia, CSF is a business term for an element which is necessary for an organization or project to achieve its mission. They are the critical factors or activities required for ensuring the success of your business. The term was initially used in the world of data analysis, and business analysis.
Rockart defined CSFs as:
"The limited number of areas in which results, if they are satisfactory, will ensure successful competitive performance for the organization. They are the few key areas where things must go right for the business to flourish. If results in these areas are not adequate, the organization's efforts for the period will be less than desired."
He also concluded that CSFs are "areas of activity that should receive constant and careful attention from management."
Talking about critical success factor, last December 15, 2008, when we had our class in management information system 2 (MIS 2), one of the reported topics was about CSF and we were asked to identify the CSFs of our department which is the Institute of Computing (IC) but I was not able to answer not because I had no idea, but I just could not raise my hand (joke!).
So now that we have those definitions from the different sources, let us now proceed to its significance. After reading quite a few articles, from what I have understood, it is really important to identify the critical success factors of an organization or a project to have focused on things that must be observed all the way through and as what have stated in Wikipedia, key success factors generally include exceptional management. Therefore, identifying CSFs and managing it in an exceptional manner will lead the organization or a project to success.
What are these factors? Here are some of the critical success factors that were identified in Wikipedia:
- Money: positive cash flow, revenue growth, and profit margins.
- Your future: Acquiring new customers and/or distributors.
- Customer satisfaction: How happy are they?
- Quality: How good is your product and service?
- Product or service development: What's new that will increase business with existing customers and attract new ones?
Those factors that were stated above have helped me understand more about critical success factors. So, after defining the term, knowing its significance and showing some of the examples, to move on, here are now the steps for CSFs approach that were presented by Deborah Muckle in his presentation in Chapter 11: Information Systems Planning:
First, identify the firm’s primary mission and objectives that define satisfactory overall performance. Every organization has its mission or the reason why it exists which simply means its purpose and its objectives that support to accomplish its mission. Primarily, an organization exists to serve its stakeholders at its best. These stakeholders are the customers, employees, business partners, shareholders, and communities that benefit from the organization’s existence and growth. It is not easy or we can never identify the CSFs of an organization when they don’t even know their purpose of their existence. Why need to identify the CSFs when there is nothing to be accomplished? Think of that. As it has been said, purpose in life transcends self and gives meaning and satisfaction. It is important that the organization should also be specific with their vision, mission and objectives. Of course, there can never be an organization without its vision, mission and goals.
Second, executives identify the CSFs. After identifying the organization’s mission and objectives, and CSFs were also identified, the organization can now focus their efforts on the factors. Let me have an example, if I were to ask myself, why do I exist? What is my purpose here on earth? To achieve that purpose, what are the things that I need to improve or to have? Are my abilities enough?
It has been stated in Mind Tools site,
“By identifying your Critical Success Factors, you can create a common point of reference to help you direct and measure the success of your business or project.
As a common point of reference, CSFs help everyone in the team to know exactly what's most important. And this helps people perform their own work in the right context and so pull together towards the same overall aims.
Critical Success Factors are the areas of your business or project that are absolutely essential to it success. By identifying and communicating these CSFs, you can help ensure your business or project is well-focused and avoids wasting effort and resources on less important areas. By making CSFs explicit, and communicating them with everyone involved, you can help keep the business and project on track towards common aims and goals”
So, after reading the citation, I have now my realization, “Every living thing, no matter how small is in itself, a delight” How was that? You might confuse and wonder how the quote connected to the topic, for what? But then allow me to use it. Many of the organizations have a tendency to generalize their critical success factors that would lead them to a problem. When determining CSFs, it is suggested to be more specific because as what the quote trying to express, small things might be unnoticed without knowing that they are the important things. Just like viruses, they are so small that they cannot be seen through most microscopes however, they are contagious and dangerous. That is why the executives or managers of any organization should have a deep analysis on the organization’s CSFs. They have to consider the business needs when thinking about what really matter for the success. Once we have a list of CSFs, it is time to consider what is absolutely essential and so identify the truly critical success factors.
Next is to identify the pertinent indicators or measures of performance for each CSF; measurements could be either quantitative or qualitative. These pertinent indicators or measures of performance are what we called key performance indicator (KPI). “A critical success factor is not a key performance indicator (KPI). Critical success factors are elements that are vital for a strategy to be successful. KPIs are measures that quantify management objectives and enable the measurement of strategic performance” – stated in Wikipedia.
In order for the organization to determine how much they attain their objectives, KPIs are used. Like for example, if one of the CSFs of the organization is customer satisfaction, then the KPI now is the number of customers that are happy with the product or service. If we are talking about money, it could be the amount of revenue or the cash flows of the organization. Let me have another example, from the factor stated above, acquiring new customers and/or distributors, the number of new customers should be measured.
After the long analysis in identifying critical success factors and identifying the measures of performance for each CSF, lastly, decide which measures are most important than then makes sure that IS plans provide means for collecting and using this information. Organizations find ways or means enabling them to achieve their mission by doing necessary activities. As what I have said earlier, determining factors should be specific; it should be in sufficient detail to provide sufficient information for the plan to begin. The very reason why should develop an IS plan and why need to identify CSFs and that is for the organization to succeed. It has been said that it is not necessarily that all the measures are should be employed; instead, the organization is advised to weigh all the output measures and identify which measures are the most important. But that is not the end at all, after that, the decisions should go in to the IS plan and should be stated there the means using the information.
Let me share with you my observation from the previous assignments up to the present, the word success has been always there. We can always reason out that the organization should do that and do this, should have that and have this for the attainment of its success which is true. Even me as a person, I really wanted to succeed. When we say success, it is really broad and music to our ears. So to achieve success, we must always pay the price. It takes lot of courage and perseverance. For that reason, I could say, we all love success.
And for me to say, organization should identify the critical success factors within and control the factors that enable success and should overcome the factors that would hinder the success of its organization.
Jumping up to the conclusion, when a plan is to be implemented, it should be taken into consideration the critical success factors of the organization. As it was stated, CSFs are the things that must go right for a business to succeed. As I still remember, from the previous assignment I said that in developing information systems plan (ISP), there are several factors that must be considered. Each of which should not be taken for granted and should be well analyzed and planned and part of that are the CSFs.
References:
http://en.wikipedia.org/wiki/Critical_success_factor
