Critical success factor

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Critical Success Factor (CSF) is a business term for an element which is necessary for an organization or project to achieve its mission. For example, a CSF for a successful Information Technology (IT) project is user involvement.[1]

Contents

[edit] Concept history

The concept of "success factors" was developed by D. Ronald Daniel of McKinsey & Company in 1961.[2] The process was refined by Jack F. Rockart in 1986.[3] In 1995 James A. Johnson and Michael Friesen applied it to many sector settings, including health care.[4]

[edit] Factors

A plan should be implemented that considers a platform for growth and profits as well as takes into consideration the following critical success factors:[5]

  • 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?
  • Intellectual capital: Increasing what you know that's profitable.
  • Strategic relationships: New sources of business, products and outside revenue.
  • Employee attraction and retention: Your ability to do extend your reach.
  • Sustainability: Your personal ability to keep it all going.

[edit] Management factors

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Key success factors generally include exceptional management of several of the following:[6]

  • Product design
  • Market segmentation
  • Distribution and promotion
  • Pricing
  • Financing
  • Securing of key personnel
  • Research and development
  • Production
  • Servicing
  • Maintenance of quality/value
  • Securing key suppliers

[edit] Relation to Key Performance Indicator

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 objectives and enable the measurement of strategic performance.

An example:

  • KPI = Number of new customers.
  • CSF = Installation of a call centre for providing quotations.

[edit] References

  1. ^ Rockart, John F., "Chief executives define their own data needs", Harvard Business Review 1979 (2), pages 81-93.
  2. ^ Daniel, D. Ronald, "Management Information Crisis," Harvard Business Review, Sept.-Oct., 1961.
  3. ^ Rockart, Jack F. "A Primer on Critical Success Factors" published in The Rise of Managerial Computing: The Best of the Center for Information Systems Research, edited with Christine V. Bullen. (Homewood, IL: Dow Jones-Irwin), 1986, OR, McGraw-Hill School Education Group (1986)
  4. ^ Johnson, James A. and Michael Friesen (1995). The Success Paradigm: Creating Organizational Effectiveness Through Quality and Strategy New York: Quorum Books. ISBN 978-0899308364
  5. ^ Paul Lemberg's Extraordinary Results
  6. ^ INFORMATION MANAGER - STRATEGIC PLANNING FOR THE PROACTIVE BUSINESS LEADER: Success factors

[edit] External links

  • Salmeron, Jose L.; Ines Herrero, I., "An AHP-based methodology to rank Critical Success Factors of Executive Information Systems". Computer Standards and Interfaces 28(1), pp.1-12 2005.
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