SUCCESS MAKING

Determination of Critical Success Factors for your organization

1. Introduction

The principle of identifying critical success factors as a basis for determining the information needs of managers was proposed by RH Daniel (1961 Harvard Business Review – HBR) as an interdisciplinary approach with a potential usefulness in the practice of evaluation within library and information units but popularized by F Rockart (1979 Harvard Business Review – HBR

The following as an example of generic CSF’s:

• New product development,
• Good distribution, and
• Effective advertising

2. Five key sources of Critical Success Factors

MAIN ASPECTS OF Critical Success Factors and their use in analysis
CSF’s are tailored to a firm’s or manager’s particular situation as different situations (e.g. industry, division, individual) lead to different critical success factors. Rockart and Bullen presented five key sources of CSF’s:

1. The industry,
2. Competitive strategy and industry position,
3. Environmental factors,
4. Temporal factors, and
5. Managerial position (if considered from an individual’s point of view). Each of these factors is explained in greater detail below.

3. Basic Type of CSFs

There are four basic types of CSFs according to Rockart. They are:

• Industry CSFs resulting from specific industry characteristics;
• Strategy CSFs resulting from the chosen competitive strategy of the business;
• Environmental CSFs resulting from economic or technological changes; and
• Temporal CSFs resulting from internal organizational needs and changes.

4. Critical Success Factor Method

• Start with a vision

• Mission statement
• Develop 5-6 high level goals
• Develop hierarchy of goals and their success factors
• Lists of requirements, problems, and assumptions
• Leads to concrete requirements at the lowest level of decomposition (a single, implementable idea) Along the way, identify the problems being solved and the assumptions being made Cross-reference usage scenarios and problems with requirements
• Analysis matrices

• Problems vs. Requirements matrix
• Usage scenarios vs. Requirements matrix
• Solid usage scenarios
• Relationship to Usage Scenarios
• Usage scenarios or “use cases”; provide a means of determining:
  • Are the requirements aligned and self-consistent?
  • Are the needs of the user being met as well as those of the enterprise?
  • Are the requirements complete
• Results of the Analysis

5. Example of Critical Success factors for Company XYZ

Critical Success Factor

Source of
CSF

Primary Measures
& Targets

1. Increase Number of customers

Industry

95% customer retention rate;
15% new customers per yr

2. Instal PC-based customer service
…hot line

Strategy

90% of customer queries
answered in 1 hour

3. Increase number of customer service reps

Strategy

3 reps per 100 customers

4. Restructure capital structure

Environmental

Lower cost of capital by 2%

5. Raise employee morale and
…productivity

Temporal

Increase employee retention
rate to 95% / yr.

References

• Porter, Michael E., ed., Competition in Global Industries, Boston, Mass.: Harvard Business School Press, 1986.
• Porter, Michael E., Competitive Advantage: Creating and Sustaining Superior Performance, New York: The Free Press, 1985.
• Porter, Michael E., Competitive Advantage of Nations, New York: The Free Press, 1990

John S. Reel, “Critical Success Factors In Software Projects,” IEEE Software, vol. 16, no. 3, pp. 18-23, May/June 1999, doi:10.1109/52.765782

About the Author

Dr. S. Balasubramanian currently working as Director , Anna University Coimbatore
Mr. Kannan, Research Scholar, Anna University Coimbatore is currently doing ph.d under the guidance of Dr. S. Balasubramanian