Assignment 6 (MIS2)

Identify and discuss the steps for "critical success factors" approach?
Critical Success Factor (CSF) is the term for an element that is necessary for an organization or project to achieve its mission. It is a critical factor or activity required for ensuring the success of your business. The term was initially used in the world of data analysis, and business analysis. For example, a CSF for a successful Information Technology (IT) project is user involvement.
A plan should be implemented that considers a platform for growth and profits as well as takes into consideration the following critical success factors:
•Money: positive cash flow, revenue growth, and profit margins.
•Your future: Acquiring new customers and/or distributors.
• Customer satisfaction: How happy they are.
• 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 is profitable.
• Strategic relationships: New sources of business, products and outside revenue.
• Employee attraction and retention: Your ability to extend your reach.
• Sustainability: Your personal ability to keep it all going.
Critical Success Factors (CSF’s) are the critical factors or activities required for ensuring the success your business. The term was initially used in the world of data analysis, and business analysis.
Most smaller and more pragmatic businesses can still use CSF’s but we need to take a different, more pragmatic approach.Critical Success Factors have been used significantly to present or identify a few key factors that organizations should focus on to be successful. As a definition, critical success factors refer to "the limited number of areas in which satisfactory results will ensure successful competitive performance for the individual, department, or organization”.
Being Practical
As you read this and many other resources on the internet you will discover that there are potentially a confusing variety of definitions and uses of Critical Success Factors.Before you start the journey looking at CSFs it is important to realise that the specific factors relevant for you will vary from business to business and industry to industry. The key to using CSFs effectively is to ensure that your definition of a factor of your organizations activity which is central to its future will always apply. Therefore success in determining the CSFs for your organization is to determine what is central to its future and achievement of that future.This page is primarily written for students of management and business, to keep things simple for application in smaller organizations remember to only have 5-7 critical factors for YOUR organization, and I am sure one of those will be cashflow!
How are they important to your business?
Identifying CSF's is important as it allows firms to focus their efforts on building their capabilities to meet the CSF's, or even allow firms to decide if they have the capability to build the requirements necessary to meet Critical Success Factors (CSF's).
Types of Critical Success FactorThere are four basic types of CSF'sThey are:
1. Industry CSF's resulting from specific industry characteristics;
2. Strategy CSF's resulting from the chosen competitive strategy of the business;
3. Environmental CSF's resulting from economic or technological changes; and
4. Temporal CSF's resulting from internal organizational needs and changes. Things that are measured get done more often than things that are not measured. Each CSF should be measurable and associated with a target goal. You don't need exact measures to manage. Primary measures that should be listed include critical success levels (such as number of transactions per month) or, in cases where specific measurements are more difficult, general goals should be specified (such as moving up in an industry customer service survey).
Definitions
Critical Success Factor an element of organizational activity which is central to its future success. Critical success factors may change over time, and may include items such as product quality, employee attitudes, manufacturing flexibility, and brand awareness. This can enable analysis.
Critical Success Factor any of the aspects of a business that are identified as vital for successful targets to be reached and maintained. Critical success factors are normally identified in such areas as production processes, employee and organization skills, functions, techniques, and technologies. The identification and strengthening of such factors may be similar. ..
Critical Success Factor (CSF) or Critical Success Factors 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.
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, Industry: There are some CSF's common to all companies operating within the same industry. Different industries will have unique, industry-specific CSF'sAn industry's set of characteristics define its own CSF's Different industries will thus have different CSF's, for example research into the CSF's for the Call centre, manufacturing, retail, business services, health care and education sectors showed each to be different after starting with a hypothesis of all sectors having their CSF's as market orientation, learning orientation, entrepreneurial management style and organizational flexibility.In reality each organization has its own unique goals so while thee may be some industry standard - not all firms in one industry will have identical CSF's.Some trade associations offer benchmarking across possible common CSF's.
2.Competitive strategy and industry position, Competitive position or strategy: The nature of position in the marketplace or the adopted strategy to gain market share gives rise to CSF's Differing strategies and positions have different CSF'sNot all firms in an industry will have the same CSF's in a particular industry. A firm's current position in the industry (where it is relative to other competitors in the industry and also the market leader), its strategy, and its resources and capabilities will define its CSF'sThe values of an organization, its target market etc will all impact the CSF's that are appropriate for it at a given point in time.
3. Environmental factors, Environmental changes: Economic, regulatory, political, and demographic changes create CSF's for an organization.These relate to environmental factors that are not in the control of the organization but which an organization must consider in developing CSF's Examples for these are the industry regulation, political development and economic performance of a country, and population trends. An example of environmental factors affecting an organization could be a de-merger
4. Temporal factorsTemporal factors: These relate to short-term situations, often crises. These CSF's may be important, but are usually short-lived.Temporal factors are temporary or one-off CSF's resulting from a specific event necessitating their inclusion. Theoretically these would include a firm which "lost executives as a result of a plane crash requiring a critical success factor of rebuilding the executive group". Practically, with the evolution and integration of markets globally, one could argue that temporal factors are not temporal anymore as they could exist regularly in organizations.For example, a firm aggressively building its business internationally would have a need for a core group of executives in its new markets. Thus, it would have the CSF of "building the executive group in a specific market" and it could have this every year for different markets.
5. Managerial position (if considered from an individual's point of view). Each of these factors is explained in greater detail below. Managerial role: An individual role may generate CSF's as performance in a specific manager's area of responsibility may be deemed critical to the success of an organization.Managerial position. This is important if CSF's are considered from an individual's point of view. For example, manufacturing managers who would typically have the following CSF's: product quality, inventory control and cash control. In organizations with departments focused on customer relationships, a CSF for managers in these departments may be customer relationship management.
CSF as a requirement:
After having developed a hierarchy of goals and their success factors, further analysis will lead to concrete requirements at the lowest level of detail
CSF as a key influence factor:Some CSFs might influence other CSFs or factors such as markets, technologies, etc.Such CSFs could be rephrased into “key influence factors” For example: “physical size” or “trained staff”
A 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: o Are the requirements aligned and self-consistent? o Are the needs of the user being met as well as those of the enterprise? o Are the requirements complete
• Results of the Analysis
Using Critical Success Factors for Strategic and Business Planning
Examples of Critical Success factorsStatistical research into CSF’s on organizations has shown there to be seven key areas. These CSF's are:
1. Training and education
2. Quality data and reporting
3. Management commitment, customer satisfaction
4. Staff Orientation
5. Role of the quality department
6. Communication to improve quality, and
7. Continuous improvementThese were identified when Total Quality was at its peak, so as you can see have a bias towards quality matters. You may or may not feel that these are right or indeed critical for your organization.The Critical Success Factors we have identified and us in the BIR process are captured in the mnemonic PRIMO-F
1. People - availability, skills and attitude
2. Resources - People, equipment, etc
3. Innovation - ideas and development
4. Marketing - supplier relation, customer satisfaction, etc
5. Operations - continuous improvement, quality, 6. Finance- cash flow, available investment etc

References:http://rapidbi.com/created/criticalsuccessfactors.html