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In the following blog I will address CSFs (Critical Success Factors) and their role in developing IS/IT strategy’s, firstly by exploring experience, then onto current methodology following lastly the lessons learned.
To generalise Rockart, John F (1979), CSFs are important as they allow an organisation to assess underlying targets which they depend on in order to reach their goal of success and can be used as measurable to reaching that goal.
For the Company I currently work for, I think it considers itself successful in the respect that it has a high profit turnover, has recently doubled in size and holds good value in the financial market.
I think they look to improve and have the following CSFs (“We need/must”):
The word critical may not apply here too much as it wouldn’t be ‘Critical’ if they weren’t to hit these targets. Success is measured per project where they each contribute to the overall CSF where every project must be profitable. Failure to meet that requirement in most cases results in culling. In reality the engineering overhead translates to a head count, where we’re currently going through a redundancy stage period to meet this target.
This has resulted in reduced funding for IS/IT but in a sense has made it much leaner, where IT solutions for example meet the requirements with smaller unnecessary waste. It has re-prioritised the success of the company as opposed to the distracting sub-targets that seem to build up over time.
SWOT (Strengths, Weaknesses, Opportunities & Threats) analysis is an example of how a project/business can be evaluated in order to form a strategy and ultimately a competitive advantage.
Another method of forming a strategy is a balanced scorecard, where four perspectives are considered: financial, customer, internal business and innovation & learning. From these, objectives can be realised (also referred to as KPIs (Key Performance Indicators)) and again a strategy may be formed. The Balanced Scorecard links measures to business objectives, while CSF analysis identifies what is critical to achieving results." - Ward J & Peppard J (2002).
Using these methods as examples, it’s clear that defining objectives allows CSF’s to be defined, therefore a clear strategy can be created to meet those objectives.
It is essential that CSFs are clearly defined in my opinion, as without direction the overall aim of being successful may be overlooked or missed.
There is an element of risk in my experience, as I think these need to be reviewed regularly as Companies become more and more dynamic over time with the CSF analysis needing to be part of a continuous improvement. As Ward J & Peppard J (2002) put it, they “should receive constant and careful attention from management.”
Ward, J & Peppard, J (2002) Strategic Planning for Information Systems (Third Edition), John Wiley & Sons
Rockart, John F (1979) Chief Executives Define their Own Data Needs (Harvard Business Review, March 1979)