Critical success factors (CSFs)

ACCA P5 考試：Critical success factors (CSFs)

Critical success factors (CSFs) are often quoted in management literature as those areas in which an organisation needs to perform best if it is to achieve overall success. CSFs have frequently been used to help determine the requirements for executive information systems (EIS), supporting the ‘key indicator’ approach to management control. A number of methods have been developed to identify these key indicators, and the CSF approach is one of the most widely used, which should be measured and monitored using EIS to help manage the strategic direction of an organisation,

It is difficult and expensive to gather, store, validate and make available the various types of management information required for decision making. As such, it is important for managers and providers of information support systems to determine, in advance, what is most relevant to them.

It is necessary to identify the ‘key indicators’ that will help a manager to plan, manage, and control an area of responsibility. This method is based on the need for managers to focus, at any point in time, on the most significant aspects of their responsibilities. The development of an EIS, designed to support management control, is based on two main concepts:

The selection of a set of key indicators of the health of the functional business area. Information will then be collected for each of these indicators.

Exception reporting – the ability to make available to a manager, as required, information on only those indicators where performance differs significantly from expectations.

The underlying belief is that an effective control system must be tailored to the specific industry in which the organisation operates, and to the specific strategies that it has adopted. It must identify the CSFs that should receive careful and continuous management attention if the organisation is to be successful, and it must highlight performance with respect to these key variables in reports available to all levels of management.

The first concept is frequently approached from the viewpoint of CSFs in that a limited number of areas are identified in which results, if they are satisfactory, will ensure successful performance. They are the few key areas, it is believed, where ‘things must go right’ if the organisation is to flourish. In turn, each manager must identify the key areas that apply to them, in which results are identified as being absolutely necessary to achieve specific goals. The goals, in turn, support overall organisational goals. The genesis of this approach goes back to the history of warfare, where writers on battles have identified the successful leader as the one who concentrated his forces on the most significant areas.

The current state of performance in these areas should be continually measured. Because these areas are identified as being critical, each manager should have the appropriate information that indicates whether events are proceeding sufficiently well in each area. CSFs and associated performance indicators (PIs) can play a central role in this.