COM333 – IS3
Critical Success Factors Analysis
• Information requirement analysis
– Identifying the information that is needed in
order to operate and mange the
organisation so that the organisation can
identify what IS should deliver. What IS
need to developed – IS strategy
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• Determining the IS Demand
– One way is to ask each area of the
business their requirements.
• Provide a wish list,
• No genuine priorities associated with the list
• No knowledge of the inherent demand in the
business strategy.
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• Another way is a group charged with defining
or updating the IS/IT strategy to
– Absorb every written strategy statement
– Interpret them into relevant IS/IT principles and
CSFs, application requirements associated with
major planned initiatives, and a set of supply
criteria to deliver the service demanded by the
business.
• Issues
– Strategy is not well documented all the time
– Inability to feed into the development of strategy
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• The best option is to develop the IS
demand parallel with the business
strategy.
– Feeding trends, ideas opportunities into the
top level business strategy
– Working closely with the areas of business
in building up a set of achievable business
and associated IS/IT initiatives that will
deliver the targeted performance.
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• Need to obtain a profound understanding of
the drivers for change, derived from
– Needs and objectives
– The current situation (where we are)
– Articulate the situation being sought (where we
want to be)
– Start to propose how the gaps might be closed
(how to get there).
• These are achieved through a mixture of fact
finding and analysis focused on the elements
of the business and technical environments.
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SWOT
CSFs
Value Chain
Business Model
Business
Strategy
Current and Expected
Business and Technical
Environments
Current Status of
IS/T
IS//IT
Opportunities
Proposed business
initiatives
Determine
the IS
Demand
Impact from
IS//IT
Potential Status
of IS/T
Proposed IS/IT
initiatives
Determine the IS demand
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•
Analysis of business strategy
•
Analysis of current and
expected future business
environment
•
•
Analysis of internal business
environment
Identification of Critical
Success Factors of the
business
•
•
•
•
•
•
Identification and analysis of the
internal and external value
chain
•
Further value chain analysis
•
•
Evaluation of the current
application portfolio
•
Identify the components and
associated information needs
Determine how IS/IT can
contribute to strengthening the
business’s competitive
positioning
Understand the relevant
organisational characteristics,
SWOTs and other factors
Crystallise the essential
characteristics of success in
meeting the objectives stated in
strategy
Identify the most important
information flow through the
business and across its value
chain partners
Bring into focus the potential
opportunities for improving the
value delivered by the
information
Determine the inventory of the
ISs in use, in development and
assess their contribution and
potential.
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• Critical Success Factors (CSFs)
– “things must go right” (Rockart, 1979) for the business to
flourish
– “are those handful of things that within someone’s job must
go right for the organisation to flourish. They are the factors
that the manager wishes to keep a constant eye upon.”
(Robson)
– “An internal or external business-related result that is
measurable and that will have a major influence on whether
a business segment meets its goals.” (Martin)
– “The limited number of areas in which results, if they are
satisfactory, will ensure successful competitive performance
for the organisation ... If the results in these areas are not
adequate, the organisation’s efforts for the period will be less
than desired.” (Rockart)
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• CSF analysis is a popular and powerful in IS/IT strategy
planning and business planning.
• It can be used in number of different ways and for different
purposes.
– Most effective technique in
• involving the senior management in IS planning, because it is wholly
rooted in business issues
• and in gaining their commitment to proposed IS actions that contribute
achievement in critical areas
– Enables linking of candidate IS projects through CSFs to objectives
– In individual interviews with senior management , it is a good
catalyst in unearthing their own individual information needs
– By providing a link between objectives and information
requirements, the CSF can play an important role in prioritising
candidate schemes
– It is particularly useful in IS planning when the business strategy
has not been progressed beyond objectives by focussing attention
on the most critical aspects of the business that need action taken
to improve their performance.
– It is extremely powerful when used alongside value chain analysis
in identifying the most critical processes, and enabling ownership of
the CSF and is associated actions to be accurately pinpointed.
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• CSF analysis is used for the purpose of
interpreting the business objectives,
tactics and operational activities in
terms of key information needs of the
organisation and its managers, and
strengths and weaknesses of the
existing systems.
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Corporative
Objectives
Corporative
CSFs
Business Unit
Objectives
Business Unit
CSFs
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• CSFs differ from industry to industry, between
organisations within the same industry, and from one
time period to another in the same organisation.
• So there are five influential factors to consider
– the industry or sector – all the organisation within one
industry will share this
– the competitive strategy or industry position – large players
may determine these for the smaller players
– environmental factors – the economy, country or politics etc
– temporal factors – those are not ‘normally’ of concern but are
so ‘for a time’
– managerial position – CSF will vary with the level in the
hierarchy.
• The higher up the management triangle more likely it is that
CSF will be of the building variety – tracking the progress of
changes.
• Lower level of management have CSFs relating to monitoring
of current operations.
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Industry
CSFs
Organisational
CSFs
Business Unit or
Function CSFs
Manager’s
CSFs
CSFs Levels
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Understand the mission
and objectives
Determine the CSFs
for each objective
Conduct a SWOT on
each CSF
Develop
measures
Result: guide for the
executive information
system
Consolidate across
objectives and identify
information dependencies
Result: outline plan of
IS requirements
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• CSFs are needs,
• They help to bridge the gap between those
who can act upon information and those who
can provide it.
• they do not specify information systems or
applications.
• They identify information requirements
which may be the basis of an information
system.
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Identify CSF
CSF
KD
IR
IR
KD
IR
KD
Identify key decisions
related to the CSFs
KDs provide bridge to the
information requirements
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• Example
– One of the objectives of an oil company is
“to achieve 1% growth in market share”
Tactics
CSFs
Improve the performance
across all regions at rates in
excess of the industry
average.
Competitive pricing
To improve performance in
those regions which are
currently under performing
to match national average
Level of advertising,
national and local
Remuneration of site
managers
Distribution of sites
Measures
Company prices versus
average price
Amount paid versus
industry average
Proportion of top turnover
sites
Site density / market size
ratio
Amount spent versus
industry average
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• CSFs were identified with reference to the
objective and its supporting tactics.
• Having determined appropriate measures,
the organisation identified more activities that
it needed to do to meet its CSFs
–
–
–
–
Survey prices
Review and survey salaries
Review demographics of site locations
Compare advertising expenditure against the
industry average
• These in turn each have information
requirements and associated performance
measurement activities.
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1 Business objectives
• Raise shares earnings
• Increase market share
• Develop new business
• Develop internationally
2 Critical success Factors
Create new
market
Find new
product
Automate
factories
Develop world
wide image
Improve product
quality
3 information system needs
Develop
customer
intelligence
Install new
product
database
Investigate
FMS
Develop profit
analysis and
financial control
Explore CAD
link with
customers
1.
Strategy group identify and agree on the objective of the SBU
2.
Management team interview managers, get opinions and resolve conflicts to agree. Reveal critical process
and activities
3.
Apply technology to products and process. Develop IS management support and co-ordinate and control
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critical activities.
• General guidelines on CSF
– CSFs are very flexible which can entice some organisations
to be too casual about their use.
• Casual applications can provide false results.
• CSFs should used within the same precision on as formal
methods
– The person managing the CSF study should have a
thorough understanding of the organisation’s business.
– It is helpful to have a senior management champion
– Educate the staff members involved in the CSF method
before the actual interview
– Do not link concrete information such as information needs,
computer applications etc during the first round of interviews.
– Try to use several management levels in order to validate
the CSFs and to get a broader picture and higher
organisational CSFs.
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• There are lots of derivatives of CSF
analysis
• All follow the top down approach
• Henderson’s work on critical sets is a
variant of CSF analysis.
– This model suggest a three stage process
can identify the IS strategy.
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• Understand the business using
– Five forces model
– Value chains
• Identifying information needs using
– Critical sets
– High level data model
• Ranking IS/IT opportunities
– Placing onto a two by two matrix segment
• Ranking is done by
– Analysing the critical/key assumptions by their degree of
stability and their importance to the business strategy
– Then analysing the critical/key decisions by their
importance to the business strategy and the scope there is
for the IS/IT to enhance their decision making process
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Business
Strategy
Feedback
Goals of
Management
Critical Success
Factors
CAS
(Assumptions)
CIS
(Information)
CDS
(Decisions)
Monitor
Input
Support
EIS Analysis
MIS Analysis
DSS Analysis
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CSF extended: critical information set
High
Low investment
justifiable
High investment
justifiable
Little or no
investment justifiable
Low investment
justifiable
Stability
Low
Low
High
Importance
Critical assumptions ranked by analysing them by their degree of stability and their
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importance to the business strategy
High
Low development
cost justifiable
High development
cost justifiable
Little or no justifiable
cost
Low development
cost and/or higher
operating cost
justifiable
Scope for
enhancement
Low
Low
High
Importance
Critical decisions ranked by their importance to the business strategy and the scope
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there is for the IS/IT to enhance their decision making process
• Limitations
– To be of value, the CSF should be easily and directly related
back to the objectives of the business unit under review.
From experience people found generally it loses its value
when used below third level in an organisation hierarchy.
– CSFs tend to be internally focused and analytical rather than
creative
– CSFs, partly, reflect a particular executives management
style.
– Needs very skilled and very perspective interviewers to do
the abstracting of CSFs from senior managers
– Mangers who are not really involved with strategic planning
find it difficult to apply CSF analysis
– It is usually impossible to build a true picture of the
organisations information requirements using only CSFs.
– Resultant decisions may ignore any resources constraints
surrounding their management
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