Business Process Library Q Business Process Management

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CSF (Critical Success Factor) is a factor that impacts the result critically when a company aims to accomplish its goal. In Japanese, it is translated into Primary Success Factor.

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Overview

CSF is a measure to lead a company to "a successful accomplishment of its strategic goal (KGI)." "Identifying CSFs" and "sharing CSFs in the company" are essential in terms of selection of important factors and concentration on them.

Concrete example will help us understand about this point. For instance, assume a case in which a management team of a company, whose amount of sales is decreasing, sets a goal, "increase sales."

If CSFs are not identified, some employees would think that finding potential customers is the most important factor and focus on it. On the other hand, others might think that increasing average spend of existing customers is indispensable and concentrate on it. If, based on the current circumstances of the company, it is expected that gaining potential customers is very difficult, employees should strive to increase average customer spend and what the management team should monitor is the transition of the average customer spend. Therefore, even if the defined goal is accomplished, the efficiency is somewhat questionable.

If "identifying CSFs" and "sharing CSFs in the company" were done, such a situation could have been avoided.

What is KGI?
An acronym of Key Goal Indicator. In Japanese, it is translated into "Important Goal Achievement Indicator." KGI is an indicator to define a strategic goal and achievement of it. Companies act to achieve this goal.


As can be seen in the example above, "identifying CSFs" and "sharing CSFs in the company" are imperative to efficiently accomplish the goals. Once these two are done, the company can achieve the goals effectively by throwing in all available resources in a concentrated manner towards the "success." Therefore, in terms of selection and concentration, "identifying CSFs" and "sharing CSFs in the company" is indispensable for the sake of successful company administration.

KGI and KPI are the relative terms to CSF, and understanding the relation among them helps understand CSF more deeply.

In general, a company defines its strategic goals and acts in order to achieve them. In such a company activity, KGI is the strategic goal to be achieved, and CSF is the important factor (measure) to achieve the goal. KPI is an indicator to grasp how business process related to CSF is executed.

In various types of business, many factors that are CSFs are related to the following.
What is KPI?
An acronym of Key Performance Indicator. In Japanese, it is translated into "Important Achievement Indicator." KPI is an indicator to make a decision about the status of accomplishment of business process that impact critically the achievement of goals.
  • Design of merchandise
  • Price of merchandise
  • Promotion for merchandise
  • Service
  • Channel for sales





Example

As an example, KGI, CSF, and KPI are here defined in a hypothetical case of a railroad company.

KGICSFKPI
10% increase in sales Net sales per customerthe customers of accessories of more than $10 >30%
10% reduction in cost inventory control cost up to a week's investory

KGIs are defined, as concrete goals, based on abstract objectives such as increasing sales, improving customer satisfaction, raising availability, and raising employees' skill level.

Clarify goals, which are indicators to define success.

CSFs, which are the key factors to achieve KGI, are extracted. By extracting CSFs, factors that must be focused on the most are clarified.

Consider what the most influential factors are.

KPIs to grasp the status of achievement of business process related to CSFs are defined.

Consider what indicators are useful to grasp the status. Once KPIs are defined, proceed to the definition of desired targets, decision about concrete actions, and so on.

Relation between BPM and CSF

In BPM, the order of priority of management should be fixed. Business process that critically impacts the result is an item to be managed intensively, and it must be paid very much attention to from its design to monitoring of it. CSF is imperative to decide the order of priority of business processes. Business process that CSF is related to is to be managed intensively, it must be iteratively monitored and improved by defining KPI.

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