The importance of critical success factors (CSF) and
key performance indicators (KPI) is well established. These are essential
decision-making tools to have visibility on the achievement of the
organization’s objectives and gain competitiveness in its market. The choice of
CSFs and KPIs can vary significantly from one company to another, depending on
the specifics of your business and your current objectives. In this second part
of our guide, we answer some of the most common questions about CSFs and KPIs
and give you some markers to select the right indicators for your business.
Who is in charge of selecting CSF indicators and KPIs?
Since it is more effective to integrate critical
success factors (CSF) and key performance indicators (KPI) into your business
intelligence solution, the choice of indicators is often designed as an IT task.
That said, Business Intelligence is not just software, it is a policy of
planning and monitoring of transformative objectives for the company, which
first engages management. The BI software will then have the advantage of
presenting the information collected at the different levels of the company in
a synthetic way, so as to give visibility on the current strategy and to make
it possible to rectify the situation along the way. The choice of indicators is
closely linked to the company’s strategy and must be carried out by the
decision-makers, in consultation with the employees of the various departments.
How many CSF and KPI indicators do I need?
The indicators are set on the basis of the objectives
of the organization. CSFs relate to tactical objectives, which detail the
company’s vision and strategy. Similarly, KPIs are more specific and measurable
indicators that measure the degree of achievement of critical success factors
(CSFs). It is generally recommended to break down your vision into 3 to 5 objectives
to clarify your vision. Each objective can then be broken down in turn into 3
to 5 critical success factors, i.e. 9 to 25 CSFs in all. Finally, for each CSF,
you will need to set at least one KPI to measure its achievement.
The precise number of indicators to adopt is specific
to each company, depending on your needs and your strategic vision, but
generally, it is recommended to limit yourself to the essentials and not to
multiply the indicators as desired, because this will make it difficult to estimate
the effectiveness of actions. Similarly, it is important to ensure consistency
between the objectives set, within the framework of a harmonious strategy.
Multiple and not well thought out objectives can indeed be contradictory: for
example a customer satisfaction objective and a budget control objective. The
clearer and more focused your objectives and indicators are, the more
visibility you will have on your strategy.
How can I check that I have chosen the right
indicators for my business?
The process of developing and monitoring a strategy is
always approximate, with the need to remain reactive and review certain aspects
as you go along. The same goes for CSF and KPI indicators. It is through
practice that your selection will be refined and that you will learn to choose
the critical success factors and the most relevant key performance indicators
for your activity. Either way, keep in mind that metrics serve your business
vision, not the other way around. You can rectify them along the way to better
achieve your goals.
In addition, there are indicators that are better
suited to certain professions. Here are the aspects to focus on when choosing
the right indicators for the following sectors:
- Construction: requests for information (RFI), change
in orders, schedule of operations, productivity, site safety, inspection,
quality, project closure.
- Industry: productivity, process, delivery times,
stocks, quality, health and safety.
- Real estate: operational efficiency, maintenance,
rental periods, collection periods, net income.
- Trade: prospecting, sales cycle, conversion of
opportunities, sales volume, sales basket, turnover, customer satisfaction,
complaints, after-sales service.
Pégase EXPERT supports companies from different
sectors in the implementation of the Divalto Infinity ERP for better monitoring
of their growth and competitiveness strategies. in Africa (Morocco and Algeria)
in the Caribbean (Martinique and Guadeloupe) in France (Lille and Paris) in the
Indian Ocean (Reunion and Mayotte) and in Canada (Quebec), we are nearby to
support you in your process of transformation digital.