Are Your KPIs Related to Your CSFs?

There is a great deal of talk about Dashboards and Business Intelligence in tech circles today. A dashboard (in my mind) is basically a collection of a number of indicators (gauges) that help a manager judge how her part of the business is doing. There are sales dashboards, marketing dashboards, manufacturing dashboards, and so forth.
While business intelligence normally includes a dashboard component, it also contains (again in my mind) tools to allow managers to locate sources of issues. Image of a corporate dashboard. The terms “drill down” and “ad-hoc query” are perhaps overused, but the idea is simple: a manager sees an “exception” in the data presented, and uses the business intelligence tool to find the reason for the exception in the detailed business data.

ERP systems are including pre-formed dashboards, usually centering around financial measures and financial data (for example, accounts payable and accounts receivable agings).

The biggest issue with these pre-formed KPI (Key Performance Indicator) dashboards is that for any given business KPIs need to be related to CSFs. CSF stands for Critical Success Factors. Every business has at least 3 and no more than 6 CSFs. They are the critical elements that drive the business to success. Without success in these areas, the business will not prosper or grow.

Does this imply that pre-built KPI dashboards aren’t useful? Or that pre-constructed business intelligence can’t help a business? No. But it implies that at least somewhere among the measures, each business should be sure to include key performance indicators that measure effectiveness in each CSF area.