Last updated on 06th Oct 2020, Artciles, Blog

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Nandhakumar (ITIL Configuration Manager )

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CSF stands for Critical Success Factors while KPI stands for Key Performance Indicators. These two, altogether different concepts, are often confused or used interchangeably. One of the easiest ways of understanding these concepts in contrast, and singly, is by knowing that KPIs serve to be the effects of an organization’s actions, while CSFs are the causes behind its success. There exists a strong and close relationship between these two ITIL concepts. Once the CSFs have been properly identified and been executed upon, and if the organization is aware of its KPIs, then managers are quite close to meeting KPIs successfully. Read on for more. 

CSFs or Critical Success Factors :

Developed during the period between 1979 & 1981, the concept linked with critical success factors has gone through several layers of refinement advised by notable researchers. CSFs are typically elements that are very essential for the successor for a goal / objective to be achieved. Oft used for denoting the vision of an organization, its mission statements, or a business strategy, CSFs have to necessarily be in place for a objective to succeed. The success of CSF drives a strategy forward.

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KPIs or Key Performance Indicators :

KPI measures are used for quantifying management objectives. More often than not, they are accompanied with a threshold or target and enable accurate measurement of organizational performance.  Threshold, or the measure of KPIs, is indicative of the plotting of achievement vs. a definition. This definition may either be denoted against numbers or is time based. In simple words, a key performance indicator is but an indicator of performance. It showcases whether a specific performance is good or requires improvement; which in turn is denoted through the threshold linked to the KPI. In fact, KPIs indicate the defined performance levels that are necessary for achieving a set of factor/s critical for an objective to achieve success. Among many other things, this point indicates that KPIs are a derivation of CSFs.

Examples of KPIs and CSFs :

For instance, if one of the CSFs for an IT department serves to be the restoration of normal services, then the KPIs that can emerge from this CSF may be of the likes of Average Handle time (AHT), average wait time (AWT), percentage of time when the resolution takes place after the first contact (FCR or First Call Resolution), etc.  In the same vein, if the CSF for a collections department is the ensuring of high debt recovery, then the percentage collection attributed to various ageing buckets, percentage collection in lieu of total outstanding, etc. are the KPIs that can flow for the organization. 

What is Threshold?

Threshold indicates whether the performance on a KPI is acceptable or not. It adds definitive value to various KPIs. For instance, the size of a table “indicates” whether it is small enough to seat only six people, or so large that it may accommodate a small pool table. Though this indicator reflects upon the size of the table, it fails to measure whether the same meets the specific requirements or not. This fact is rightfully denoted by a quantification of the size of the table. For instance, a table measuring 3 feet by 6 feet will serve as the threshold for acceptance.

Purpose of KPIs and CSFs :

The purpose of KPIs is the identification of some metrics and defining of thresholds to indicate acceptable levels of performance. These performance levels are then used for indicating the achievement of CSFs that are also measurable—but with binary values only– yes and no. For example, CSFs should be able to indicate, “No, that factor has not been realized,” or otherwise. 

Here are some examples that explain the difference further:

  • KPI = customer satisfaction (which is quantifiable and follows an approach for measurement) + Threshold = > 65%KPI = resolution score (which is quantifiable and follows an approach for measurement) + Threshold = > 75%
  • KPI = added net customers (new customers minus disconnections) + Threshold = 900 in 30 days

It’s essential to understand that the definition of measurement units may be different in nature. They tend to be adopted by the department / organization / industry in different ways and include many dynamics. In the instances stated above, the customer satisfaction for any given sample is capable of being measured as:

  • A resultant of a “number rating” attached by a customer to particular question/s included in the survey form;
  • As an average of the rating attached by a customer to each question;
  • On a qualitative scale before being converted to numbers.  

In the same way, the definition of a resolved case may include the measuring of:

  • Repeat contacts by a given customer across a predefined period; post the first contact; or within 24 hours, 3 days, a week, and so forth,
  • The exclusion of some categories of customers,
  • Or, by using the number of contacts by any given customer’s telephone number; instead of the cases that have been logged separately by the service department.

Other examples:

1. Objective = you wish to drive from Location A to Location B in 7 hours

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  • CSF = driving skills, access to transportation, availability of fuel, affordability, driving conditions
  • KPI = was the trip completed in 7 hours
  • Threshold = 7 hours

2. Objective = Improved customer retention

  • CSF = quick turnaround time, efficient after sales service, transparency in bills, less waiting time, etc.
  • KPI = resolution score > 65%, customer satisfaction score > 65%, Average Handle time < 12 minutes
  • Threshold = > 65%, < 12 minutes

Conclusion :

CSFs are not subsets of their KPIs. They are very different from each other. KPIs are the primary numbers or metrics that are used for measuring whether or not the CSFs have been achieved. On the other hand, CSFs are possibly objectives or aims that may be non numerical or numerical in nature. These CSFs are primarily selected because of their significance in the determination of the success of a project’s services, processes, plans, and other activities.

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