The above is a term you may have come across, but in my experience it is widely misunderstood. It seems to me everyone has a different interpretation of the term. So I thought I would put my own view down on paper. I actually think CSF gets confused with “success factor”, which is a term I don’t particularly like.
I have used CSF’s as a technique in business analysis. Imagine that your project has the challenge to improve a business process. You would ask yourself and your team, “what few things do we need to improve to effect the overall business process improvement?” suppose the challenge was to reduce the order processing cycle from ten days to five days? There may be a whole host of ideas to improve the situation such as better monitoring of stock levels, reliable suppliers, better integration between sales channels, forecasting etc etc. You should try and make a long list, say ten to a dozen, then review with your team, users and stakeholders to get down to about four. When you have these few, then you can ask yourself “if our project manages to improve these few factors, does that maximise our chances of achieving the overall all aim of the project!” if yes then these are your CSF’s.
CSF’s are very useful because they provide the means to bring focus to your project. You can cross tab your requirements against them, which will provide the arguments for either including or excluding them from the scope. They can be very powerful as they play well with your business stakeholders.