CSS Budgeting –Business Sustainability & Growth

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We all know how hard is to approve a budget for the next years, no matter which area you manage.

Primarily, a good portion of the CSS (Customer Support & Services) expenses has no revenue to back it up, so financial people looks at the activity as a burden to the company’s budget. 

On the other hand, on the majority of the more complex and long lasting products, number of customers, products delivered and related support activities only grows year after year independently of how good or bad the new products sales performance is demanding more efforts and resources from CSS areas. A bit different from other areas, which might be passing thru a downturn and naturally reduce costs and expenses in a given period. 

If you decrease the CSS budget you stand the chance of falling behind with your customers, if you over budget you might hurt the results of the company. So, an intelligent approach and balance is required.

The solution is on the company mindset, strategy, and as a consequence on the business plan of the product and services. 

Company mindset and culture will make a difference.

If the company is truly focused on customer, he is in the center of the organization, processes and management. A comprehensive budget will naturally be built to sustain all targets and values. Moreover, it will create opportunities for growing on a sustainable way.

I am not defending that CSS deserves a limitless budget.

I am here talking about the budget exercise starting by determining what needs to be accomplished to excel and then the necessary resources to make it happens.

Once this is clearly determined, then the mindset comes to play => Let’s find a way to fund it! Let’s profit from it and plan our growth! 

In this exercise, you will learn how much more you can make and improve your results.

There are several opportunities for building a structured plan with growth projections. Let me briefly touch important points, which will give a strong base for this exercise.

Product Business Plan – A product BP shall not underestimate potential costs and expenses during product life and operation. Product reliability, warranty, customer unexpected costs, which you might need to compensate, may affect your results if not budgeted properly. It is common to see BPs performing behind, increasing its break-even point, because of the aggressive/optimistic approach to the aftermarket expenses, as they tend to be subjective. Be careful in this part.

Services – In some companies, product and services business plans share the CSS funding. This might also help, but remember to consider this special arrangement when services results performance are analyzed and judged, as these expenses are not primarily originated by services activities. This is one way not to overburden the product BP.

- Making a more comprehensive approach, aftermarket services in several businesses, present good margin opportunities, in some cases considerably bigger than the product ones as it stays active for years after the product has been delivered. 

- So, in the CSS budgeting exercise, understand the potentials and explore the possibilities are quite important. It might even make you review your organization and the way you look at your business. 

- This is a road full of opportunities, from selling parts, repairs, to comprehensive levels of participation in the customer operation, like helping his parts stock planning, being his parts stock planning or his stock, being his repair management, depending on the product, doing some of his services activities, etc. 

- Do not miss at least to understand the potentials and decide where and how you want to step in.

- Remember, the more you are inside of the customer organization, the more chances you have to understand his needs and increase his share of wallet with you.

Product Life Management – Another important process that may take you to another level of relationship with your customer. I have assessed this topic in a previous insight. (see here it here)

Product Sales and Marketing Plans – Due to your good support and services performance, as you are focusing to deliver excellence to your customer, your product sales will grow, and you could offset some of the CSS expenses with these extra results. In addition, the fact that you are closer to the customer will allow you to understand his needs and develop product improvements, and even new set of products, placing you ahead of the competition.

Do you see how things are connected and how many opportunities exist? Of course, it needs focus, determination, starting from the top, and affects the entire company, but the potential is enormous.

I am not mentioning in this insight, although they are as important, all efforts related to productivity improvements, lean assessment, disruptions and so forth. These will be subject for another one.

As you could notice, I am proposing a little bit more than a regular budgeting exercise. Take the opportunity to envision how much you can do to your customer and realize all the return you will get. Transform this vision into strategies and business plans. Have your budget aligned with the plans and manage them well, carefully, thoroughly. (see here one insight about it)

You started with a big issue in hands, how to fund CSS, and ended with a great plan guaranteeing a sustainable business growth.

Dec/2018