As the year comes to an end, yes, there are less than 8 weeks to go; we look at developing information that will ultimately find its way into next year's budget. Budgets for the most part have already been accounted for with regards to

the 2008 calendar year, at this point, and management knows what expenses may need to be cut, as well as what purchases may require further scrutiny.

 

But now is the time to build your business case to insure funds are available for your projects.

 

In Kathleen M. Petersons' article on web site Multichannel Merchant "Making a Budgetary Case For Your Contact Center, Part One". I think that Ms Peterson did make her case, siting her examples below, when you look at her audience, usually the CEO and CFO.

 

Service may well sit on our list of key performance indicators. But objectives presented to senior management must be linked to the enterprise - cost reduction, increased market penetration, customer retention, etc.   Ask someone if you are not clear on the company objectives. One place to look is the annual report. Read the message from the CEO to shareholders, which will outline the enterprise accomplishments from the previous year and highlight the objectives for the coming year.   These objectives are your objectives. In any presentation to senior management, it is appropriate to quote the CEO and demonstrate how your organization is integral to the plan.

 

Which is contrary to what David Toliver responds to in the Blog "Does Customer Service Factor in The Budget When Updating Your Contact Center".

 

I think service level and customer retention go hand in hand.  How many times have we heard about customers leaving one provider for another because customer service was so poor?    How often is customer service ranted about in forums and on blogs, with the damaging effects of social media (the new word-of-mouth) unknown, but likely significant?

 

In my experience, there are many types of contact centers, but most fall into one of two main categories. The 1^st, is where a center is outsourced to a 3^rd party provider that specializes in multiple types of services, either turnkey operations, or as little as you need based on your companies requirements, and of course budget.

 

Typically the entire management team in these outsourced contact centers understands the need of meeting all of the key performance indicators, or KPI's as well as the impact that loss in service will to their bottom line when customers leave. If not; the competition will be glad to pick up their customer base when they go out of business.

 

The 2^nd type of contact center or insourced contact center is harder to understand, because when a company builds infrastructure around a product or service offering, what typically happens; getting your product or service to market is top of mind.

 

The end of the life cycle that involve the supporting infrastructure is the last thing to receive any of the companies mind share. Usually falling on IT, the sales team, or accounting department to handle until a more robust solution can be developed. Here is where having good business practices come into play.

 

The fundamental issue; is that translation regardless if translating Latin to English or technical requirements into financial terms, are very difficult, and  it is not always easy to convey your intent into the nomenclature of your audience.

 

Even within the same discipline, such as the CIO or the CFO organizations, there are miscommunications that can have devastating reactions to your bottom line.

 

As an example, I use an old Enron joke, or at least I hope that it is a joke to prove my point. "When Jeff Skilling CEO of Enron was looking for a CFO, he asked a number of the would-be CFO's, what 1 + 1 equaled, one after the other would say, of course it's two, when Skilling asked Fastow the same question, Andy without hesitation closed the blinds and the door, and asked Skilling "What do you want it to be?".

 

The point being that neither Ms Peterson nor Mr. Toliver were speaking in terms of a more global audience (IT or Finance). In Ms Peterson's case, she did do a good job in hitting the high points on building a business case using industry accepted KPI's, that would be understood by the people that review Multichannel Merchant . Mr. Toliver on the other hand was speaking to IT professionals that would understand the direct correlation that SLA's would have to customer retention.

 

It has been my experience, at least with my clientele that most managers, especially in the C Suite understand performance indicators, as a process, and most can regurgitate the company mantra, on how these KPI's are used, often using service levels as a function of those indicators.

 

The problem is that a service level represents a point in time, and does not correlate to what is actually occurring, even when you use these services levels as a trend because, most are an interpretation of a point in time. Just look at the trends behind a company that is showing their management SLA's consistently hitting 99.99%, yet their customer base is still dwindling. A root cause analysis may indicate that customers had different expectations than were being conveyed by the service levels, and left becuase their needs were not being met.

 

When looking at the annual reports of a company, the year after they have gone out of business, chances are there were signs, but the shareholders that lost money on the company were not leaving in droves, indicating that the annual report did not accurately reflect the dire straits the company was in with regards to the financial measures that was disseminated in the annual reports.

 

It is my take, that a more disciplined approach, with a clear concise communication path across all groups and the dissemination all KPI metrics plays a greater role in insuring your request are not appearing in front of your management the 1^st time your submit a budget.

 

All aspects of the measurements should be incorporated into the company's operations plan, tying in the company's objectives to the plan with quantifiable measures, that all department heads can see and have direct input, through their team members' representation throughout the year.

 

When the budgeting process starts, all lines of business will have a better understanding of the impact one line item may have on the overall budget, and make more informed decisions, before you request approval for your budget.