Chargeback Process Delivers for 1-800-Flowers.comBy Tim Moran | Posted 2009-06-04 Email Print
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To ensure that the executives in its brands and business units understand and are responsible for their IT costs, 1-800-Flowers implemented a chargeback system in which everyone benefits.
Started as a retail store in 1976, 1-800-Flowers.com, based in Carle Place, N.Y., provides customers with flowers plus a wide selection of plants, baskets and other gifts for all occasions. Recently, after making a number of acquisitions, the company was supporting about 14 new brands and businesses, including The Popcorn Factory, Cheryl&Co. cookies and Fannie May chocolates.
All this activity put a huge strain on the company’s IT department. Though technology services were being delivered centrally, the various brands were not responsible for the IT costs.
“We have new brands and businesses since we made the acquisitions,” explains CIO Steve Bozzo. “Each had developed its own suite of technologies and had its own IT department. Though we did consolidate IT after these acquisitions, there was no chargeback mechanism and no methodology for allocating our costs to any of these brands. Basically, the budget fell 100 percent below me. We needed a mechanism that would allow us to properly allocate costs to the brands.”
According to Bozzo, everything was highly centralized, and the presidents of the brands weren’t paying for anything, nor did they understand the extent of their IT usage. The idea was to not only charge the brands for their IT use, but to also offer control of IT to the businesses themselves.
Bozzo and his team realized that it would help the brand presidents run their operations more effectively if they knew which resources were used on what projects, how much IT expense was fixed, and how much it was costing them to give their employees IT tools such as laptops, PDAs and smartphones.
“The only way to make sure technology expenses are kept to a minimum is to be able to look closely at every detail of IT use,” Bozzo says. To achieve that, he determined that a chargeback tool was needed, so he and Craig Tenenbaum, the company’s director of IT financial planning and control, began evaluating the systems on the market.
“We did a deep dive and looked closely at what products were available, and we determined that ComSci offered the best solution for us,” Bozzo says. They chose the BillBrowser module of ComSci’s IT Cost Transparency Service, which would provide them with a detailed look into the consumption and utilization of IT resources throughout the company.
“There are other players out there with solutions that cost from $500,000 to more than $1 million, but ComSci met our goals and came in at a reasonable price,” Tenenbaum adds.