Baseline Magazine Baseline June 2009 Issue 96

BASELINE JUNE 2009 PHOTO COURTESY OF 1-800-FLOWERS IT EXPENSE MANAGEMENT By Tim Moran S TARTED 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 respon- sible 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 central- ized, 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 busi- nesses 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 28 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 WWW.BASELINEMAG.COM 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 prod- ucts 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. RATE CARDS AND STICKER SHOCK Tenenbaum, his internal IT people and ComSci started by coming up with a “rate card” to help determine what the technology product categories were to be and the best way to charge the brands and business units for those products and services. “For instance, we said we were going to charge back for desktops,” Tenenbaum explains. “Desktop charges include the purchase of the machine, 24/7 maintenance and so on. We determined what the cost of a desktop would be based on those costs divided by the number of desktops in the company.” This same process was applied to all the product categories on the rate card. Before any of that could be done, however, all the files and information to create the rate card had to be uploaded into ComSci. “That was a daunting task,” Tenenbaum acknowledges, “because, with so many brands, we have a lot of servers, and we had to get them all aligned. We went server by server, and, in some cases, a server was shared by several brands.” At the beginning of the process, Tenenbaum thought it would be one of the hardest assignments he had ever

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