ComSci Delivers Immediate Payback for 1-800

CASE STUDY: 1 - 8 0 0 - F L O W E R S . C O M
ComSci Delivers
Immediate Payback for
1-800-FLOWERS.COM
®
1-800-FLOWERS.COM, Inc. is the world’s leading florist and gift shop.
For more than 30 years, 1-800-FLOWERS.COM, Inc. has been providing
customers with fresh flowers and the finest selection of plants, gift baskets,
gourmet foods, confections, balloons and plush stuffed animals, perfect
for every occasion.
Technology is essential to the success of 1-800-FLOWERS.COM, which in
the past has been named one of the top 50 online retailers by Internet
Retailer, a 2008 LaureateHonoree by theComputerworld Honors Program,
and the recipient of ICMI’s 2006 Global Call Center of the Year Award.
In recent years, 1-800-FLOWERS.COM has grown through acquisition,
so that the 1-800-FLOWERS.COM “Gift Shop” now includes gourmet
gifts such as popcorn and specialty treats from The Popcorn Factory®,
cookies and baked gifts from Cheryl&Co.®, premium chocolates and
confections from FannieMay confections brands, wine gifts from
Ambrosia®, gift baskets from 1-800-BASKETS.COM®, and many others.
After these acquisitions, 1-800-FLOWERS.COM found itself in a situation
where IT services were delivered centrally, yet the individual Brands were not
responsible for the IT costs. Since the costs were not being allocated to the
Brands, it was becoming more difficult to determine the true profitability of
each Brand.
ASSESSING THE CHALLENGES
After each acquisition, 1-800-FLOWERS.COM had consolidated the IT
functions into a centralized IT function. Yet IT remained a corporate expense,
and none of it was charged back to the Brands. “The success of our business
depends on technology, and we want business to control how IT is used.How
much of our on-going ‘lights-on’ IT expense is justified? Could it be better
spent elsewhere?”said Bozzo. “We can only answer those questions with
the full participation from the business, and to do that, the business needs to
understand the costs behind our use of IT.”
A cost transparency and chargeback solution seemed to hold the answer, but
there were two major challenges in implementing it: the technical and logistical
side of researching and generating an invoice for each Brand, and the cultural
and behavioral stress that would occur when the Brands suddenly were
presented with a bill for something they had always gotten for free.
“As a technology-intensive business,
IT is a significant and essential
investment for 1-800-FLOWERS.
COM,” explained Steve Bozzo, CIO of
1-800-FLOWERS.COM. “We needed to
understand how our IT expenditures
contributed to the growth and
profitability of each brand.”
CASE STUDY: 1 - 8 0 0 - F L O W E R S . C O M
CHALLENGES ——————————————————————
 IT services were delivered centrally, and IT costs were not allocated back
to the brands and other business units
 Difficult to determine the true profitability of each brand
SOLUTIONS ——————————————————————
 IT established a product catalog with specific product and rate structures
 IT department generated mock bills for Showback and reviewed the
results with brand presidents
RESULTS ———————————————————————
Enhanced partnership between IT and the brands




Brands now understand the financial impact of their use of technology
Better and more informed decisions are made
Use of technology is more efficient and more closely aligned with business strategy
Executive Dashboards / Analytics / Decision Making Information
Unit Costing, Demand & Performance Metrics, What-if Analysis
PRODUCER
CONSUMER
IT CostFlow™
CIO Invoice™
Manage Cost
Drivers
IT Budget Forecaster™
Manage Business
Consumption
Service Costing & Performance Management
BillBrowser™
Audience: IT Leaders, Finance, Product Managers
Consumption-based Forecasting
Audience: All Internal IT Customers
Production Controls
Financial Calendar, Manage Exceptions, Pre-Bill Process
Service Pricing & Cost Modeling
Configurable Process
Holistic Data Set
Data Validation/Normalization
Corporate Systems (Financial)
IT Systems (Resource Utilization)
Systems of Record
HR IS
Hierarchy
Assets
Service Desk
Storage
PPM
External providers (e.g., Cloud)
CASE STUDY: 1 - 8 0 0 - F L O W E R S . C O M
IDENTIFYING AND IMPLEMENTING
A SOLUTION
Choosing the right Technology Financial
Management solution was easy. “We looked
at several providers, some of which were very
expensive. ComSci was the only one that met
our goals and objectives,” commented Robert
Schumann, VP, Delivery Management & Quality
Assurance for 1800FLOWERS.COM. “It’s
webbased, so it’s very easy to implement and use.
Users can get to the information from anywhere.”
ComSci and 1800FLOWERS.COM then worked to
create a rate card for every IT service. For desktop
service, that would include the desktop itself, 7 x
24 support, maintenance, and other services. The
idea was to give the Brands an allinone price that
created a complete “product” rather than charge
piecemeal for each little service. The result was a
comprehensive catalog of all technology services
that IT would charge back to the Brands.
“The process is quite intense, but it enabled us to
get to the bottom of every expense,” continued
Schumann. “For servers and hosting, this was
daunting to comb through. I thought it would be
the hardest project I would ever be involved in, but
it actually turned out to be kind of fun.”
The next step was to generate the invoices.
1800FLOWERS.COM chose took an iterative
approach, generating “mock” invoices for each
Brand and then working with the Brand presidents
to ensure the accuracy of the invoices. These
invoices were based on real usage data, so they
were “mock” only in the sense that the Brands were
not expected to pay them. Every month, the Brand
executives would get a report on every item in the
catalog and how it was used and by whom. It was a
way to “Showback” the expenses to the Brands.
“Initially, it was a bit of a sticker shock. The Brands
weren’t used to getting charged, so they were
surprised at how much some things cost. The
mock invoices opened up a lot of questions about
expenses,” said Schumann. “As it went on, it got
better. We worked with the Brand presidents as a
team to focus on reducing costs and ensuring the
accuracy of the charges. We got to the bottom of
every charge and every question. It functioned as a
check and balance process on the accuracy of our
systems.”
The implementation process took between 3
to 6 months. “We had a working system in 3
months and then another 2 months or so to make
the data accurate,” concluded Schumann. The
actual data collection process is straightforward.
1800FLOWERS.COM just uploads that data to
ComSci every month and ComSci maintains it.
REALIZING THE BENEFITS
1800FLOWERS.COM saw almost immediate
payback from its investment with ComSci. “The
findings in the IT department alone were significant
enough to give us payback almost immediately,”
said Bozzo. “As we continue to work with the
Brand executives in identifying unnecessary costs,
the savings will be astronomical.”
Bozzo also feels there are significant “soft benefits”
to using ComSci for IT cost transparency, as it is
building a better relationship between IT and the
business and given 1800FLOWERS.COM a tool to
look at its use of technology in a whole new way.
“I’ve been in the IT business for 30 years, and it is
rare that you have a gamechanger like this.”
One of the key performance indicators (KPIs) that
1800FLOWERS.COM tracks is the proportion
of ‘Lights On’ expenses to ‘Projects’ – that is
the normal maintenance activities to the new
systems that will provide a competitive advantage.
Right now, 1800FLOWERS.COM is at 70%
Lights On and 30% Projects. The usual benchmark
for a company is 60% Lights On and 40% Projects.
1800FLOWERS.COM has a goal is to get to 50/50, or
maybe even to 40/60.
“The Brands don’t want to reduce their technology
budget, but they do want to move it to projects that
can really make a difference for their business growth,”
explained Bozzo. “That’s what ComSci and IT cost
transparency can help us achieve.”
For the future, 1800FLOWERS.COM plans to make
extensive use of ComSci’s new budget module. “We
can develop next year’s budget in real time, using real
time data.”
SHARING LESSONS LEARNED
While the costs savings are an essential hard benefit,
1800FLOWERS.COM feels the soft benefits should
not be overlooked. Said Bozzo, “If the success of
our business depends on technology, then we want
business to control how IT is used. The whole idea
of cost transparency is to translate ‘Technology’ into
‘Business Language’ to help the business make better
decisions.”
1800FLOWERS.COM also found that managing the
“cultural impact” of cost transparency was essential to
its longterm success.
“The one piece of advice we can give someone
implementing chargeback for the first time is to not
just roll it out all at once. Sending mock bills gave
us the time to get the bugs out, to help the Brands
understand the charges, and to establish a working
relationship that had us working as a team to reduce
costs.”
The IT department holds monthly Business Relationship
Meetings (BRM) with each of the Brands to discuss
the chargebacks – what’s working, what’s right,
what needs to be fixed. “The end result of all those
conversations is saving the company money,”
concluded Bozzo.
ComSci, LLC
485B Route 1 South, Suite 100
Iselin, NJ 08830
Phone: (732) 632-8000
Fax: (732) 632-1830
Business Development
Phone: (732) 733-1450