1-800 Flowers CIO: Steve Bozzo

Dan Farber: Steve thanks for joining me.

Steve Bozzo: Oh, my pleasure Dan.

Dan Farber: Steve, you've been at 1800 flowers for just a short time, and prior to that you were at the MetLife insurance company in the international division. What's been the biggest issue in terms of transitioning from insurance to flowers?

Steve: Well the biggest transition frankly Dan, has been the fact that 1-800-flowers is a retailer, or an e-tailer. We do upwards of 75% of our business over the internet, and that's the biggest difference between MetLife and 1-800-Flowers.com?

Dan Farber: Now in terms of working over the internet, it's been about 10-15 years that we've had the internet and we've had e-tailing. What do see as the biggest changes that you've seen, and most important ones over the years?

Steve Bozzo: Well, the biggest change obviously has been the transition onto the net itself. We actually were the first florist to partner with AOL in 1994, and as you know we built our brand around the telephone number which was very innovative in and of itself. In 1995 we converted that to the net, and the volume on the net from that point on has been growing dramatically. So for us, the biggest transition obviously has been the migration from other technologies and other sources into the net, when we've been in business for 31 years now, so we've kind of grown up on the net.

Dan Farber: Steve, what do you consider to be the main elements of the user experience that you are trying to convey to your customers?

Steve Bozzo: Well, as we mentioned earlier Dan, 75 percent of our customers come in via the web so if we speak of this in terms of the web initially it has to be a very visual experience. It has to be one where we can portray the beauty of our products to our customers, not only our flowers but our other products as well, so it have to be a very visual experience, it has to be an easy experience, one that they feel very comfortable using in purchasing our products, and it has to be an efficient experience, we don't want our customers to constantly be re-keying information in. So those are the main ingredients, certainly in our call centers we have the same thing, we want it to be a quick experience, we want to try to portray our products as best we possibly can verbally, and we want it to be a quick experience and a pleasant experience for our customers. We work very hard on that, same thing with our catalog and our advertising.

Dan Farber: You work with perishable items, how does your supply chain work, and how do you optimize your ability to move that product and not get caught with a lot of wilted flowers?

Steve Bozzo: Well we control that very, very tightly primarily, that's the way we handle that. We have our own local fulfillment centers where we can control the distribution cradle to grave ourselves. We work very closely with our florists around the country. Our bloom net service actually has 9000 florists around the country and they work extremely closely with each one of those to manage quality and delivery and all aspects of the experience for perishable products, so that's something we take very seriously.

Dan Farber: What are some of the technologies that you're investing in for the future?

Steve Bozzo: Well, we're investing heavily in Web 2.0 technologies for sure, we're using AJAX to enhance our customer experience, we're using web technologies this past holiday, for Mother's day we had a mobile site in operation which was very successful for the first time.

Dan Farber: So in other words, customers from their mobile devices could order flowers very easily with a nice user experience?

Steve Bozzo: With a nice user experience, that's exactly right Dan. And beyond that we're enhancing that for one-click capabilities, and way beyond as our customers embrace that technology, so were right there with that technology at this point.

Dan Farber: So when you talk about one-click technology, is it almost like a self-service similar to what you do on Amazon, in terms of you see what you want to buy, it's one click and it's done?

Steve Bozzo: Exactly right. All the customer information is already stored and it's readily available so it makes the experience very, very easy and very, very satisfying even though it's actually on a mobile device, so that's exciting to us.

Dan Farber: And you mentioned Web 2.0 technologies, what are some of the areas you're exploring? When we talk about web 2.0 I think we mean wikis and blogs and predictive markets. Are there some other areas, or social networking that you're looking into?

Steve Bozzo: Absolutely yes, hover-overs as an example is a big thing for us. Making the user experience very, very elegant and pleasant for our customers, we're always looking for that, that's absolutely paramount in our minds. But we do use blogs, we're looking at blogs extensively, we believe social networking obviously is a revolution and we're embracing that.

Dan Farber: How specifically are you embracing social networking?

Steve Bozzo: How we do that right now is predominantly through blogs. We look every single day to see what our customers are saying about 1-800-flowers.com. We respond in some way to every single mention of 1-800-flowers.com we collect that information, we catalog it, and we react to it in a very tangible way. I would say that's the predominant way we do that now.

Dan Farber: So basically, you're looking at what people are saying about the brand out in the blogosphere or on the web. What kind of tools do you use to translate that information into actionable items?

Steve Bozzo: Well we use a variety of technologies to collect information on the web. And we also use just informal means to collect information, even in terms of our employee base. Our chairman, Jim McCann likes to say that he sees the customer base as an extension of our employees because they're constantly giving us ideas. So that's how we basically do that, we just make it real.

Dan Farber: Now as you're making IT investments, how do you calculate the return on investment or measure the effectiveness of what you're investing in?

Steve Bozzo: Well basically what we do is we do a rigid return on investment analysis of every major initiative that we undertake. So we obviously look at the expenditures on a 5 year basis so it's not only the initial investment, but the maintenance, and what the revenue streams associated with that investment are and we do a rigid return on investment analysis, we have a capital committee that evaluates that on a regular basis so it's not just good enough to bring the project in successfully, we also have to make sure that it's successful in the years to come and it needs the ROI projections that we've put fourth and committed to.

Dan Farber: And as you make these investments, and I know you've been there only about 5 months, what do you see as the big challenges that you've come into in terms of running accompany that basically selling flowers over the web?

Steve Bozzo: Well the big challenge is I think like any company, there's a tremendous need to quickly bring IT technologies to market in a cost effective and meaningful way. That's a challenge I've seen in my 30 years in the business, and indeed we are working on that in I think aggressive and very innovative ways, not the least of which is agile computing. Where we can take technologies and bring them to bear on our customers very, very rapidly. I believe that's going to be a powerful idea as we move forward.

Dan Farber: And what are some examples of where you've been really agile and been able to get some good return on investment in a rapid fashion?

Steve Bozzo: Well what we're excited about is architecting the environment in a way that it's standardized. And we use open architecture so that we have the ability to buy vs. build much more so then we have in the past. Many companies are developing very interesting and innovative products that are able to asses carefully in the marketplace and then quickly bring in to our environment so that we could pilot that technology. And it turns out to be viable, quickly bring it into the marketplace.

Dan Farber: From the standpoint of your infrastructure, obviously you have to deal with a few days where you have some extraordinary peak usage, how are you managing that?

Steve Bozzo: Well that's a huge challenge. We need to build our infrastructure to manage the peaks obviously, and then the rest of the year we have that excess capacity. So basically what we do is we scale the environment horizontally, when we need additional hardware or software we scale the environment horizontally, we do that in 3 hosting centers around the country and we build the environment to satisfy the peaks. When we don't need the environment for the peaks, we expand our development environment and we start virtualizing so we're tapping into those resources more and more so that we use that excess capacity to prepare for the peaks, and we make more efficient use of that technology as best we possibly can.

Dan Farber: So you're not outsourcing in terms of using an external service when you need peak hours as you might for an electrical utility, you need more power you simply go to the grid and get more.

Steve Bozzo: Right, we're not doing that now we're of course exploring that in a variety of ways, but the applications that we're supporting are so mission critical to us during our peaks that we're a little hesitant to do that but we're absolutely pursuing that as well as a variety of options to see what we can do to help better manage our peaks not the least of which is to even out our revenue stream over the year.

Dan Farber: So what kind of utilization are you getting on your servers and storage given that you're built for peaks but those peaks are fairly rare.

Steve Bozzo: Well we can peak at 70 percent 80 percent, we monitor our peaks very, very carefully obviously we want some headroom during our holiday periods. So even off-peak we're monitoring everything every single component in our environment is being monitored and analyzed on an on-going basis, performance, response time with respect to performance, capacity on each of our servers, utilization of all of our servers, so we do monitor that very, very carefully Dan, but we're very careful not to exceed about a 70 percent peak I would say.

Dan Farber: One of the other major topics we hear a about today are companies moving toward green data centers also in terms of your own product, how much are you focused on providing more kinds of green or organically grown product?

Steve: Well we do take going green very seriously for a variety of reasons. From a purely selfish perspective we obviously want to keep our costs down as much as possible but we're absolutely very concerned about our environment. From an IT perspective, our 3 data centers are outsourced, so we work very closely with our vendors to keep our electrical expense down and our usage of electricity down as much as we possibly can. So we're almost naturally driven to be as efficient as we possibly can with our resources.

Dan Farber: I just have to ask this question: do you have a lot of flowers around your shop?

Steve Bozzo: We certainly do, absolutely, they're beautiful flowers.

Dan: Well Steve, thanks very much for speaking with me.

Steve Bozzo: Oh, my pleasure Dan.

Dan Farber: I've been speaking with Steve Bozzo, who's the CIO of 1-800-flowers. For CIO Sessions, I'm Dan Farber, thanks for watching.