Brown-Forman: Profiting on Corporate Computing

Abstract

Brown-Forman installed a profit-center control system for its information services department (IS) in 1991. The results were dramatic: costs were flattened, backlogs disappeared, and cooperation improved. Subsequent events raised more concerns: mainframe volumes dropped as applications moved to less costly platforms and new technologies became available, but there was no money to pay for them. To avoid cross-subsidization, all profits were remitted to users. IS requested new "investment funds" from the company's Executive Committee. The request raised the question: Is this the way profit centers are supposed to work?