Click here to close now.

Welcome!

XML Authors: Liz McMillan, Elizabeth White, Pat Romanski, Dana Gardner, Carmen Gonzalez

Related Topics: Virtualization, Java, XML, MICROSERVICES, Web 2.0, Cloud Expo

Virtualization: Article

Shift in Culture Delivers Better Results

McKesson redirects IT to become a services provider that delivers fuller business solutions

The next edition of the HP Discover Performance podcast series highlights how pharmaceuticals distributor and healthcare information technology services provider McKesson has transformed the very notion of IT. We will see how a shift in culture and an emphasis on being a services provider has allowed McKesson to not only deliver better results, but elevate the role of IT into the strategic fabric of the company.

To learn more about how McKesson has recast the role of IT and remade its impact in a positive way, join Andy Smith, Vice President of Applications Hosting Services at McKesson. The discussion is moderated by Dana Gardner, Principal Analyst at Interarbor Solutions. [Disclosure: HP is a sponsor of BriefingsDirect podcasts.]

Here are some excerpts:

Gardner: Let me start with this notion of IT transformation. What allowed you to convince others that this was worth doing?

Smith: What we did, and this started several years ago, was to focus on what our competition was doing, not the competition to McKesson -- but the competition to IT. In other words, who was the outsourcer or who were the other data-center providers. From that, we were able to focus on our cost, quality, and availability and come up with a set of metrics that covered it all, so that we could know the areas we needed to transform and the areas where we were okay.

Gardner: So, in a sense, you had to redefine yourself as a services provider, because that's who you saw as your competition?

Smith: Exactly, and that's who our customers are talking to -- our competition. When they came to us for a service, they had already talked to third-party providers. And so we realized very quickly that our competition was the outside world, so we had to model ourselves to be more like them and less like an internal IT department.

Gardner: That, of course, cuts across not only technology, but culture and the whole idea of being accountable, and to whom. So let's start at that higher level. How did you begin to define what the new culture for IT should be?

Balanced scorecard

Smith: We started out with a balanced scorecard. It really came down to whether the employees and the customers were satisfied. Did we do what we said – were we accountable -- and were the financials right?

So when we started setting up that balance scorecard, that on its own started to change the culture. Suddenly, customer satisfaction mattered, and suddenly, system availability mattered, because the customer cared, and we had to keep the employees trained, so that they were satisfied.

Over time, that really changed the culture, because we're looking at all four parts of the scorecard to make sure we're moving forward.

When we were just an internal IT department, we spent more time saying, "The customer gave us an order, we hit the checkbox and finished that order, we're done." We were always asking, "Did we do it, and did we do it on time?"

What we really focused in on were the real drivers. A lot of the measures are more trailing indicators. Even money tended to be a trailing indicator.

That's not really what the customer was looking for. The customer was looking for. "Did you deliver what I needed, which may be different than what I asked for. Did you deliver it at a good price? Did you deliver it at a good quality." So it did switch from being measuring the ins and the outs of an order taker, to whether we are delivering the solution at the right price.

Gardner: As we've seen in a number of companies, when they’ve gone to more measurement using metrics, key performance indicators (KPIs), and working towards service-level agreements (SLAs), sometimes that can become daunting. Sometimes, there is too much, and you lose track of your goal. Is there a way that you work towards a triage or a management approach for those metrics, those KPIs, that allowed you to stay focused on these customer issues?

Smith: What we really focused in on were the real drivers. A lot of the measures are more trailing indicators. Even money tended to be a trailing indicator.

So we went into what's really driving our quality, what's really driving our cost. We got down to four or five that we are the ones that mattered. "Is the system up and running. Are changes causing outages. Are data protection services reliable. Are our events being handled quickly and almost like a first call resolution. Are they being resolved by the first person that gets the event?"

The focus was prevent the outage and shorten up the mean time to restore, because in the end, all of that will drop the cost. It worked, but it was focusing on a handful, rather than dozens.

Pulling down cost

It truly did bring down our cost within McKesson. Each year we pull down our cost several million dollars. So every year my budget gets smaller, but every year my quality gets higher, my employee satisfaction gets higher, and my customer satisfaction gets higher.

It can really get both. You don't have to sacrifice quality to reduce cost. The trick was saying that I no longer needed a person to do this commodity factory work. I could use a machine to do that, which freed up the worker from being a reactive commodity person to being a proactive value-add person. It allowed the employee to be more valuable, because they weren't doing the busy work anymore. So it really did work.

Gardner: For those in our audience who might not be familiar with McKesson, tell us a little bit more about the company. Specifically, tell us about the scale of your IT organization to put those millions of dollars into some perspective in the total equation?

Smith: McKesson IT is roughly 1,000 employees. The company is roughly 45,000 employees. So percentage-wise, we're not that big. My personal budget to run the IT infrastructure is about a $100 million a year.

So pulling out a few million dollars a year may be only a few percent, but it's still a pretty significant endeavor. We've managed to pull that cost out, both through the typical things like maintenance contracts and improved equipment, but also by not having to grow the full-time employee (FTE) base. I haven't had to let any FTEs go, but what we've discovered was that, as we did these things, I needed fewer employees.

To get people to stop thinking about the technology and start thinking about the business solution is a slow transition, because it's a real mind-shift.

As employees resigned, I didn't have to replace them. My staff base has been shrinking, but I haven't had anybody lose a job. So that's been also very reassuring for the employees, because they kept waiting for that big shoe to drop, waiting for us to say, "We're going to outsource you," but we've never had to do it.

Gardner: When you compete against the outsourcers better, then you are going to retain those jobs and keep that skill set going. There is a cliché that you're able to take people from firefighting and put them into innovation. Is there a truth to that in what you've done?

Smith: That really is truth. It took time, and we’re not done, but to get people to stop thinking about the technology and start thinking about the business solution is a slow transition, because it's a real mind-shift. In a lot of ways, these employees see the reactive work as the bread and butter work that puts the paycheck on the table. That lets them be a firefighter and a hero, and if you take that away, the motivators are different.

It takes time to get people comfortable with the fact that your brain is worth a lot more doing value-add work than it was just doing the firefighting. We're still going through that cultural shift. In some ways, it's easier for the older employees, because if you go back a few decades, IT was that. It was programmer analyst, system analyst, and business analyst. For me, "analyst" disappeared from all my job titles.

In the last couple of decades, for some reason, we erased analyst, and now you're just a programmer or an operator. In my mind, we're bringing the analyst back, which for the older employees, is easy, because they used to do it. For the younger employees, we've got to teach them how to be consultants. We've got to teach them how to be analyst. In some cases, it's a totally different, scary place to go, because you actually have to come out of the back office and talk to somebody, and they're not used to that.

Cultural shift

Gardner: Maybe there are methodologies that work here that you could discuss, services-oriented architecture (SOA) comes to mind and also ITIL. Have you been using ITIL approaches and SOA to help make those transitions? Is there a technology track is a cultural shift?

Smith: Yes, we went down the ITIL road, because we were manual before. Everybody was doing it with tribal knowledge. The way I did it today might be different than the way I'd do it tomorrow, because it's all manual, and it's all in people's heads.

We did go into ITIL version 3 and push it very hard to give that consistency, because the consistency really mattered. Then, we could really measure the quality. We could be ensured that no matter who did it or when it was done, it was done the same way, and that reliability mattered a lot.

We also got away from custom technology, and we got to where everything is going to be a certain type of machine. It's going to look the same. All the tools are going to be fully integrated and no longer be best-of-breed point solutions. Driving that standardization made a big difference. You don’t have to remember that machine on the left you reboot it this way, and that machine on the right you reboot it a different way. You don’t have to remember anymore, because they're all the same.

We made the equipment and tools standard and more of a commodity so that the people didn’t have to be that anymore. The people could be thought leaders. All those things really did work to drive out the cost and increase the quality, but it's a lot of different pieces. You can't do it with just one golden arrow. You have to hit it from every angle.

We had to increase the transparency to say we’re doing a good job or we’re doing a bad job.

We had to change the technology, the people, and the processes. We had to increase the transparency to say we’re doing a good job or we’re doing a bad job. It was just, "Expose everything you’re doing."

That's scary at first, but in the end, we found out we really are competing with the competitors and we can continue to do it, and do it better. We understand healthcare, we understand McKesson, and we’re an internal group, so we don’t have a profit margin. All those things combined can make us a better IT solution than a third party could be.

What really matters is the business solution you’re trying to solve. We’re stepping even farther back, saying that the service is order to cash, or the service is payroll, or the service is whatever. We’re stepping back farther, so we can look at the service from the standpoint of the customer. What does the customer want? The customer doesn’t want Unix. The customer wants order to cash. The customer doesn’t want Windows. The customer wants payroll.

Thinking about cloud

Stepping back has now allowed us to start thinking about that cloud. All the equipment underneath is commoditized, and so I can now sit back and say that the customer wants this business solution and ask who is the best person to give me the components underneath?

Some of them, for security reasons, we’re going to do on our internal cloud. Some of them, because of no security issues, we’re going to have a broker with an external provider, because they may be better, cheaper, or faster, and they may have that ability to burst up and burst down, if we’re doing R&D kind of work.

So it's brought us back to thinking like a business person. What does the business need and who is the best provider? It might not be me, but we’ll make that decision and broker it out. This year we're probably going to pull off our internal cloud and our external cloud and really have a hybrid solution, which we’ve been talking about for a couple of years. I think it will really happen this year.

More Stories By Dana Gardner

At Interarbor Solutions, we create the analysis and in-depth podcasts on enterprise software and cloud trends that help fuel the social media revolution. As a veteran IT analyst, Dana Gardner moderates discussions and interviews get to the meat of the hottest technology topics. We define and forecast the business productivity effects of enterprise infrastructure, SOA and cloud advances. Our social media vehicles become conversational platforms, powerfully distributed via the BriefingsDirect Network of online media partners like ZDNet and IT-Director.com. As founder and principal analyst at Interarbor Solutions, Dana Gardner created BriefingsDirect to give online readers and listeners in-depth and direct access to the brightest thought leaders on IT. Our twice-monthly BriefingsDirect Analyst Insights Edition podcasts examine the latest IT news with a panel of analysts and guests. Our sponsored discussions provide a unique, deep-dive focus on specific industry problems and the latest solutions. This podcast equivalent of an analyst briefing session -- made available as a podcast/transcript/blog to any interested viewer and search engine seeker -- breaks the mold on closed knowledge. These informational podcasts jump-start conversational evangelism, drive traffic to lead generation campaigns, and produce strong SEO returns. Interarbor Solutions provides fresh and creative thinking on IT, SOA, cloud and social media strategies based on the power of thoughtful content, made freely and easily available to proactive seekers of insights and information. As a result, marketers and branding professionals can communicate inexpensively with self-qualifiying readers/listeners in discreet market segments. BriefingsDirect podcasts hosted by Dana Gardner: Full turnkey planning, moderatiing, producing, hosting, and distribution via blogs and IT media partners of essential IT knowledge and understanding.

@ThingsExpo Stories
SYS-CON Events announced today that robomq.io will exhibit at SYS-CON's @ThingsExpo, which will take place on June 9-11, 2015, at the Javits Center in New York City, NY. robomq.io is an interoperable and composable platform that connects any device to any application. It helps systems integrators and the solution providers build new and innovative products and service for industries requiring monitoring or intelligence from devices and sensors.
The 17th International Cloud Expo has announced that its Call for Papers is open. 17th International Cloud Expo, to be held November 3-5, 2015, at the Santa Clara Convention Center in Santa Clara, CA, brings together Cloud Computing, APM, APIs, Microservices, Security, Big Data, Internet of Things, DevOps and WebRTC to one location. With cloud computing driving a higher percentage of enterprise IT budgets every year, it becomes increasingly important to plant your flag in this fast-expanding business opportunity. Submit your speaking proposal today!
SYS-CON Events announced today that Litmus Automation will exhibit at SYS-CON's 16th International Cloud Expo®, which will take place on June 9-11, 2015, at the Javits Center in New York City, NY. Litmus Automation’s vision is to provide a solution for companies that are in a rush to embrace the disruptive Internet of Things technology and leverage it for real business challenges. Litmus Automation simplifies the complexity of connected devices applications with Loop, a secure and scalable cloud platform.
While not quite mainstream yet, WebRTC is starting to gain ground with Carriers, Enterprises and Independent Software Vendors (ISV’s) alike. WebRTC makes it easy for developers to add audio and video communications into their applications by using Web browsers as their platform. But like any market, every customer engagement has unique requirements, as well as constraints. And of course, one size does not fit all. In her session at WebRTC Summit, Dr. Natasha Tamaskar, Vice President, Head of Cloud and Mobile Strategy at GENBAND, will explore what is needed to take a real time communications ...
As Marc Andreessen says software is eating the world. Everything is rapidly moving toward being software-defined – from our phones and cars through our washing machines to the datacenter. However, there are larger challenges when implementing software defined on a larger scale - when building software defined infrastructure. In his session at 16th Cloud Expo, Boyan Ivanov, CEO of StorPool, will provide some practical insights on what, how and why when implementing "software-defined" in the datacenter.
SYS-CON Events announced today that Solgenia will exhibit at SYS-CON's 16th International Cloud Expo®, which will take place on June 9-11, 2015, at the Javits Center in New York City, NY, and the 17th International Cloud Expo®, which will take place on November 3–5, 2015, at the Santa Clara Convention Center in Santa Clara, CA. Solgenia is the global market leader in Cloud Collaboration and Cloud Infrastructure software solutions. Designed to “Bridge the Gap” between Personal and Professional Social, Mobile and Cloud user experiences, our solutions help large and medium-sized organizations dr...
Internet of Things (IoT) will be a hybrid ecosystem of diverse devices and sensors collaborating with operational and enterprise systems to create the next big application. In their session at @ThingsExpo, Bramh Gupta, founder and CEO of robomq.io, and Fred Yatzeck, principal architect leading product development at robomq.io, will discuss how choosing the right middleware and integration strategy from the get-go will enable IoT solution developers to adapt and grow with the industry, while at the same time reduce Time to Market (TTM) by using plug and play capabilities offered by a robust I...
The world's leading Cloud event, Cloud Expo has launched Microservices Journal on the SYS-CON.com portal, featuring over 19,000 original articles, news stories, features, and blog entries. DevOps Journal is focused on this critical enterprise IT topic in the world of cloud computing. Microservices Journal offers top articles, news stories, and blog posts from the world's well-known experts and guarantees better exposure for its authors than any other publication. Follow new article posts on Twitter at @MicroservicesE
After making a doctor’s appointment via your mobile device, you receive a calendar invite. The day of your appointment, you get a reminder with the doctor’s location and contact information. As you enter the doctor’s exam room, the medical team is equipped with the latest tablet containing your medical history – he or she makes real time updates to your medical file. At the end of your visit, you receive an electronic prescription to your preferred pharmacy and can schedule your next appointment.
Wearable technology was dominant at this year’s International Consumer Electronics Show (CES) , and MWC was no exception to this trend. New versions of favorites, such as the Samsung Gear (three new products were released: the Gear 2, the Gear 2 Neo and the Gear Fit), shared the limelight with new wearables like Pebble Time Steel (the new premium version of the company’s previously released smartwatch) and the LG Watch Urbane. The most dramatic difference at MWC was an emphasis on presenting wearables as fashion accessories and moving away from the original clunky technology associated with t...
SYS-CON Events announced today the IoT Bootcamp – Jumpstart Your IoT Strategy, being held June 9–10, 2015, in conjunction with 16th Cloud Expo and Internet of @ThingsExpo at the Javits Center in New York City. This is your chance to jumpstart your IoT strategy. Combined with real-world scenarios and use cases, the IoT Bootcamp is not just based on presentations but includes hands-on demos and walkthroughs. We will introduce you to a variety of Do-It-Yourself IoT platforms including Arduino, Raspberry Pi, BeagleBone, Spark and Intel Edison. You will also get an overview of cloud technologies s...
Containers and microservices have become topics of intense interest throughout the cloud developer and enterprise IT communities. Accordingly, attendees at the upcoming 16th Cloud Expo at the Javits Center in New York June 9-11 will find fresh new content in a new track called PaaS | Containers & Microservices Containers are not being considered for the first time by the cloud community, but a current era of re-consideration has pushed them to the top of the cloud agenda. With the launch of Docker's initial release in March of 2013, interest was revved up several notches. Then late last...
The WebRTC Summit 2015 New York, to be held June 9-11, 2015, at the Javits Center in New York, NY, announces that its Call for Papers is open. Topics include all aspects of improving IT delivery by eliminating waste through automated business models leveraging cloud technologies. WebRTC Summit is co-located with 16th International Cloud Expo, @ThingsExpo, Big Data Expo, and DevOps Summit.
SOA Software has changed its name to Akana. With roots in Web Services and SOA Governance, Akana has established itself as a leader in API Management and is expanding into cloud integration as an alternative to the traditional heavyweight enterprise service bus (ESB). The company recently announced that it achieved more than 90% year-over-year growth. As Akana, the company now addresses the evolution and diversification of SOA, unifying security, management, and DevOps across SOA, APIs, microservices, and more.
The list of ‘new paradigm’ technologies that now surrounds us appears to be at an all time high. From cloud computing and Big Data analytics to Bring Your Own Device (BYOD) and the Internet of Things (IoT), today we have to deal with what the industry likes to call ‘paradigm shifts’ at every level of IT. This is disruption; of course, we understand that – change is almost always disruptive.
SYS-CON Events announced today that SafeLogic has been named “Bag Sponsor” of SYS-CON's 16th International Cloud Expo® New York, which will take place June 9-11, 2015, at the Javits Center in New York City, NY. SafeLogic provides security products for applications in mobile and server/appliance environments. SafeLogic’s flagship product CryptoComply is a FIPS 140-2 validated cryptographic engine designed to secure data on servers, workstations, appliances, mobile devices, and in the Cloud.
GENBAND has announced that SageNet is leveraging the Nuvia platform to deliver Unified Communications as a Service (UCaaS) to its large base of retail and enterprise customers. Nuvia’s cloud-based solution provides SageNet’s customers with a full suite of business communications and collaboration tools. Two large national SageNet retail customers have recently signed up to deploy the Nuvia platform and the company will continue to sell the service to new and existing customers. Nuvia’s capabilities include HD voice, video, multimedia messaging, mobility, conferencing, Web collaboration, deskt...
SYS-CON Media announced today that @WebRTCSummit Blog, the largest WebRTC resource in the world, has been launched. @WebRTCSummit Blog offers top articles, news stories, and blog posts from the world's well-known experts and guarantees better exposure for its authors than any other publication. @WebRTCSummit Blog can be bookmarked ▸ Here @WebRTCSummit conference site can be bookmarked ▸ Here
SYS-CON Events announced today that Cisco, the worldwide leader in IT that transforms how people connect, communicate and collaborate, has been named “Gold Sponsor” of SYS-CON's 16th International Cloud Expo®, which will take place on June 9-11, 2015, at the Javits Center in New York City, NY. Cisco makes amazing things happen by connecting the unconnected. Cisco has shaped the future of the Internet by becoming the worldwide leader in transforming how people connect, communicate and collaborate. Cisco and our partners are building the platform for the Internet of Everything by connecting the...
Temasys has announced senior management additions to its team. Joining are David Holloway as Vice President of Commercial and Nadine Yap as Vice President of Product. Over the past 12 months Temasys has doubled in size as it adds new customers and expands the development of its Skylink platform. Skylink leads the charge to move WebRTC, traditionally seen as a desktop, browser based technology, to become a ubiquitous web communications technology on web and mobile, as well as Internet of Things compatible devices.