Health Care CIO Sees All CIO Roles Changing

As the CIO for a $4.1 billion health care products distribution company, Jim Harding knows only too well the changing face of medical technology today.

He sees senior physicians hand-writing prescriptions, penciling notes in patient folders and resisting electronics while the younger physicians embrace PDAs and digital transcription units.

But Harding sees the identical trend impacting IT management far outside health care, with younger office workers coming in with technology know-how that far outdistances their older counterparts.

“That’s why the job of the CIO is much different today than it was 20 years ago,” said the technology chief for Henry Schein Inc., the Melville, N.Y.-based firm that employs about 10,000 people in 19 countries.

“The user base is so much more educated on computers. They have a much better understanding of memory and disk issues. They know what a T1 is.”

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But as modern a workforce as he has, the technology Harding prefers to store and manage 50TB of data is decidedly old school: a group of AS/400 servers that he speaks of with mainframe-era admiration.

Referring to the legacy machines that IBM now calls the iSeries, Harding touts their reliability.

“They rarely ever—do I even know of a time?—they just don’t go down, and they require very little maintenance,” he said. “These machines are workhorses. The downside, though, is that you’re dealing with IBM.”

The heart of the company’s data-crunching efforts falls to a quartet of four AS/400s that serve not only as a primary technology platform, but also a built-in place to consolidate functions that might otherwise become a proliferation of servers for e-mail, databases and other narrow functions.

“Everybody that I know is looking at server consolidation all the time,” Harding said. “Is it truly better to buy 200 servers?”

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Beyond the AS/400s, the company’s hardware includes desktops from Dell and IBM, IBM laptops, Toshiba tablet PCs and about 250 BlackBerries (Research In Motion).

On the operating system side, the company has standardized on Windows XP and Windows 2000, but may become even more purely Big Blue by moving all Web efforts onto IBM’s Websphere, because Websphere “has a lot more stuff out of the box than we can get in the XP world.”

The company’s approach with its AS/400s is certainly not unheard of.

“It’s a question of having a single point of functionality instead of managing an entire environment of 20 or 230 servers,” said Mike Kahn, managing director of the Clipper Group Inc. analyst firm. “The partitions are strongly separated in the I-series, allowing better security. So, if there’s a problem, it’s isolated.”

Mike Chuba, a vice president with the Gartner Group of Gartner Inc., agreed, adding that—even today—the AS/400s can provide some unique functionality. “There are reasons why some go with platforms that are the more expensive, bigger ones,” Chuba said. “Error-correcting code could be built into a more expensive system. That isn’t there in a simple, more commodity-designed system.”

The AS/400 installed base also has a very strong incentive to stay put.

“The cost of migration is a big factor that keeps people where they are, as well as legacy workloads. To go to a commodity designed system—it’s a massive decision process,” Chuba said. “If you move over from a platform with five series lines of availability for some platform that has lower standards of availability, that could be expensive. It can make strong economic sense to keep a system where it is.”

Harding is also a strong proponent of extensive application customization. Roughly half of all code on his network is homegrown, he said.

He described his fondness for custom software as much less of a financial issue—although that plays a role—and more as being because he frequently needs very specialized functionality quickly and it’s simply faster to build it than find it.

“If we need to enable a new business process, a new pricing scheme, a new chargeback system for our vendors, [with custom coding] we’re able to get it done in relatively speedy terms,” Harding said. “We don’t have to wait for a package or a release, which means that we can react very quickly to a business need. I feel very good about the flexibility there.”

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The Clipper Group’s Kahn said that custom coding is becoming more attractive.

“A lot of people feel that custom coding gives them a proprietary or strategic advantage. Each company has to determine if that’s the advantage or edge they need. Some companies have to have that something that makes them different,” Kahn said.

“You can’t generalize that. A system that works at one hospital might not work at another one. Sometimes companies buy these pre-packaged solutions only to find out they can’t tolerate it,” he added.

The nature of Henry Schein Inc.’s operations is twofold: Harding’s team must support those 10,000 employees globally, but he must also package the technology to be resold to about 475,000 physician offices, dentists, laboratories, government facilities and veterinary clinics.

Those two roles have very different responsibilities, and Harding is preparing to split those roles into two positions, with Harding keeping the customer part for himself.

That resale role is another key reason for his fondness for custom code, he said. It provides him much more flexibility when it comes to pricing, for example.

In some sales situations, the company would like to provide a certain pricing approach, but application licensing rules sometimes lock him into pricing that makes sense for neither his company nor his company’s customer.

“We have to say, ‘You can’t price that way because that’s not the way SAP priced it,'” he said. With homegrown apps, the company has far more flexibility to price them as business needs dictate.

Next Page: Getting custom to play well with off-the-shelf.

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