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Emerging Enterprise: Strategic IT: Page 7 of 12

Drug Distributor No Dope in Using Tech

As a teenager, Chuck Hudson worked as a delivery boy at his hometown pharmacy. Today, he's still making deliveries, but on a grander scale. As director of IT at Smith Drug, he runs the technology infrastructure that supports the distribution of pharmaceuticals and narcotics to more than 1,000 independent pharmacies in 13 states.

A billion dollar Spartansburg, S.C., company that's been in the business half a century, Smith Drug has long embraced information technology as an integral element in its success. To that end, Hudson reports directly to the CEO and participates in weekly strategy sessions with business leaders.

But like many businesses of a certain age, Smith Drug is saddled with a legacy IBM 390 mainframe. Three full-time programmers--of the company's 13-person IT staff--are dedicated to keeping the mainframe alive, and tweaking the critical business applications that run on it. "The system is 25 years old," says Hudson. "It's held together with duct tape and WD-40."

To ease the load, Hudson has initiated a migration from the mainframe to a modern ERP system. Once that's complete, which is expected to happen by 2007, he'll be able to redeploy those employees to ERP support and to the helpdesk, and have them trained in Java and .Net. "We can continue to grow the business and look for efficiencies to keep costs down and profits up," Hudson says.

While Smith Drug is upgrading its own infrastructure, it also must manage a variety of customer ordering systems that range from a cutting-edge Web portal to '70s-era terminals. It would be more efficient for Smith Drug if all its customers migrated to Internet-based ordering using its Web portal, but the company values customer service as much as high-tech streamlining. "We service some mom-and-pop stores that aren't as aggressive about technology as others," Hudson says. "We have customers who don't even have Internet access, but we want to accommodate them to keep them as customers."