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Emerging Enterprise: Strategic IT: Page 8 of 12

Unfortunately, the tech market isn't as accommodating to Hudson; there are some areas where it just hasn't caught up to business needs. To help prevent the sale of counterfeit drugs, for instance, states will mandate that distributors use pedigrees to document the movement of a drug from the manufacturer to the distributor to the pharmacy. Pedigrees can be paper or electronic, but each state will have different requirements for supporting the process. That means Smith Drug may have to comply with 13 different pedigree systems. Several companies offer to host electronic pedigrees, Hudson says, but without a single standard, these solutions will still require a lot of manual data entry. "It's going to be a nightmare," he says.

RFID technology, which has the potential to streamline inventory management, is also plagued by a lack of standards. Smith Drug is testing RFID readers in its warehouses, but it's problematic because each manufacturer requires a different interface into the company's data-management applications. "All the different standards really put a burden on us," Hudson says.

Then there's another issue that could keep Hudson awake nights--the intensifying pressure from chain pharmacies that stand to obliterate the local competitors, who are Smith Drug's customers.

But, just as Smith Drug thrives through good customer service, Hudson believes the local pharmacies are doing the same. "Even though CVS and Eckerds go up on every corner, pharmacy students are opening up their own little businesses," he says. "They give good service--it's personal because the pharmacist gets to know you. I think they are doing OK."

--Andrew Conry-Murray