Transcript of a BriefingsDirect podcast on healthcare giant McKesson's continuing multi-year, pan-IT journey toward management transformation.

1. HP Fueled Application Delivery Transformation Pays
Ongoing Dividends for McKesson
Transcript of a BriefingsDirect podcast on healthcare giant McKesson's continuing multi-year,
pan-IT journey toward management transformation.
Listen to the podcast. Find it on iTunes. Sponsor: HP
Dana Gardner: Hello, and welcome to the next edition of the HP Discover Performance
Podcast Series. I'm Dana Gardner, Principal Analyst at Interarbor Solutions, your moderator for
this ongoing discussion of IT innovation and how it’s making an impact on people’s lives.
Once again, we're focusing on how IT leaders are improving their services' performance to
deliver better experiences and payoffs for businesses and end users alike, and
this time we're coming to you directly from the HP Discover 2013 Conference
in Las Vegas. [Disclosure: HP is a sponsor of BriefingsDirect podcasts.]
We’re here the week of June 10 to explore some award-winning case studies
from leading enterprises. Our next innovation case study interview highlights
how McKesson Corp. accomplished a multi-year, pan-IT management
transformation.
We’ll see how McKesson's performance journey, from 2005 to the present, has enabled it to
better leverage an agile, hybrid cloud model.
To learn more about how McKesson gained a standardized services orientation to gain agility in
deploying its applications, please join me now in welcoming Andy Smith, Vice President of
Applications Hosting Services at McKesson. Welcome, Andy.
Andy Smith: Thank you, Dana. Glad to be here.
Gardner: It's good to have you back. It's hard to believe it's been a full year since we last spoke.
I was very interested in how McKesson had been progressing and maturing its applications
delivery capabilities back then. What's new? What's different? What's changed in the last year?
Smith: Probably one of the things that have changed in the last year is that our performance
metrics have continued to improve. We're continuing to see a drop in the number of outages from
the standardization and automation. The reliability of the systems has increased, the utilization of
the systems has increased, and our system admin ratios have increased. So everything, all the key
performance indicators (KPIs) are going in the right direction.

2. That allowed us to make the next shift, which was to focus on how can we do better at providing
capabilities to our customers? How do we do it faster and better through provisioning,
because now it's taking less time to do the support side of it.
Gardner: It's really interesting to me that a big part of all this is the
provisioning aspect going from fewer manual processes and multiple points of
touch to more self-provisioning. How has that worked out? Have the people
stepped up to the plate on that, and do they seem to want to take more initiative
in terms of how applications are developed and deployed?
Smith: It's been very well received. We've been in production now roughly two-and-a-half
months. Rather than delivering requests via business requests to add some compute capacity in
an average of six months, we’re down to less than four days. I think we can get it down to less
than 10 minutes by the time we hit the end of summer.
Well received
So, it's been well received. It's been a challenge to get people to think differently about their
processes internal to IT that would allow us to do the automation, but it's been very well
received.
Gardner: Just for the edification of our listeners, tell us a bit about McKesson. You’re not just a
small mom-and-pop shop.
Smith: No, I think we’re Fortune 14 now, with more than $122 billion in revenue and more than
43,500 employees. We focus specifically on healthcare, how to ensure that
whatever is needed by healthcare organizations is there when they need it.
That might be software systems that we write for providers. That could be claims
processing that we do for providers. But, the biggest chunk of our business is
supply chain, ensuring that the supplies, whether they be medical, surgical, or
pharmaceutical, are in the hospital's and providers's hands as soon as they need
them.
If a line of business needs to make an improvement in order to capture a need of a customer, with
the old way of doing business, it would take me six months to get the computer on the floor.
Then they could start their development. Now, you're down to less than a week and days. So they
can start their development six months earlier, which really helps us be in a position to capture
that new market faster. In turn, this also helps McKesson customers deliver critical healthcare
solutions more rapidly to meet today's emerging healthcare needs and enable better health.
Gardner: And there are also some other factors in the market. There's even more talk now about
cloud than last year, it's hard to believe, focusing on hybrid capabilities, where you can pick and
choose how to deploy your apps. Then, there's the mobile factor. Is the compression of time

3. something that you’re still feeling, perhaps more so now with mobile, or is that now a part of
your applications’ speed initiatives?
Smith: It's not part of my speed initiatives right now, but we are recognizing that we have to
build that next generation of application. Part of that is the mobility piece of it, because we have
to separate the physical application, the software-as-a-service (SaaS) application from the display
device that the customer is going to use. It might be an Android, an iPhone, or something else, a
tablet.
So we're recognizing the fact that for next-generation of product, we really have to separate that
mobile portion from it, because that display device could be almost anything.
Gardner: So there are more complexity factors always coming into the picture. Let's go back to
this services orientation and standardization. What were some of the difficulties that you had.
What were the hurdles in terms of trying to get standardized and creating that operating
procedure that people could rally behind, self provision, and automate? What's for those people
that are just starting on this journey? What might they expect?
Smith: The first piece is just a change in culture. We believe we were customer-centric providers
of services. What that really translated to was that we were customer-centric customized
providers of services. So every request was a custom request. That resulted in slow delivery, but
it also resulted in non-standardized solutions.
One of the most difficult things was getting the architects and engineers to think differently and
to understand that standardization would actually be better for the customer. We could get it to
them faster, more consistently, and more reliably, and on the back end, provide the support much
more cheaply to get that mind shift.
But we were successful. I think everybody still likes to customize, but we haven't had to do that.
The right culture
Gardner: We’re here at HP Discover, and you’ve won an award. Congratulations, incidentally.
How have the HP products and services come together to help you not only tackle these technical
issues, but to foster the right culture?
Smith: When we talked last year, we had a lot of the support tools in place from HP -- operations
orchestration, server automation, monitoring tools -- but we were using them to do support
better. What we're able to do from the provisioning side is leverage that capability and leverage
those existing tools.
All we had to do is purchase one additional tool which is a Cloud Service Automation (CSA) that
sits on top of our existing tools. So it was a very minor investment, and we were able to leverage

4. all the support tools to do the provisioning side of the business. It was very practical for us and
relatively quick.
Gardner: Of course, a big emphasis here at HP Discover is HP Converged Cloud and talking
about these different hybrid models. How has the automation provisioning services orientation,
and standardization put you in a place to be able to avail yourselves of some of these hybrid
models and the efficiencies and speed that come with that? How do they tie together -- what
you’ve done with applications now and what you can perhaps do with cloud?
Smith: We’ll be the first to admit that providing the services internally is not necessarily always
the best. We may not be the cheapest and we may not be the most capable. By getting better at
how we do provisioning and how we do our own internal cloud frees up resources, and those
resources now can start thinking about how we work with an external provider?
That's a lot of concern for us right now, because there is that risk factor. Do you put your
intellectual property (IP) out there? Do you put your patients’ medical records out there? How do
you protect it? And so there are a lot of business rules and contracting issues that we have to get
through.
From a technology standpoint, we know we can do it. We’ve done it in the labs. We’ve
provisioned out to third-party providers. It all works from a technology standpoint with the tools
we have. Now we have to get through the business issues.
Gardner: It's interesting that you are seeing this relationship between applications and the
transformation you've made to make your applications delivery more agile and the deployment
opportunities you have with cloud and hybrid cloud models. HP has its fingers in both sides of
that equation -- the apps and then also the cloud.
Is there a certain advantage that you see working with HP that will perhaps allow you to pull
those together for your benefit?
Smith: I think so, because a lot of companies, HP included, are on the same journey. You’ve got
some legacy that you have to keep. You’ve got some legacy that you need to improve on. But
you also need to be ready to build that next-generation application.
On the same journey
It's fortunate, in some ways, that HP is on the same journey. We partner on a lot of these things.
When we brought CSA in, it was one of the earlier releases, and now we’ve partnered with them
through the Customer Advisory Boards (CABs) and other methods. They continue to enhance
this to meet our needs, but also to meet their needs.
Gardner: With CSA, are you on the latest version of that?

5. Smith: We might be down one point release, we’re at 3 point something, so we are maybe one
back. But we brought it in as 1.0, then 2.0, and now we’ve moved into 3, and it's continued to
improve.
Gardner: Now that you've been on this journey from 2005, where do you see yourselves in a
couple of years? How does this tie together? What are your new goals and requirements that
you're setting for yourselves and are interested in achieving?
Smith: Because we’re in healthcare, very similar to banking, we've hit a point where we don't
believe we can afford to be down anymore.
Instead of talking about three nines, four nines, or five nines, we're starting to talk about, how we
ensure the machines are never down, even for planned maintenance. That's taking a different
kind of infrastructure, but that’s also taking a different kind of application that can tolerate
machines being taken offline, but continue to run.
That's where our eye is, trying to figure out, how to change the environment to be constantly on.
Gardner: To have those levels of performance, you can't just look at the infrastructure or the
apps. It needs to be all of those things, and the apps from beginning to end, in terms of their
lifecycle.
Smith: Exactly. If the application isn't smart enough to tolerate a piece of machine going down,
then you have to redesign the application architecture. Our applications are going to have to scale
out horizontally across the equipment as the peaks and valleys of the customer demands change
through the day or through the week.
The current architecture doesn't scale horizontally. It scales up and down. So you end up with a
really big box that’s not needed some times of the day. It would be better if we could spread the
load out horizontally.
Gardner: So just to close out, we have to think about applications now in the context of where
they are deployed, in a cloud spectrum or continuum of hybrid types of models. We also have to
think about them being delivered out to a variety of different endpoints.
Different end points
What do you think you’ll need to be doing differently from an application-development,
deployment, and standardization perspective in order to accomplish both that ability to deploy
anywhere and be high performance, as well as also be out on a variety of different end points?
Smith: The reality is that part of our journey over the last several years has been to consolidate
the environment, consolidate the data centers, and consolidate and virtualize the servers. That's
been great from a customer cost standpoint and standardization standpoint.

6. But now, when you're starting to deliver that SaaS mobile kind of application, speed of response
to the customer, the keystroke, the screen refresh, are really important. You can't do that from a
central data center. You've got to be able to push some of the applications and data out to
regional locations. We’re not going to build those regional locations. It's just not practical.
That's where we see bringing in these hybrid clouds. We’ll host the primary app, let's say, back in
our corporate data center, but then the mobile piece, the customer experience piece, is going to
be have to be hosted in data centers that are scattered throughout the country and are much
physically much closer to where the customer is.
Gardner: Of course, that’s going to require a different level of performance monitoring and
management.
Smith: Exactly, because then you really have to monitor the application, not just the server at the
back end. You’ve got to be watching that performance to know whether you have a local ISP
that’s come down, if you have got a local cloud that’s come down. You’re going to really have to
be watching sort of the endpoints so you can see that customer experience. So it is a different
kind of application monitoring.
Gardner: Well, we look forward to speaking with you again, Andy, in a year or two to see how
that’s progressing. But I am afraid we’ll have to leave it there for today. We’ve been learning
about how McKesson accomplished a multi-year, pan-IT Management Transformation and
we’ve seen how McKesson’s performance journey has enabled it to create an agile hybrid cloud
model.
And so join me now please in thanking our guest, Andy Smith, Vice President of Applications
Hosting Services at McKesson. Thank you, Andy.
Smith: Thank you, Dana.
Gardner: And I’d like to thank our audience too for joining us for this special HP Discover
Performance Podcast coming to you from the HP Discover 2013 Conference in Las Vegas.
I'm Dana Gardner; Principal Analyst at Interarbor Solutions, your host for this ongoing series of
HP sponsored discussions.
Thanks again for listening, and come back next time.
Listen to the podcast. Find it on iTunes. Sponsor: HP
Transcript of a BriefingsDirect podcast on healthcare giant McKesson's continuing multi-year,
pan-IT journey toward management transformation. Copyright Interarbor Solutions, LLC,
2005-2013. All rights reserved.

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