And as drug wholesale giant McKesson HBOC learned the hard way, it's not just the start-ups feeling the wounds of the Web. The world's largest - and one of the oldest - drug and health-care services companies is still recovering from a round of its own self-inflicted hurt. It is trying to shake its Net hangover with a cautious but ambitious overhaul that it hopes will keep it selling everything from scalpels to Viagra to patient management software long into the new millennium.
Admittedly, the company would like to go slowly. "We've had a lot of success without the Net," said James Watkins, chief information officer at McKesson's pharmaceutical division, the company's biggest and most profitable operation. After all, for a company that's 168 years old, change doesn't come easily. Especially after some painful experiences on the Web.
Over the past three years, McKesson has spent US$14 billion buying software provider HBO & Co. in a deal that quickly became a huge embarrassment. The drug giant also lost several hundred million dollars trying to spin off a Web-focused software firm catering to doctors, only to admit a few months later that it was a bad idea.
And while McKesson still holds the health services crown with $42 billion in sales last year, eager rivals are starting to beat it at the Net game.
As a major software and information technology provider, McKesson has been forced to overhaul its software offerings to make them Web-capable and compliant with new federal laws that set tough privacy and security standards on electronic medical transactions and billing. And because McKesson ships millions of products per week, it simply must find ways to increase its productivity and cut costs. Like it or not, that means moving to the Web.
So, as McKesson looks to the lessons of dying Internet start-ups, established old-world companies similarly will no doubt be looking to McKesson to see if a brick-and-mortar giant can sort through the dot-com shakeout and remake itself into a formidable e-commerce contender.
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1. Intro 2. The Challenge 3. History lesson 4. From EDI to the Web 5. Toward digital records | |
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