A prescription for lower costs

McKesson is a multifaceted healthcare company, a large distributor of pharmaceuticals and a thriving developer of healthcare-related IT systems. Its software and hardware are installed in more than 70 percent of US hospitals with more than 200 beds, and handle everything from billing and scheduling to capturing MRI-machine images and preventing dangerous drug interactions. For the last five years, the company has used open source technology to deliver products at lower cost and greater speed, says Randall Spratt, executive vice president and CIO. After seeing open source, Spratt considers it an essential part of McKesson's product development strategy.

What role is open source playing in your strategy?

In our technology division, our flagship line of software products is called the Horizon suite. The reference architecture for that suite is dependent upon open source components and tools to create and develop them. We don't talk about product names, but we employ open source operating systems, an open source object-model interface, a number of different open source user-interface widgets and libraries, open source middleware and Web servers, and a variety of open source tools that not only provide low-level program libraries but also support the programming process in general.

What are the key benefits of open source?

The benefits for us came from the requirements of the markets we serve. Healthcare is an extremely low-margin business with constant cost pressures. Frankly, our customers were not able to consume the solutions they needed at the pace they needed because of cost constraints. So, we went to open source primarily as a strategy to reduce the extent of third-party costs -- primarily hardware and operating system costs -- that were in the solutions we sold to customers. We saw those benefits emerge dramatically -- an order-of-magnitude reduction in the expense around hardware, for example -- but we also got unexpected benefits in speeding some aspects of development and higher levels of performance.

What were the development benefits?

We got access to libraries of capabilities that we would have had to develop on our own -- the ability to take in everything from user-interface widgets to libraries of software routines and schedulers, for example.

And how does open source reduce hardware expenses?

In two ways. The operating systems make more efficient use of lower-cost hardware than many commercial operating systems, and we architected an environment where the application runs on any number of blades that sit on top of one or more database servers and the load is then automatically distributed. Hospitals can start out with a relatively modest investment and as they add users or applications, scale by adding low-cost blades rather than forklifting out an expensive Unix server and replacing it with a larger server. So, not only do we get the efficiency benefits in the first place, we get a much more scalable environment, where each step in the scale is a modest step upward.

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