Premier 100 Q&A: McKesson's Cheryl Smith on outsourcing

When it came to data center consolidation, all roads led to Iowa

By Patrick Thibodeau

March 7, 2005 12:00 PM ET

Computerworld -

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PHOENIX -- One of the speakers today at Computerworld's Premier 100 IT Leaders conference was Cheryl Smith, the executive vice president and CIO of McKesson Corp. Smith said she believes that the U.S. can provide an alternative to offshore outsourcing, and her company is proving it with a data-center consolidation project that has cut the number of centers it has from 11 to two, with locations in California and Iowa. (The main center is located in Iowa.)
San Francisco-based McKesson, which spends about $350 million a year on IT, is one of the largest companies in the U.S, and its consolidation and relocation decisions have paid off, Smith said. For the past four years, for instance, McKesson IT has been able to meet 100% of new business requests without charging the company an additional penny, she said in an interview following her talk.
You said that "America doesn't have to outsource" -- a very bold statement to make. Do you believe that? I really do. ... But I prefaced that by saying we are primarily an Americas company, [although] we have operations in other countries. We looked at India, China, Western and Eastern Europe. Part of it is getting an American company, an American management team to understand, address and face the incredible issues that you are going to deal with in other countries, in other geographies, cultures. It was hard for our management team to get their mind around it.


Cheryl Smith, executive vice president and CIO of McKesson Corp. Image Credit: Asa Mathat

We would have done it without question, but was it the right thing to do? And I think that's when we began to look at Middle America. Maybe once we get everything consolidated, outsourcing in other countries might be incredibly cheap and very, very routine. But right now, our benchmark numbers look OK. You can go to Middle America, you can get really high-quality U.S. citizens, and we leveraged a facility we already owned. You can do it very cost-effectively here if you have the right setup and if it's the right thing for your company and management team.
Did you have problems finding people in Iowa with the IT skills you needed? We got resumes from all over the United States. We more or less had our pick. One of the things that we found is there is real desire of people in technology today to want to get back to some basics: to raise their family in place that may be

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