Owens & Minor's <B>David Guzm&aacute;n</B> sees Web services as key to unlocking technology value.

InformationWeek Staff, Contributor

January 24, 2003

4 Min Read

Fueled by the explosive impact of the Internet, technology was the star performer in a sustained period of economic growth, low inflation, and low unemployment. In fact, the pace of recent technology innovation outstripped the ability of business to adapt. The danger is that the reverse is now true, with business change outpacing technology.

It's often the case that we are stuck in old analogies during revolutionary transformations. The first television commercials featured radio jingles. Similarly, use of the Internet remains stuck in print analogies and fails to take full advantage of the interactive power of the medium.

However, business processes are adapting to the accelerated pace that technology enables. Customers, business partners, and suppliers are knocking down the door for access to data held within enterprise applications, and they're demanding that business processes ignore corporate boundaries. Companies are responding by building cross-business processes that enable interdependencies among customer, distributor, and supplier. This will require a complete overhaul of the antiquated "legacy" technologies that run businesses today.

At Owens & Minor, our business strategy embraces a core business model in which we are buyer to medical suppliers and seller of medical products to hospitals, but our strategy is evolving to take advantage of an ever-changing landscape in which suppliers require third-party logistics services and in which hospitals require a wide array of supply-chain outsourcing services. The ramifications are enormous for our information systems. We're in the process of transforming our legacy applications and modernizing them as Web services. This positions our company to leverage the technology innovations that enable cross-business processes and provides the business agility needed for our evolving strategy.

Certainly, technology innovations such as Web services help us take a tremendous step toward the kind of business transformation we envision, since they enable cross-business processes and sharing of data. However, the greatest challenge all businesses face this year and beyond is modernizing legacy information systems to take advantage of technology innovations.

The heart and soul of all business applications--the so-called back-end systems--languish in technologies developed in the 1970s. These are the systems that actually run business, including inventory management, order management, warehouse management, financials, and master data files on customers and products. What I've learned from meeting with customers, suppliers, business partners, and peers is that every business is facing these issues.

The next major phase of technology investment will be the complete overhaul of the antiquated technology systems that run businesses today. Interactive business processes with customers and suppliers require modern technologies. Some of these processes will be human-to-human, some human-to-machine, and some totally automated, machine-to-machine processes. Yet each company is different in how it must adapt to this challenge. The smart companies are already engaged in this quiet transformation that hasn't received the headlines of the "E" age, but whose influence will prove more lasting.

We've been through a period of rapid growth in technology and its ability to transform business and our lives. And yet, there's no resonant consensus from business leaders of technology's contribution to business success. Technology is still viewed as a necessary evil by many companies, even while it's widely acknowledged as strategic by others.

This feeling is not antediluvian. Much of the recent growth has been characterized by misspending, led by the "gold rush" mentality of the Internet revolution and by unproductive anomalies such as Y2K. Leaders in the technology industry have so far only toyed with the inherent power of the Internet. Endless "user-experience" discussions led to flashy content with little substance. Business isn't about the "user experience"; there are far better forms of entertainment than business applications. The warring factions in the technology industry haven't helped matters, making it difficult to integrate innovative applications.

Now we're entering an era in which business needs will outpace the ability of technology to serve them. Companies must tackle the looming issue of legacy systems to compete. Those of us in the trenches need to push the technology industry to come together to provide the standards needed to deliver on the promise of Web services. The challenge is to support seminal business-process change with extended enterprise applications. Somehow, I believe we'll all rise to the challenge.

David Guzmán is senior VP and CIO of Owens & Minor Inc. Owens & Minor was the No. 1 company in the InformationWeek 500 in 2001.

Photo of David Guzmán by Sacha Lecca

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