Small Businesses Drive Big IT AdvancesBy John McCormick | Posted 2005-10-06 Email Print
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Opinion: Small businesses push technology to keep revenue up and head count down.
Robert Drucker is a blunt, tough-talking 64-year-old who used to own a dry-cleaning business in Queens, N.Y. He'll tell you with some sense of pride that he's never had any formal computer training.
But when Drucker tells you information technology matters, you might want to listen.
Why? Because Drucker has built a pharmacy business, RxUSA, that, with just 18 employees, rang up $209 million in revenue in the first half of this year—after doing $276 million in sales all of last year.
And Drucker, a pharmacist who thinks of himself first as an entrepreneur, says there's no way he could grow the business without information technology. "It's the key to being able to manage with a minimum of physical workforce and a maximum of productivity," he says.
Drucker, who has run several businesses, opened RxUSA in 1999 with a computer system he installed in the back room of a dry-cleaning venture he owned at the time.
As the business began to take off, Drucker and his business partner, RxUSA executive vice president Mark Scovotti, went looking for a system that would keep track of the drugs they bought and sold, handle purchase orders, analyze sales, and ensure that their pricing and product information was always up-to-date.
It wasn't easy, but they found another small business, a software company called Xiacon, which was willing to finely tailor an existing inventory management system to meet RxUSA's every need. The system was deployed in 2001 and, since then, the business has doubled.
Today, the company buys bulk brand or generic drugs from larger pharmaceutical distributors and has them shipped to its 6,000-square-foot warehouse on New York's Long Island. The system allows the company to handle 300 to 400 daily orders, send out $5 million worth of product in a day, and be able to instantly track the whereabouts of all shipments and deliveries.
"And we do it with three warehouse people and one pharmacy supervisor; the rest is all technology," says Drucker of the company's pharmacy operations.
But RxUSA isn't alone in using technology to run a lean-and-mean operation.
You will find in this issue of Baseline four more stories like Drucker's—chief executives of smaller businesses who are evangelists when it comes to information technology. All have found different ways to use technology, but the results are the same: Their businesses are growing, while their head counts are not.
James Emison at Western Petroleum, which deals in gas, propane and airline fuel, is using a specialized software program to run his business—from pipeline schedules to accounting. The company has 58 people and posted revenue of $3.6 billion last year.
Don Gray at Peyto Energy Trust relies on business smarts, outsourcing and a sophisticated software package to find and extract oil and natural gas. The energy company, which employs 24 people, says it will generate $290 million in revenue this year.
Alan H. Buerger at insurance company Coventry First has developed an in-house software program to analyze and manage death benefits. The 116-employee company did $391 million in business last year.
And Randy Cohen at ticket broker TicketCity.com is now managing parts of his business on a Web-based application that was originally developed to service its online customers. The company, which has 21 full-timers, expects to do $20 million worth of business.
But whether they use customized software, outsourcing or in-house development, small companies are thinking outside the box when it comes to technology—which often results in these businesses putting in place information technologies that allow them to be as productive, if not even more so, than their bigger rivals.
"One of the secrets," Drucker says, "is being able to apply state-of-the-art technology to problems. And using the technology to solve them rather than hiring another 10, 20, 50 people."