CIO Hall of Fame: Katherine M. Hudson

CIO — Career Highlights

"We were just doing our jobs at Kodak. We didn't believe we would cause as much controversy as we did at the time," says Katherine Hudson, looking back at her landmark 1989 IT outsourcing pact. Hudson's was not the first IT outsourcing deal, but the Kodak contract was big and bold enough to gain worldwide attention.

"She led Kodak to what was a counterintuitive move for the time: She showed that running data centers was no more a core competency of Kodak's than running a power plant would be," says F. Warren McFarlan, senior associate dean and professor in the Advanced Management Program at the Harvard Business School. In retrospect, the Kodak deal had as profound an effect on the industry as did American Airlines' famous Sabre reservation system, McFarlan says.

But in 1989, few were in a receptive mood. "When we tried to explain what we were doing, we were met with either a hostile audience or blank stares," recalls Hudson. "We were viewed as giving away the store. People thought, 'All of their IT capabilities and people are going off to other people--isn't that stupid.'"

Hudson says she has always advocated "selective outsourcing" because of the way it concentrates focus. "If I'm outsourcing the nonstrategic, noncore IT functions, then I'm keeping the really strategic ones and focusing my own employees on activities that will make a competitive difference for my company," she says. "That's where an incredible amount of the outsourcing value comes from."

Eight years later, it's safe to say corporate America finally gets it. Companies with sound internal IT, such as J.P. Morgan, DuPont and Xerox, have all subsequently embraced outsourcing in a big way. The majority of CIOs see it as another tool in their box; few view it as the enemy.

According to Patricia M. Wallington, Xerox's corporate vice president and CIO, "The more a person matures in the role of CIO and takes on the company objectives as his or her own, the less concern and resistance you see to outsourcing." Rather, Wallington says, outsourcing simply becomes good business.

Hudson's aggressive but compassionate management style no doubt helped her handle the rough times. "She's very direct and very comfortable addressing the difficult issues," Wallington says, "and I can tell you from experience, there are a lot of difficulties in getting these transactions done." But Hudson is also very cognizant of the human element and cares about people, Wallington adds.

Today, Hudson leads W.H. Brady, a maker of coated film and industrial identification products with sales of nearly $500 million. Now that she's running a company, the obvious question is, does she outsource? The answer: Yes, in fact, she does. Specifically, Brady outsources parts of its IT help desk and some application development. Hudson would like to outsource more, but it's not easy finding a vendor willing or able to support a relatively small company like Brady across several international locations. For an outsourcing pioneer like Hudson, it's kind of ironic.