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Volume 2 Number 7 July 1983
Employee Purchase Program For Personal Computers
International Sales Meeting Slated For Boston In August
General Manufacturing Reorganizes To Fit Corporate Needs
Finance And Administration Decentralizes Operations
The Outlook From The Field
Marketing...New Roles With Added Value
Personal Computer Sales Update
Digital in the Press
Promoting The New Digital
The State Of Artificial Intelligence At Digital
Digital Business Centers Continue To Expand
Details of the employee purchase program for personal computers will be mailed to every employee in the U.S. in August. GIA and Europe will use other means to let employees know about this offer. Based on preliminary surveys it is estimated that 25-33 percent of U.S. employees may take advantage of this opportunity. Initially, over 10,000 units have been allocated toward this program.
Employees will have a variety of options to choose from at substantial discounts. In their basic configurations (with black and white monitor), the Rainbow is being offered for $2144.40, DECmate II for $2294.40 and Professional 350 for $5021.40.
Live demonstrations and training will be available across the U.S. to help employees become acquainted with this equipment before they make their decisions.
At the end of August, Digital's entire 3,600-person sales force will gather for a marketing-sales symposium in Boston. This is the first time since 1968 , when there was less than a hundred sales people in the company, that the whole sales force has gathered in one place.
This meeting will give the six marketing groups an opportunity to present their FY84 strategies and will give all the sales people an opportunity to see, touch and ask about Digital's full range of products and their applications .
"We intend to ‘display, discuss and present a single company with wide and diversified offerings, rather than a company made up of innumerable groups and products," explains Bob Rockwell, manager, Medical Systems Group, and chairman of the task force organizing the symposium. "Our goals are to motivate the sales force, promote sales, emphasize our product breadth and sales-marketing relationships," he emphasizes.
Half the sales force (1,400 from the U.S. and 200 from Canada) will attend sessions Aug. 22-24; the other half (1,200 from Europe, 200 from the rest of GIA and 600 from the U.S.) Aug. 25-27. All of them will be on hand for a gala motivational gathering on the evening of Aug. 24.
The meeting consists of three pieces:
o sessions at which the six marketing groups will deliver their messages to groups of 400 to 500 sales people at a time;
o interactive breakout sessions with 25 to 100 people each; and
o an exhibit area, dubbed "DECTOWN," where equipment will be shown in actual applications.
DECTOWN will include a university, a lab, a hospital, a factory, a department store, a bank, a travel agency (on-line to airlines so you can actually make reservations there) , a police department (Digital Security) and a message center (where you can access EMS) . It will be a complete town, organized around the markets that Digital serves.
"Our products and marketing strategies will be self-evident from the exhibits," says Bob. "Our main focus is on the equipment, applications and the environment in which our products are displayed. We want to encourage hands-on exposure to our products."
After the sales meeting ends, this same exhibit (in the Hynes Auditorium) will be used to showcase Digital's products and capabilities to the press and the investment community and also will serve for several days as a customer trade fair.
The various parts of the General Manufacturing business, which due to maturity and specialization are no longer "general," have been assigned to the Field and Manufacturing groups they have been serving. Effective July 1, General Manufacturing itself no longer exists, according to Don Hunt, who is moving from his position of group manufacturing manager, to take strategic management responsibility for Corporate Printed Wiring Board processes.
The Field Service Manufacturing Group, now called the Field Service Logistics Group, will report to the Field organization, under the continued leadership of Bob Roche, who will report to Dick Poulsen.
Distributed Systems has been made into a stand-alone Manufacturing Group. It will be managed by Bel Cross, who will report to Bill Hanson as part of Systems Manufacturing. Bel will have manufacturing management responsibilities for the Augusta plant and worldwide product management responsibilities for Aguadilla, Puerto Rico; Clonmel, Ireland, and other facilities.
The Maynard plant, which now focuses on manufacturing terminals for the low end, will continue to be managed by Rufus Sanders, who will now report to Dick Esten, Group manager, Low-End Manufacturing. The long-range goal is to change the Maynard plant into a start-up facility for new products and processes for low-end Engineering and Manufacturing.
Greenville, South Carolina, will continue to be managed by John Caulfield, who will report to Don Hunt. Other General Manufacturing Group staff members have either been absorbed into the various new structures or are being re-assigned to other groups.
The day-to-day decision-making responsibility and accountability for F&A operations have been moved into the major functional groups (Field, Manufacturing, Engineering and Marketing), according to Al Bertocchi, vice president, Finance and Administration. Policy formulation, standards, auditing and external financial reporting will remain at corporate level.
Several positions have been realigned and redefined. An F&A manager will be named for each functional group. These people will report to Al functionally and to the respective operating vice president. They will be responsible for the full spectrum of F&A work.
Dan Infante will continue as the F&A manager of Manufacturing, and Ivan Pollack will continue as the Field Controller. In addition, effective July 1, Ivan assumed responsibility for managing the U.S. Area F&A group. Eventually the U.S., Europe and GIA Area F&A managers will report to the Field F&A manager. Field and Marketing F&A managers will be named in the near future.
George Chamberlain assumed the role of F&A manager of Engineering on July 1, and will continue to be assisted by Joe Reilly in managing Engineering Finance. George will retain his responsibilities as Treasurer, and Bill Helm will manage the day-to-day activities of the Treasury function, reporting to George and Al Bertocchi.
Bill Thompson will retain the title of Corporate Controller until the position has been filled. Bruce Ryan will continue as Assistant Corporate Controller reporting to Al.
Jack Shields, vice president, group manager, discussed the accomplishments and challenges of the Field organization at the recent State of the Company Meeting.
"Considering the variety of competitors that we face, we have to be agile and efficient. We need to be a low cost supplier in whatever niche, whatever market, with whatever thrust we need to meet those competitors. Our cost structures have to be at least as efficient as those of our competitors, or our market share will be at risk.
"Our productivity efforts in the Field have been paying off. Despite the recession, the fierce competitive environment and the fact that we have fewer sales people this year than we started with last year, our productivity is up 36 percent, and our backlog is increasing. We have the highest yield per sales person in the history of the company.
reorganized Sales by account and by applications, so we get a
high degree of customer continuity on the account side. We've
overhauled our sales training program. Fundamentally, we
believe our sales people have to know the products and the
applications, and must to be able to talk to the customers
about solutions to their problems. In addition, we have tried
increase the direct selling time of our sales people, Pat Cataldo has been heading this effort for us and has done a magnificent job.
"We've focused on management training as well. We've learned that if you have profit and loss and general management responsibility at the top level, there's a tendency to beget that same kind of organization through each level. So people lower in the hierarchy are burdened with tasks that may have nothing to do with their basic job. For example, a sales unit manager's basic skills should involve relating to customers and helping sales people to be efficient and knowing how to sell. They don't need budget responsibilities and cost centers. We shouldn't load them down with so- called 'management' tasks. Let them focus on what has to be done. Reward them for that, and train and help them so they can do it well.
"In Field Service, over the past four years, our calls per technician have increased over 55 percent. At the same time, the number of calls required per dollar of product shipped has been steadily decreasing because of the improvements we have made in our products and because of technological and methodological changes. Customer opinion surveys of the quality of our services last year reached an all-time high of 8.2 on a scale of 1 to 10.
"The cost per service visit — including all overhead such as remote
diagnostic center costs, engineering interface costs and all our other efforts to improve the quality and efficiency of service — has remained constant. In every dimension, Field Service has been increasing productivity at a rate greater than cost increases, and greater than inflation. This will have a significant impact on the company's business and its future competitive position.
’’Software Services has been growing at a compounded rate of almost 70 percent a year for the last 2 to 3 years. It is the highest growth segment that we have in the company, and a labor intensive business with a high engineering content. Our revenue per specialist has increased over the past three years 27, 21 and 27 percent, respectively. This has been achieved by focusing the specialists' capabilities around certain markets and applications and by use of various programming tools that recently became available. The number of systems installed per person went up 23 percent last year, and we plan to increase it by 18 percent next year. Our cost per contract has been coming down: it was down 3 percent two years ago, and down 5 percent last year. So, in every element of productivity, the Software Services organization has been making remarkable breakthroughs, and we expect they'll continue in that same direction.
"On the Ed Services side, we've been making small productivity improvements everywhere which add up to keep Ed Services an efficient, effective and competitive organization: a 7 percent improvement in ratio of direct to indirect people; a 2 percent improvement in the direct labor content of the developers; a 2 percent improvement in the class size; and a 6 percent improvement in the numbers of hours that it takes to conduct a course. They are using individual training laboratories and new technologies to accomplish this.
"In the order processing area, we still have a long way to go. But we're doing that job with 12 percent fewer people than we had at the beginning of the year, and the transaction numbers are up 37 percent. We have also improved the order turnaround time. In general, there are tremendous opportunities for improvement here. We can get a simplified order processing system, minimize turnaround time, get higher quality responsiveness to our customers, do it more cost effectively, have better movement of inventory and work with lower backlog.
Ed Kramer, Corporate Vice President of Marketing, discussed the new roles and responsibilities of Marketing at the June State of the Company Meeting. The following article summarizes his remarks.
"The first job of Marketing is winning in the marketplace, efforts and operate efficiently, we have to make sure that adds value to the company.
"Marketing adds value by maintaining a high level of expertise in the areas we define as market segments, and identifying major opportunities and bringing them forward in the form of proposals for final approval by the appropriate groups or committees of the corporation.
"After approval of particular programs, we have to sell these proposals to the development people and the field operations people for implementation. I'd like to see a much closer contact between the key development people and the key marketing and sales people. We need the ability to get together teams of people in Marketing, Engineering and Sales to work very specific issues on a more regular basis than we've done in the past. We also need more clearly defined areas of responsibility so we can identify more opportunities and do more creative marketing with more teamwork between marketing and other functions. I think combining some of the groups as we've just done is a step in the right direction.
"One way to view the new relationship between Marketing and Sales is to consider the field organization as a distribution company. In practice, it's probably going to be more elaborate than that because we want to have strategies that have worldwide implications. But, essentially, the Field has to sign up for what they're going to sell; so Marketing has to sell its strategies to the Field.
"In addition, we have to get our messages to our sales people so they can pass on information about our products to customers, and we have to work with advertising and sales promotion groups to tell the world about them.
now six group marketing managers for the company. They are
responsible for the major segments of our business. They are
among the best people that I know in this industry. I'm sure
that they and their teams and their counterparts in
Engineering and Sales will generate and execute the strategies
that Digital needs to win in the marketplace. I look forward
to working with them."
Joel Schwartz, vice president, Personal Computer Group, gave an update on Digital's stand in the Personal Computer market at State of the Company Meeting held in June. The following summarizes his talk:
"In the end-user markets, DECmate and Professional sales are the strongest. We have many OEM orders for both theRainbow and the Pro. In the retail area, the voume has been almost exclusively Rainbow, primarily because of the software availability and price range. Today, there are over 300 packages available running on the Rainbow.
"As for the Professional, we are delivering all the major generic applications. We have a spread sheet program, a graphics program, inancial modeling, data base packages and at least three word processing packages. That accounts fro better than 75 percent of all applications of personal computers.
"In the United States, we have more than 600 authorized retail outlets. At least 40 percent of them have committed their major volume to our line. Several months ago we signed with a new franchiser, Enpre, that will have 50 stores open by July. In addition, we are negotiating with three other regional chains.
:Outside of the U.S., we have over 450 authorized outlets inEurope and around 70 in GIA. When you roll it all together on a worldwide basis, there are over 1000 outlets authorized to handle Digital Personal Computers.
:Oour challenge is to get the product into the hands of the over 200 Forutne 1000 customers that have made commitments to over 100,000 units int he first year. We will have shipped approximately 50,000 personal computers, of allthree types, by the end of June."
Interface Age magazine published two articles this month featuring Rainbow. The June Issue of Byte Magazine carries two articles on Digital PCs, one by Wes Melling and another entitled "A DEc on Every Desk." Tjhree new magazines totally dedicated to our PCs will be on the street by the fall. One of them, Personal and Prfessiona, is already here.
At the State of the Company Meeting, Dick Berube, Corporate Communications director, addressed the new promotion strategy at Digital.
"The term 'advertising' includes several categories of activity which, when taken together, comprise Digital's promotional program. And it is imperative that they should be taken together. They should be planned together, implemented together and see and understood by the outside world as being together. We can no longer afford, for fiscal reasons as well as strategic and tactical reasons, to look and act like several different companies.
"The primary goal is to increase the effectiveness of Digital's promotional messages, by ensuring that they convey information about the company and its products which customers and prospects find useful, easy to understand and persuasive.
"Another goal is to develop the ability to track and evaluate promotional activities so that as we move from one implementation phase to the next, our decisions regarding levels of investment and types and intensity of promotional programs are based upon accurate data which we understand.
"The key participants in the planning and implementation of Digital's promotional activities are the Strategic Marketing Units (SMU), which include market groups (a.k.a. product lines), base product marketing groups, and the Field; also, the Corporate Communications Group (CCG) and the Marketing & Sales Strategy Committee (MSSC).
"The SMUs are responsible for scoping new market opportunities, doing plans, formulating communictions strategies (including major messages), determining levels of advertising and sales promotion investment and driving the implementation .
"CCG is the central coordination and implementation service, responsible for managing the message-delivery systems. MSSC functions as a regulatory agency, reviewing major strategies and approving major implementations. MSSC also resolves conflicts and reviews the results of the evaluation of our promotional programs.
"The challenge is to develop an integrated promotional plan in which Digital is portrayed to the outside world as ONE comapny with the obvious ability to provide a variety of solutions to customer problems through superior products and unique capabilities."
Dennis O'Connor, group manager, Intelligent System Technologies, updated senior management at the last State of the Company meeting on Digital's position in the technology of Artificial Intelligence.
"Digital has world-wide leadership in the use of expert systems (a form of Artificial Intelligence, (AI) . XCON, an expert system for the configuration of VAX systems, is the first industrial AI expert system used on a routine basis. At Digital, we have focused on expert systems as problem solvers. Frame-based planning systems are also being evolved. Practical AI tools like XCON have been in place for three years and are used on a daily basis in U.S. and European manufacturing plants as an effective, efficient tool.
"We currently have two focal points for artificial intelligence tools — indirect labor productivity and the management of the complexities of our business. Recently, we did a return-on-investment study for XCON. We came up with somewhere between $6 to $8 million per year in cost avoidance. Two years ago, some controllers in Sales calculated the potential payback for XSEL, an expert system for Sales force, over five years to be $156 million dollars.
expert systems? Basically, they are sophisticated software
programs that embody the experiential knowledge of a human
expert relative to a specific domain. The particular knowledge
is encoded into rules. Expert systems have an adaptive nature.
They are easily modified by adding or subtracting rules. So,
as business strategies change, rules can be changed.
"We have established an AI Technology Center in Hudson, Mass., consisting of AI Engineering, Base Product Marketing and Intelligent System Technology groups. The AI revenue base at Digital will be created by the Base Product Marketing group which is run by Bob Abramson. First, we will offer the base products and tools that these particular applications are written in. All the programs internally are written in a dialect of LISP known as OPS-5. You can do a lot of effective and useful AI work with VAX systems and VTlOOs.
"Right now, we are dedicated to applying the methodologies inside, to increase our productivity. More generic applications will be found as we go through different types of problem spaces. Once we have the base products and languages, we will be in the position to sell what we use. Digital has more experience in problem solving using AI tools than anyone else in the industry.
"My main message is that we can shape the AI market. It is up to us to go after the marketplace and get our share. The pioneering effort continues in AI within Digital's Sales, Manufacturing, Field Service, Engineering Groups and Artificial Technology Center."
Digital's Business Centers have increased their product offerings to include the company's full line of personal computers. However, their emphasis will be to sell the DECmate I and II, the MICRO/PDP-11 and VAX-11/730, which are designed to meet the business needs of the customers.
"We have had tremendous demand from the public to have our full line of personal computers at the Centers. As a result, we will make them available for those people who enter one of our Centers and specifically ask to see them. Our emphasis, however, will be to sell the product mainstays of the Centers," explains Barry Cioffi, manager, Small Business Channels Marketing.
As of the end of July, Digital will have opened 36 Business Centers. Another 44 are expected to open befor the end of FY84.
All of the Business Centers are in the 50 largest top Standard Metropolitan Statistic Areas...SMSAs) in Q3 and Q4 of FY83. All of these new stores owned or leased by Digital. Most are attached to sales offices.
The sixteen new centers are in Miami, Florida; San Antonio, Texas; Baltimore, Maryland; Augusta, Maine; Meriden, Connecticut; Westchester, New York; Parsippany, New Jersey; Salt Lake City, Utah; Colorado Springs, Colorado; Torrance, California, and Anchorage, Alaska.