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mgmt memo
Volume
3, Number 2
June 1984
Business Computer
Group Formed
Office
And
Business Engineering Groups Realign
Digital's
Distribution License -- Working With U.S. And Host
Governments On Export Compliance
Two
Vice
Presidents Undertake New Responsibilities
Making
Digital
#1 In Customer Satisfaction
VDT
Legislation
In The United States by Bruce Holbein,
Government
Relations Manager
VMS
and
UNIX Designed For Different Markets
Digital
Rises
To 84th Postion In Fortune 100 List
Digital Growing
Strong In Systems,
After Mid-Life Crisis, Says Forbes
To accelerate its expansion in the small
business computer market, Digital has brought a number of its
business-related marketing efforts together in a single group.
The new Business Computer Group Business
includes the resources of Commercial OEM, Small Busienss (which
was part of Business and Office Systems Marketing), the Digital
Business Centers and the retail marketing operation of the Small
Systems group. It is headed by Ward MacKenzie, vice president, who
also continues to head the OEM Group.
"Digital is a
major force in delivering computing power to small business
through such channels as retailers, OEMs, Digital Busienss
Centers and Authorized Digital DEalers," says WArd. "By bringing
these efforts together in one organization, we are aiming for
more efficient penetraion of this market through better
coordination of strategies, product offerings, marketing support
and customer services. Also, to meet the needs of small
businesses, marketing, sales and service need to work together
more closely than in other markets. The Business Computer Group
will bring a new level of management consistency from marketing
to the field operations which deliver our products and services
to the customer."
John O'Keefe,
formeerly manager, Small Business Group, has been anmed
marketing manager, and Jim Willis, formerly manager, COEM, is
channels manager of the enw group.
With reetail
marketing moving to this new organization, marketing of personal
computers to end users will be done by other groups. There will
no longer be a Small Systems Group. Joel Schwartz, vice
president, who formerly headed that group, is a member of the
transition team and will assume a new corporate position at the
beginning of the fiscal year.
Digital's office and business engineering
efforts have been more effectively meet the needs of targeted
customer bases.
Bob Daley is the manager of BOS Engineering,
reporting to Bill (B.J.) Johnson and Bob Hughes. He is responsible
for Unified Office
Systems/Word Processing, which reports to Bob
Dockser; Distributed Information Systems, for which Fred Howell is
the acting manager; the Controller, Bob Cohen, and Personnel
manager, Ken Kimball. The DECmate Program Office, which is managed
by Don Young, now also reports to Bob Daley.
"Bob is responsible for ensuring that BOSE
systems strategies and products are developed," explains Jack
Smith. He will also provide the Engineering linkage with BOSE
Marketing, which Bob Hughes manages.
In the small business area, three engineering
groups now report to Ward MacKenzie. They are User Engineering,
managed by Peter Conklin; COEM Software Engineering, managed by
Gerry Hornik, and Business Systems Engineering, which Ollie Stone
manages. (See the previous article about the new Business Computer
Group.)
For the last few months, Digital has been
exporting its products from the U.S. under a special distribution
license. While there hae been no significant delays in shipments
to customers, export issues are a matter of continuing importance.
Through an industry-wide coalition, Didital is working closely
with the government to resolve the complex questions that are
involved.
Basically, the Export Administration Act, under
which U.S. firms are enabled to ship their goods to foreign
destinations, expired several months ago. Since then, companies
have been shipping under congressinoal extensions of the old act
and, currently, under presidential emergency powers, while the
U.S. Congress is debating the contents of the new law. At issue is
how to prevent commercail high technology products that might ahve
a dual military use from getting into Estern Bloc countries, while
at eht same time maintaining the competitive viability of U.S.
technoogy exporters in the worldwide marketplace.
While new legislation was being debated, the
two-year distibution license issued to Ditial expired. So for the
interim period, the Commerce Department, which administers the
law, has issued the company temporary licenses.
Several recent,
highly ppublicized incidents of Soviet attempts to obtain U.S.
computer equipment have involved Digital products. Apparently,
the quality, functinoality and high reliability of VAX
computers, in particular, have made them prime targets. Digital
has been working with the U.S. government and other governments
to put in place programs to identify and stop illegal movement
of its products to the Eastern Bloc.
Digital's
temporary licenses have included some special requirements. The
company has been asked to provide a Certificate of End Use for
all shipments of VAX systems and VAX-unique peripherals outside
the U.S. For purposes of this certification, an OEM is
considered an "end-user."
Cliff Clarke has been asked by Win Hindle and
Jack Shields to head a task force to help coordinate and manage
company resources while such a special kind of distribution
license is in effect. "We're fully cooperating with the government
— and doing so in a way that minimizes any impact on our
customers," says Cliff. "We gather information about how customers
intend to use the equipment from our sales people, who are
normally responsible for understanding their customers' needs.
Information is collected and consolidated by order processing
people in Geneva (for Europe) and in Nagog (for G.I.A.), and then
transmitted to Digital people in Washington. The information is
then submitted to the Department of Commerce for review. Review by
Commerce takes about ten working days, which does not affect our
concurrent order processing and delivery cycle."
Cliff emphasizes that as the second largest
computer company in the world, Digital will inevitably become
involved in more such issues. "We have to learn to be very
flexible in anticipating and living with the inevitable changes in
policy that nations go through as they address their employment,
defense and economic issues, as they implement social programs
that are important to them, and as they try to balance the
conflicting demands of various constituencies. We operate in a
global economy.- Cooperating with various governments on issues
such as this is just a part of doing business ."
Ed Kramer and Bill Long have undertaken new
roles within the corporation. Bill, who has been vice president of
the Technical Group, will become responsible for several special
corporate-level assignments. Ed, who has been vice president of
Corporate Marketing, will take charge of the Technical Group. Both
individuals will continue to report to Ken Olsen.
Ed, who has been with the company since 1967,
brings extensive sales and marketing expertise to the Technical
Group, which consists of Education Systems, Medical Systems and
Laboratory Products Groups. He will retain responsibility for
Artificial Intelligence Marketing, and take on responsibility for
DECUS and the Marlboro, Mass., site. On a temporary basis, the
Corporate Communications function (A & SP) will continue to
report to Ed, and the Strategic Planning and Marketing Finance
functions will report to Win Hindle.
Bill, who has been with Digital for 21 years,
will be responsible for developing a process to better understand
the management issues facing Digital. He will also become involved
in a special DECtalk application for the blind, and in the
development of executive-level applications for personal
computers.
In his new position as Corporate Quality
Manager, Frank McCabe is developing a process that will weave
quality more thoroughly into the fabric of the company.
He and his staff are formulating a DEC-specific
process for quality that incorporates the best learnings from
people like Deming, Crosby, and Juran, as well as our own internal
leaders. "We are building on the unique strengths and perceptions
of Digital people and products that are not available in less
innovative environments. The focus of our quality process is
customer satisfaction," explains Frank.
"At Digital, we are now committed to be number
one in the industry in customer satisfaction. Meeting this most
most challenging goal requires the highest quality products,
systems and services on a sustained basis, and the most responsive
processes and people in day-to-day interaction with our
customers," emphasizes Frank. "It isn't enough to just handle our
internally-focused quality. Our plans, goals and daily actions
really must add up to customer satisfaction... the customer will
decide.
"When we
clearly become number one is customer satisfaction, we calculate
reward to the company is 20% of revenue. Half of this will come
from preventing defects. The other half can will come from value
our customers will place on our products and services, once we
have a firm reputation for being number one in customer
satisfactin.
"We can only achieve this ambitious goal if
every employee understands his or her part in the quest. This will
take tremendous coordination, collaboration and communication.
It's an ambitious process of change. And it is essential to
Digital's long-term success.
"We
have historically valued our products. Now we need to put the same
focus and rewards for excellence on our processes and systems,"
explains Frank.
In February, Digital raised $150 million by
issuing five year 11-3/4% notes in the Eurodollar capital markets.
An additional $200 million was raised in April in the U.S. capital
markets through the issuance of $100 million of ten year 12-5/8%
notes and $100 million of 30 year 13% debentures.
Much of the cash available to the company at
the beginning of FY84 was used to finance asset growth during the
year. The proceeds from the recent financings were used to
replenish those cash balances.
Legislation to regulate the design,
installation and use of video display terminals (VDTs) is now
pending in over a dozen states. Moreover, a Congressional
Subcommittee is holding a series of oversight hearings into health
and safety issues involving VDTs.
With respect to health and safety, independent
scientific studies conclude that there are no legitimate health
and safety issues related to use of a VDT terminal: "There
are no
legitimate health and safety issues related to use of a VDT
terminal: "There is no reason for any person, male or female,
young or old, pregnant or not, to be concerned about
radiological health effects from VDTs." Investigation of
Radiation Emissions from Video Display Terminals, Ministry
of National Health and Welfare (CAnada), 1983, p. 27.
Moreover, the comfort of the VDT operator does
not lend itself to legislation. It requires knowledge on the part
of the operator and the manager about adapting the workplace to
individual needs (lighting, glare, adjustable height levels, tilt
adjustments, supportive seating). Office equipment and furniture
companies are addressing these issues and are marketing ergonomic
furniture. Indeed, government regulation would slow this rapid
process of change and adaptation.
Third, businesses perform an endless variety of
so-called "VDT work." Within the three broad categories of VDT
use, (1) data entry, (2) data inquiry and (3) interactive
communication, there are thousands of unique applications. It is
impossible to regulate the functions of one type of terminal work
without it interfering with the productive work of another type of
office procedure.
Nevertheless, labor organizations continue to
press vigorously for the enactment of legislation establishing
mandatory VDT work rules, in the hope tht if they can persuade one
state legislature to enact any bill which singles out VDTs, they
will have gained legitimacy to press on in many states and at the
federal level.
In Maine, the Board of Occupational Safety
& Health last month voted not to issue rules to regulate VDT
work among state employees. The Board was persuaded by the
information presented to it by industry that there were no
legitimate health and safety issues involved in VDT use.
At the same time, a coalition of manufacturers
and users in Massachusetts bottled up VDT legislation in a study
bill for the third year in a row. But with each succeeding year,
supporters of this legislation have obtained more co-sponsors and
have raised the profile of the issue.
Manufacturers and users of VDTs have come to
understand that in addition to opposing VDT legislation, they must
also communicate to public officials and to operators, through
public information campaigns, about VDT safety, proper
installation and correct use. This information is readily
available, but it has not always been adequately communicated.
In response to this need, CBEMA and the
Connecticut Business & Industry Association (CBIA) have
recently persuaded Connecticut legislators that rather than enact
VDT legislation, they should accept an industry-sponsored public
information campaign.
Digital has been very active in opposing VDT
legislation. At the same time, the company has been leading
industry efforts to develop and communicate accurate and useful
manuals for operators and managers about VDT design, installation
and use.
Confusion occasionally occurs about Digital’s
position on VMS and UNIX, two major operating systems for
minicomputers. As a result, MGMT MEMO talked with Bill Heffner,
manager of Systems Software. Bill spoke about the subject at the
February State of the Company Meeting, which was featured in the
last MGMT MEMO.
"We are talking about two very different
markets when we think about VAX/VMS and UNIX. VMS is Digital's
proprietary operating system, which means it only runs on the VAX.
UNIX is the operating system, which was developed by AT&T, and
is being touted as the industry standard operating system.
Industry standard simply means that it can be used on many
different minicomputers.
"At Digital, we sell both VMS as well as our
versions of UNIX (ULTRIX-32 for the VAX and ULTRIX-32M for
MicroVAX), which support customers already using UNIX. We also
have VNX, which is based on VMS and provides UNIX-like
capabilities in a VMS-operated setting."
Bill explains that "90% of our sales are based
on VMS, but we recognize the importance of the industry-standard
market.
"In reality, VMS offers more capabilities than
UNIX. It has integrated networking, a full set of languages and
tools, as well as information management capability. It supports
VAX clusters and brings with it the full benefits of the full VAX
architecture.
"We sell VMS unless a customer specifically
wants UNIX or one of our UNIX- like products. The latter two are
often preferred in the research or academic environments,"
concludes Bill.
A new simultaneous annoucement program gives
the sales force the materials to run a seminar to present major
new products to customers as these products are announced to the
outside press. It means sales people will be better able to answer
customer questions in a timely manner, and they will be able to
discuss overall strategies and support products that might be
slighted in the press coverage of the announcement.
"The trade press reports what they think is
important. The simultaneous announcement program enables us to get
the full story to a vast number of our customers. Since the
program encourages the greatest possible involvement of local
sales organizations, it makes it possible for the sales force to
respond to customer requests for product information, and for them
to quickly qualify customers," says Dick Mollin, Corporate Sales
Office.
The simultaneous announcement program includes
training identified sales and software people about the products,
sending support videotapes, slide presentations, and written
reference and promotional material to identified "announcement"
locations around the world.
This program was started with the VAX 11/785,
videotex and relational data base.announcements in early April.
The major press conference took place at the World Trade Center in
New York City. At the same time, key customers in 27 U.S.
locations and two Canadian locations learned about the products at
the special announcement sessions. Earlier that day, sales
representatives were given the opportunity to view the same
program.
"We were very pleased with the results and
learned a lot of ways to improve the process. We reached about
3,000 customers with a consistent message and quickly qualified
prospects for the new products," says Dick. He notes that this
announcement program will be expanded to include more worldwide
sites, but that it will only be implemented for major product
releases.
"We don't want to overuse this program because
we want to ensure its positive effect on our sales force and
customers," explains Dick. The next simultaneous announcement
program is expected to reach some 15,000 customers at more than
100 locations.
Digital increased its standing to 84 from 95 in
Fortune magazine’s annual listing of the nation's largest
corporations. This is the tenth consecutive year that Digital has
improved its position in the list.
In its May 21 issue, Forbes magazine concludes
that Digital's recent troubles were "growing pains." "In this new
era the real product is the system, not any one of the parts,"
notes the article, entitled "Mid-life Crisis." And systems -- a
wide array of computer products and easy and efficient ways to
link them together — are Digital's strength.
Referring to the office market, which
reportedly is doubling every year and could reach $5 billion in
three years, Forbes says, "There is high-powered
competition: IBM, Wang, and smart smaller companies like Data
General and a lot of would-bes. But DEC does have advantages. IBM
has numerous product lines that still don't link well -- it has been slow at this."