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Volume
3, Number 5
October 1984
Customer Satisfaction As
Digital’s Number One Priority
Government Validates
Digital's Ada Compiler
Investor Interest Expands
Convertible Bond Issue
CAEM Reorganizes To Focus On
Engineering & Manufacturing
GIA Manufacturing And
Engineering Formed
New Industry Marketing Group
For Telecommunications
Dick Farrahar Named Engineering
And Manufacturing Personnel Manager
John Mccredie Named Director Of
External Research Programs
What Happened To The R&E Tax
Credit? By Bruce Holbein, Manager, Government Relations
Northeast Area regional and district managers
attended a recent crossÂ-functional meeting, formally launching a
Customer Satisfaction Program.
"About 15 years ago, when we put together a
corporate philosophy statement," Win Hindle, vice president,
Corporate Operations, told the audience, "We stated that our
primary goal is not growth, but to be a quality organization and
do a quality job. As we achieve quality, growth and financial
perforamce come as resutls. Today, I think I'd change only one
thing from the words we wrote 15 years ago: On the top line, I
would write, 'Quality equals customer satisfactin.' That remains
our philosophy.
"We are elevating customer satisfaction to the
number one priority of the company. The customer set that we are
targeting for the future demands an increasing level of service
and satisfaction. That's brought about by the increasing
competition and by the realtive inexperience of these customers,
in such areas as the commercial, office and small business
markets.
"our challenge is to meet the needs and
expectations of those customers, and to provide the kind of
satisfaction that will allow us the same degree of penetraion and
quality that we have achieved in technical markets.
"Surveys have shown that in specific areas,
such as operating systems and field service, Digital ranks as the
best int he industry. However, in terms of overall satisfaction
with all aspects of customer relationships, we rank behind
Hewlett-Packard and IBM. In two or three years, we want Digital to
be recognized as providing a higher degree of customer
satisfaction thatn anybody else int he indsutry. In situations
where a tradoff is necessary betwen profit/growth and
quality/customer satisfactino, quality and customer satisfactino
must be our top priority.
"Waulity/reliability is the battlefield of
today's economic war," added Frank McCabe, Corporate Quality
manager. "The challenges are just as much cultural as they are
technical. There is only one person who decides how successful we
are, and that's the customer. Focusing on the customer ensures we
ahve the right strategies and programs and processes across the
company. Customer satisfactin is by far the fastest way to grow
profit margins today.
"Competitively, carrying the perception of
being number one in customer satisfaction is a tremendous
advantage. Once you have clearly established that reputation, it
can last for many years.
"We have the reputation of well-engineered
products. If we can translate that into a perception of customer
satisfaction leadership, by focusing on excellence in our
processes and systems, we could then ratchet ourselves into a
premium price situation.
"The Corporate Quality organization is
committed to directing an intense focus across the company to
ensure that all the strategies, programs, actions, measuements and
results, supported by the right education and structure, involve
all 85,000 employees in the goal of being number one in the
industry in Customer Satisfaction.
"Customer satisfaction has its own meaning for
every individual function. In Manufacturing, the traditional focus
is on the metrics within the plant. But as each plant throughout
the company focuses on its own narrow metrics, the chances of them
ultimately focusing on the larger customer satisfaction metric are
very low. In the future, the measurement criteria in
ManufacÂturing will focus in on areas like warranty costs. Instead
of ’assemble, test, fix, change,' the emphasis has to be on
getting it right the first time. In terms of the quality of our
vendors, we are moving toward expecting and demanding parts per
million instead of inspecting parts per hundred.
"In Engineering, the main interest has
historically been in the performance of the products. Now, Time to
Market, Systemness of Products and Systems Reliability are even
bigger issues. In the past, the approach was to design,
breadboard, test, change. Now Engineering is moving to simulation:
build and be right.
"Besides having the most direct day-to-day
impact on customer satisfaction, the Field can also help in the
area of order administration, customer interaction and feedback of
data from customers. The number of changed orders per system must
shrink. When an order changes multiple times during its cycle, not
only does it have a significant impact on the customer, but it
also has a large impact on us. We may end up with a system sitting
on the shipping dock, having to be reconfigured. That represents a
dissatisfied customer and, also, very high cost to us.
"Encouraging progess is being made in many
areas of the company, as indiviÂdual managers take hold of the
processes and drive for quantum improvements in performance — as
evidenced by recent gains in the VAX problem installÂation level
and order administration cycle times."
Digital's VAX system Ada* compiler has been
fully validated by the U.S. government. It will now undergo
testing at selected sites throughout the country before public
release.
The Ada programming language, mandated by the
U.S. Department of Defense (DoD) for mission critical
applications, suits a variety of computing needs, including
systems, computational and general programming, and real time.
"Two or three other companies have been
validated, but nobody with a comÂpiler that can generate code as
efficient as ours. This will be the indusÂtry leader," boasts Bill
Heffner, manager, Base Systems Software EngineerÂing. He explains
that a compiler is software that takes instructions written in a
programming language and converts them into machine instrucÂtions
.
IBM's compiler has not yet been validated. Data
General's has been valiÂdated, as have been those of a few
independent software houses. "Our version is much more complete,"
says Bill. "A typical program will run far faster on a VAX system
than on anyone else's hardware. No one has validated a compiler of
this magnitude."
Official validation of the Ada compiler for VAX
systems culminates Digital's efforts in a project that began in
the late 1970s. Internally funded, the development of this
compiler represents Digital's commitment to and belief in the
future of the language and in the importance of the government
market.
Why another language?
"The government was spending an inordinate
amount of money trying to get their applications to run on
different machines and, as technology changed, to move up to new
machines," Bill explains. "First they said, 'Let's move up to a
higher level language as opposed to machine language.' So they
moved up to languages like FORTRAN and COBOL. Then they found that
every vendor had a different dialect of those languages. So the
government decided to put together a massive effort to define a
language that could serve as a standard throughout the world for
anybody who sells computers to the government."
In 1973, DoD software costs were $3.5 billion
and rising, and DoD was using more than 450 languages on more than
200 different computer models. To put an end to this "Tower of
Babel," they formed a High Order Language Working Group (HOLWG)
to:
o formulate requirements from each service
area,
o evaluate existing languages, and
o make recommendations for a solution.
HOLWG's goal was to develop a single language
for software for embedded (realtime) applications. Ada was the
result of the program they initiated.
Now, according to DoD Directive 5000.13, the
Ada language is required for all mission critical systems entering
advanced development in January 1984. It is also required for all
programs entering any engineering development in July 1984. And
DoD also encourages Ada use in other applications to help reduce
overall development and support costs.
"Everybody who gets a contract to produce any
kind of software for the government will be expected to write
their applications in Ada," explains Bill. "In other words, this
is a product that Digital has to have."
Validation
To prevent the proliferation of multiple
versions of the language (which would undermine the goal of
uniformity that led to its development), the government has
instituted a rigorous validation procedure. " An Ada compiler has
to pass about 2000 government-mandated benchmark tests to make
sure the software implements everything that it is supposed to and
to check to make sure you didn't implement anything extra," says
Bill. "First you have to run these tests on your compiler yourself
and mail the results to the government for certification. If they
like what they see, they send a validation team to your site to
run those same tests again. Then and only then do they officially
"validate" your Ada compiler.
"Validation of our Ada compiler was an
important landmark," says Bill. "Much of our government-related
business depends on this. And our compiler is, by far, the best
around. We have a good opportunity to be industry leaders in this
field."
The government wants to make sure that there is
only one version of the language — that
compilers developed for different computer hardware all support
the same language, not just a subset of it, and that they do not
add features to the language. The goal is total consistency.
"In the case of FORTRAN, for instance,
companies compete to 'enrich' the language, adding to it and
improving it," notes Bill. "With Ada, that approach is impossible.
Here vendors will compete on the basis of the compiler that
translates the language for their machine."
* Ada is a registered trademark of the U.S.
Government (Ada Joint Program Office) .
Digital will hold a sales exposition called
"DECWORLD '85" for Digital's existing customers and sales
prospects. "The trade fair will demonstrate Digital's computing
style and capabilities and will showcase new products," says Ed
Kramer, vice president, Technical Marketing. Ed has named Mark
Roberts, who is Operations manager for Western and Central Area,
to be Senior Marketing manager for the event. Mark and Ed will
co-chair the DECWORLD '85 Strategy Committee.
DECWORLD '85 will be held December 5-11 at the
Hynes Auditorium in Boston. An Employee Day will be scheduled
sometime over the intervening weekend.
Independent Survey Rates Digital Field Service #1 In
Industry
Digital's Field Service organization is
considered the best in the industry by customers, according to the
results of a recent independent customer survey.
International Data Corporation (IDC), an
independent industry survey organiÂzation, asked customers to rate
their current service suppliers on a scale of one to five (five
being the best) in several areas. Among the 10 major vendors
included, Digital was rated as having the best overall field
service organi zation.
Digital also had the best overall rating in the
area of "critical service factors," coming out on top in nine of
12 individual categories: hardware repair; rapid service response;
preventive maintenance program; service of field engineer; service
of field management; quality of service; telephone diagnostic
capability; emergency repair during contract hours; and emergency
repair during non-contract hours.
The results indicate an improved position in
customer satisfaction. A year ago, Digital's Field Service was
consistently rated third in independent surveys, behind
Hewlett-Packard and IBM.
"Our improvement in the area of customer
satisfaction, as reflected by this survey, is extremely
encouraging," says Dick Poulsen, vice president, Field Service.
"It shows our ability to continually assess our performance, set
goals for ourselves and achieve those goals. But there is room for
still more improvement towards the goal of having the most
satisfied customers in the industry, hands down."
Digital recently raised $400 million by selling
convertible subordinated debentures. The company had initially
planned a bond issue of $300 million, but investor interest
prompted Digital to expand its offfering to $400 million.
The double-A
rated bonds at par ($1000 each) essentially sold out the same
day they went on sale. The bonds are due Sept. 1, 2009,
carry an interest and are convertible into common stock at $114 a
share. That 21% conversion premium over the Sept. 6 closing price.
Net proceeds of the sale will be added to
working capital, and together with internally generated funds will
be used to finance capital expenditures and additions to
inventories and accounts receivable, as well as other general
corporate purposes.
Software is the part of the computing system
that the customer uses every day. And our software strategy has to
ensure that we give customers the performance, compatibility and
ease of use they need.
On the PDP-11, we didn’t have an overriding
strategy. As a result, we had multiple offerings which included
the RSX, RSTS, and RT operating systems.
When the time came to do the VAX family, we
decided on a three part program. First, we would have a single
hardware architecture so we could build a hardware family, giving
customers choices — like the 780 and the 750 — to meet their needs
in terms of cost, capacity and performance.
Second, we would have one and only one
operating system, namely VMS; and based on that operating system,
we would develop one and only one version of each language
compiler. So today there is only one FORTRAN compiler that runs on
every one of our family members. And there is only one VMS
operatÂing system for all of our family members.
This design discipline gives us something that
nobody else in the industry has — including IBM. The user can move
an application from the bottom of our VAX line to the top and be
assured that it will not change. So, the customer who wants to
grow can do so in two different ways — by buying a larger VAX
system that can run the same software, or by buying more small
VAXs and distributing computing power around the organization.
The third part of the strategy is the
interconnect. We will tie our comÂputers together with one
protocol, namely DECnet, so all our computing systems can talk
together. That means companies that distribute their computing
among many machines can share data among those machines, when
appropriate; and computers can serve as a means for company-wide
communicaÂtions, through applications like electronic mail.
Since developing our original strategy, we have
made a few minor changes. When it was time to put the VAX
architecture on a chip, we found it wouldn't fit. Therefore, we
had to define a subset architecture, which we call "MicroVAX." So,
we really have two VAX hardware architectures; but to the user
there is no difference. Essentially, an application in VMS will
still run on a Micro VAX system, although part of it is emulated
in the software (MicroVMS) as opposed to being executed in the
hardware.
Also we have gone more into heterogeneous
networks than we thought we would. Originally, we thought
everything would be 32-bit. We have now concluded that we must not
only include our 16-bit family and 36-bit family, but even other
computers, such as IBM. So our DECnet architecture has expanded to
be heterogeneous.
Another major change is that we are now selling
ULTRIX, a version of UNIX*, as a standard operating system for VAX
computers. There are people who would like to learn one and only
one operating system -- UNIX — no matter which vendor's hardware
they buy. To meet their needs, we are taking UNIX and repackaging
it to run on our hardware. So we now have two operating systems
for our VAX family.
*UNIX is a trademark of AT&T Bell
Laboratories, Inc.
Computer-Aided Engineering & Manufacturing
(CAEM) is reorganizing to focus its activities around two main
strategic business groups: the engineering and manufacturing
areas. Bill Steul has been named manager of the EngineerÂing
Systems Group (consisting of electronics, mechanical design and
earth resources engineering), and Jim Dale is manager of the
Manufacturing AppliÂcations Market Group (consisting of
manufacturing management and factory automation).
A new CAEM group marketing function will
concern itself with integrating the efforts and messages of those
two application groups, and developing stratÂegies and programs to
promote applications that transcend the engineering/-
manufacturing boundary. Technical Marketing reports to Fred Smith,
and Dave Copeland manages CAEM*s technical development activities.
This development includes Computer-Integrated Manufacturing (CIM)
and a variety of other efforts underway elsewhere in the company
and through sponsored university programs. Dave will also manage
the program for joint development activiÂties between CAEM and
Digital's Manufacturing Information Systems. The CIM engineering
group reports to Steve Gutz who reports to Dave.
"A little over a year ago we brought the old
Engineering Systems Group (ESG) and Manufacturing, Distribution
& Control (MDC) together," explains Peter Smith, vice
president, CAEM. "We did this to develop a consistent marketing
theme and to develop a computer integrated manufacturing (CIM)
strategy. We wanted to focus on the applications that our
customers need when they move their products from engineering
design into manufacturing.
"Now we want to put renewed business and
applications focus on engineering and manufacturing. In other
words, we want the best of both worlds -- to work together as a
team and yet to provide enough individual focus on engineering and
manufacturing to make sure we have the applications our customers
need.
"We spend a lot of time working on outside
partners so they can bring their applicatinos together with our
systems. We also spend a lot of time with Central Engineering,
working with them on future product direction. Our goal is to
provide our customers with the best centrally engineered computer
products for their engineering and manufacturing requirements.
CAEM's direct development activity focuses on products which
integrat the engineering and manufacturing applications developed
by our cooperative marketing partners or Digital OEMs. For
instance, a customer may be using a design applicatin from one
third party softwaare house and an analysis application from
another. Our strategy is to use VAX Information Architecture
products to develop an engineering data manager for all the data
produced by thse separate but closely related applciatins. In this
way, we combine the strengths of our corporate products with the
application expertise of our coooperative marketing partners and
Digital OEMs.
"We have about 45 cooperative marketing
partners providing applications, and a number of Digital's OEMs
are active in this area as well. We want to support them rather
than compete with them in the area of applications. So our
development efforts focus on providing the glue — the integration
tools that customers need to tie their whole automated engineering
and manufacturÂing efforts together," concludes Peter.
Storage Systems has reorganized part of the
group to more effectively manage process-intensive parts of the
business, to integrate the manufacturing organizations, and to
insure the improved integration of strategies and plans.
A Process Technology group, headed by Charlotte
Frederick, has been estabÂlished to manage the development and
manufacturing of process-intensive key components of storage
technology that are shared by multiple products. This group will
initially include heads engineering and manufacturing, and plated
media development and manufacturing. At a later date, it will also
include thin film head technology.
Greg Plakias will be manager of an integrated
manufacturing operations group designed to create a worldwide
manufacturing strategy and plan, achieve customer satisfaction,
and interface with Manufacturing. The group consists of all
product manufacturing units and their support functions
(materials, quality, and manufacturing operating finance).
Storage Systems includes manufacturing
facilities in Shrewsbury Springs, Enfield, Springfield, Tempe,
Kaufbueren, Singapore and The group's Engineering sites are in
Shrewsbury, Colorado Springs (the Reseach and Development Center)
.
A new committeehas been formed to insure the
integration of plans and strategies within Storage Systems. Called
the Storage management Committee, it will focus on storage systems
technology and worldwide product/business plans.
"I believe all of these changes will enable us
to more effectively meet our manufacturing and finance objectives,
and integrate our approach to the process technologies key to our
future. The Storage management Committee strengthens the
international dimension of our organization," explains Grant
Saviers, vice president of Storage Systems.
Due to rapid
growth of business int he General International Area (GIA),
Digital is integrating its Manufacturing and Engineering
operations to better suppoprt that increasingly important market
area. Under Dick Yen, vice president, the new organizatino, GIA
Manufacturing and Engineering, includes manufacturing operations
in Kanata, Puerto Rico and the Far Est and the GIA Business
Office. GIA Engineering alignment is being reviewed an will be
announced at a later date.
Digital has formed a Telecommunications
Industry Marketing Group to focus efforts on strategic worldwide
telecommunications companies, equipment manufacturers, and newe
network services companies. Such companies include European PTTs;
U.S. telephone operating companies; telecommunications
manufacturers like Northern Telecom and Rolm; network services
companies like GTE Telenet, MCI and Western Union; and larger
telecommunication conglomerates such as GTE, ITT, Siemens and
AT&T. Digital has long been a elader in supplying products and
services to this industry.
This new group has responsibility for defining
product and application requirements, and for marketing and
promoting all appropriate Diigital products and services to this
industry. It also has the task of analyzing and proposing new
marketing opportunities for Digital in the fast-growing
telecommunications services market.
Until a manager is named, Bob Schmitt, manager,
Communications Marketing, will serve as acting manager of
Telecommunications Industry marketing. The new group reports to
Bob Hughes, vice president, Busienss and Office Systems (BOS)
Marketing.
Bill Helm, Treasurer, has been given additinoal
responsibilites as manager of Field Operations Finance and
Administratin. He will report to both Al Bertocchi, vice
president, Finance and Administration, and Jack Shields, vice
president, Sales and SErvice. In his new position, Bill will have
worldwide F&A responsibility.
Ilene Jacobs, Assistant Treasurer, has been
appointed Group Treasury manager, replacing Bill Helm in that
capacity. She will continue to be Assistant Treasurer and continue
to report to Bill.
Ivan Pollack has been named to the position of
Marketing Finance and Administration manager, reporting to both Al
Bertocchi and Win Hindle, vice president, Corporate Operations. He
replaces Bill Steul, who has accepted a position as group manager
of Engineering Systems within Computer-Aided Engineering and
Manufacturing (see realted article). Ivan is currently Field
Operations Controller. He will assume his new duties in
mid-October.
Dick Farrahar has been named Personnel manager,
Engineering and ManufacturÂing, responsible for all Personnel
activities in these organizations. He reports to Jack Smith, vice
president, Engineering and Manufacturing, and John Sims, vice
president, Personnel.
Dick has been with Digital since 1970,
including six years in the Field and six in Manufacturing. For the
past two years, Dick has been Personnel manager for Marketing and
Finance/Administration, and has served as a member of the
Personnel Management Committee.
John McCredie has been named director of
External Research Programs, reÂporting to Sam Fuller, vice
president, Corporate Research and Architecture. In this position,
John will be responsible for identiying critical research areas
within Digital and matching them with appropriate external
research institutions. Resulting contracts should benefit both the
corporation and the educational community. He will also serve as a
member of the Education Investment Review Board and staff member
for Joel Schwartz, vice president, Educational Marketing.
The high technology industry's first appearance
in high stakes tax lobbying ended on a disappointing note on June
18th when Congressional conferees failed to extend the 1985
expiration date of the R& E tax credit.
R& E tax credit was born as part of the
political war that gave rise to the great tax cut of 1981. This
year, however, the R&E credit wason its own at $2.1 billion,
it was the largest revenue loser in a revenue bill.
The goal of the high technology indstury was
either, at best, to make the credit permanent or, at worst, to hae
its expiration date extended past 1985. Neitjher goal was
attained, and the credit is still schedule to expire at the end of
calendar 1985.
What can the high technology industry do to
extend the credit next year?
We need to establish a broad base of support
within Congress for the credit. Only 150 of the 435 members of the
House of Representatives co-sponsored the bill to make the credit
permanent. Many of these co-sponsors were junior members of the
two parties, and 40 of them resulted from Digital's direct
involvement. Republican leadership was neutral; the Democratic
leadership remains hostile to the credit.
The leadership of both parties allowed only a
handful of "revenue losers" to and our industry came up short
commodity brokers, life insurance companies, the securities
industry and the tobacco industry. Each of these successful gruops
had a legistlator int he tax conference who was their chapmion
with the political clout necessary to protect their issue.
In contrast, most of the high technology
companaies allowed thir trae associations to manage the effort to
extend message to Congress about the importance of the credit to
corporate R&E was diffused. If our industry wants the credi to
survive a major tax increase in 1985, many companies will have to
treat credit not as an incidental lobbying matter, but as a
priority corporate project.