Richard Seltzer's
home page Publishing home
Articles
about DEC
mgmt memo
.
Volume 4,
Number 1
__________________________________________________
February, 1985
Changes In Field
Organization
Aimed At Customer Satisfaction
Digital Sues To Bar
C. Itoh From Selling Vt220 Look-Alikes
Four VP Positions
Created In Digital Europe
Developing
One-Company Promotion Plan
Anthony Lauck
Chosen
As One Of 100 Brightest U.S. Scientists
DECweek '85 To Make
Connections With Digital Customers
Treasury Tax
Proposal And R&D Credit Update by Bruce Holbein,*
Manager, Governmetn Relations
Recent changes in the structure of Digital's
Field organization will make it easier for customers to deal with
the company while optimizing internal resources.
"Our business is becoming less hardware- and
more system-oriented. A customer purcheses a 'total system; from
Digital, but we have traditionally divided responsibility for
servicing that system among several groups," says Jack Shields,
vice president, Sales and SErvice. "This has made us unnecessarily
complex to our customers and has slowed the intrenal
decision-maknig process."
To focus on "systems," the management of
after-sale hardware and software support has been consolidated
into one organization. This group will include Field Service; the
Spares business, previously part of the Peripherals & Supplies
Group (PSG); and the Software Product Support business, previously
part of Software Services. Dick Poulsen, vice president, Field
Service, will manage this effort on behalf of the Field. Besides
making Digital easier for 9 customers to deal with,
these changes will enable Software Services and PSG to
strategically concentrate their resources.
Computer Special Systems (CSS), managed by Russ
Gullotti, will now report to Don Busiek, vice president, Software
Services. "Putting CSS and SWS-- Digital's system solution
organizations -- under one manager will enhance our ability to be
more systems-oriented," says Jack. No further organizational
changes in CSS are anticipated.
John Alexanderson, vice president, Peripherals
& Supplies Group, will continue to focus his organization on
increasing Digital's share of the system upgrade market, through
the Add-On and Upgrade Group and the Accessories and Supplies
Group. John will also work with Dick Pousen to better align the
charters of the Traditional Proucts group and the Trade-In
Refurbishment group.
"I have also asked the Sales organization to
make specific recommendations as to how to improve our selling
efforts for services and after-sale products," says Jack. "We
want our Sales organization to sell all of Digital's products and
services. This effort is planned to be underway in FY86.
"The end results of these changes will be
significant to Digital and to our customers."
Workstation
Organization Aligned
Steve Teicher has been made manager of
Digital's workstation effort and Ron Ham the manager of
Applications and Base Product Marketing for workstations. In
making the announcement, Jeff Kalb, vice president, Low End
Systems and Technology, noted, "We will now have one workstation
gruop and look to developa common architecture, common strategy
and single workstation message for our customers. This aliignment
also confirms the position of the PRO in the workstation space,
which has been its focus for the last year. In the PRO-300 Series,
we have an extremely strong competitor to the IBM AT for
workstation-like applications."
Steve
will take responsibility for the high-end and low-end
workstation groups as well as the part of the PRO organization
that is directly involved with software and hardware. He will
also be responsible for hardware, the base operating systems
where appropriate, and advanced development, diagnostics,
graphics work and product management.
Ron will focus on hardware and software
applications and on base product marketing. He will coordinate
with the Marketing and Sales organizations to leverage all of our
efforts towards having the broadest possible offerings to our
customers within our selected marketplaces. In base product
marketing, Ron will emphasize competitive and pre/post sales
analysis, field sales, software service, and application center
support. Ron will retain responsibility for special workstation
projects.
Digital has filed suit in the
U.S. District Court of New Jersey against C. Itoh, a
manufacturer and distributor of computer-related products,
seeking an injunction against further marketing, selling and
distribution of the C. Itoh CIT-220+ video display terminal.
Digital charges that the C.
Itoh product is a direct and unauthorized copy of the distinct
external appearance of Digital's VT220 terminal product,
including its wedge-shaped video monitor and unique keyboard
layout. Additionally, Digital charges that C. Itoh copied VT220
documentation and set-up screen formats in violation of Digial's
copoyright protection.
The distinctive appearance
features were originated by Digital with introduction of its
personal computers in May 1982, and subsequently employed in the
VT220 series which was announced in November 1983. Digital
claims that the widespread exposure of the wedge monitor and the
low-profile keyboard, in association with its name, have come to
be recognized as trademarks of Digital.
A number of manufacturers do sell products
which emulate Digital's terminals. Such products deliver similar
functionality but are based on those manufacturers' uniqueness in
design.
The recent actions taken by Digital are in
keeping with the company's long-standing policy to vigorously
protect innovations resulting from its investments in research and
development, which bring unique benefits to Digital customers.
In addition to a permanent injunction against
C. Itoh which would prohibit them from further manufacturing,
sales or distribution of the CIT-220+, the suit specifically
seeks: treble damages based on the gains and profits derived by C.
Itoh from the sales of CIT-220+ products; a recall of all existing
CIT-220+ terminals and manuals from C. Itoh customers; delivery to
Digital of all CIt-220+ manuals and materials used to produce the
manuals; the disposition of any and all promotional and packaging
material bearing CIT-220+ designations; and advertising by C. Itoh
to correct false claims about the CIT-220+.
Also named in the suit were C. Itoh and Co.,
Ltd., of Japan; and C. Itoh Electronics, Inc., and CIE Terminals,
Inc., both of Irvine, Calif.
Digital's action followed an October 29
issuance of a writ against C. Itoh Electronics, Ltd., in the
United Kingdom, which resulted in C. Itoh's agreement to suspend
distribution of the CIT-220+ in that country.
Four of Europe's senior Field Operations
managers have been named vice presidents of Digital Equipment
Corp. International (Europe). They are Bruno d'Avanzo, Marketing;
Bobby Choonavala, International Sales; David Stone, Engineering
and Software & Application Services; and Don Zereski, Field Se
rvice.
In making the announcement, Pier-Carlo Falotti
noted that the appointments recognize "their contributions to the
company and the importance of the positions they hold in the
European organization."
Bruno d'Avanzo became European Marketing
manager in the fall of 1984 after serving four years as the
Country manager for Italy. Immediately prior to that he was the
Sales manager of Digital's Italian subsidiary for two years. Bruno
joined Digital in 1976 as the IPG Marketing manager for what was
then Digital Europe's South-West Region, which was composed of
Belgium, France, Italy, the Netherlands, Spain, Switzerland and
Yugoslavia. He holds a degree in electrical engineering from the
University of Padua, and was a Fulbright Scholar at the University
of Pennsylvania.
Bobby Choonavala was named International
Sales manager in 1983 after five years as European Sales manager.
He joined Digital in 1966 as a Project Engineer in Maynard, and
two years later became the first manager of the company's Dutch
subsidiary. He then served as a district manager in Europe before
serving as manager of the former South-West Region in Europe from
1973-1978. Bobby holds degrees from the University of Bombay and
Technische Hochschule, Aachen (Germany).
David Stone, who joined Digital in 1970,
became Corporate Software Engineering manager in 1972, and two
years later was named European Software Services manager. In
1983, he was named European Engineering manager, also retaining
the European Software Services job. During the last two years, he
has had several other responsibilities for European Engineering,
including the US-based International Product Office, and all
European engineering based in Valbonne (France), Reading (UK) and
Geneva (Switzerland). David holds degrees from Harvard University
and the University of Pennsylvania.
Don Zereski was named the European Field
Service manager in 1983 after serving the General International
Area as Field Service manager for nine years.
He joined Digital in 1962 and held several
positions in Engineering, Manufacturing and Field Service. Don was Corporate
Product Support manager, for Digital's worldwide mid-range systems
support, from 1968 to 1974. He also managed the Field Service Test
Equipment Manufacturing and Process Development Group and the
Field Service Repairs Operations Group. Don completed the
Worcester Polytechnic SIM (School of Industrial Managment) Program
and the Harvard University Program for Management Development.
To support Digital's efforts to become one
company with one overall message, the Corporate Communications
Group (CCG) has reorganized to ensure the company's ability to
deliver a truly integrated, company[wide promotion plan for FY86.
"The key is thoughtful planning against
explicit strategic objecties, explains Dick Berube, Corporate
Communications director. "To ensure that the company has a
promotion plan which targets Digital's major marketing objectives,
is implemented efficientlyh and yeilds the most effective results
against those objectives, we have formed a Planning and Account
Services organization within CCG whose job is to work closely with
the market, product and service groups to produce the kind of plan
Digital needs.
"Our goal is to present a plan to MSSC
(Marketing and Sales Strategy Committee) by May 1 which will
contain prioritized objectives around products, applications,
markets and channels. These will be supported by strategies,
measurement criteria, messages and costs for the major promotional
activities in which the company decides to invest. If we can
reach agreement on the 'what' and 'why', we can then begin to
understand the 'when' and 'how'. This will allow us to assign some
priorities and make well-informed tradeoffs and, therefore,
intelligent investment decisions around 'how much' for each of the
various promotional activities that will bring the most useful
results, remembering that the goal of promotion is to predispose
the marketplace and shorten the sales cycle. This approach should
also take considerable hassle out of the budgeting process, and
will allow for regular review and re-allocation, if necessary.
"Creating an effective promotional planning
process will require the participation and support of all the
strategic and base product marketing organizations, service
groups and geographies in the company. It's a tall order but, with
everyone's cooperation, it is eminently achievable," Dick says.
In a related matter, Dick reported that Ketchum
Advertising of Pittsburgh, PA, has been given the green light to
begin an advertising campaign which is designed to increase
awareness of Digital as a leading vendor of effective computing
solutions to major business problems. The campaign will use
testimonials by important, well-known companies for whom Digital
has solved tough information management problems.
"Having our customers tell the world about
Digital’s superior products, leadership technology, outstanding
service and unique abilities is much more believable and
influential than our saying the same things about ourselves," Dick
said. The first phase of the campaign, which breaks February 5,
will include such companies as General Electric, Avon, Chase
Manhattan, AMF and Bank of Boston.
Anthony Lauck, manager of Networks and
Communications Architecture and Advanced Development, has been
chosen by Science Digest as one of America's 100 Brightest
Scientists. A Digital employee since 1974, Anthony is one of 10
scientists from Massachusetts and one of 25 employed in the
computer industry selected by the magazine.
He was chosen because of his work as a major
contributor to the design and development of Digital's networking
products. Anthony is the author of several technical
communications articles, co-inventor of Local Area Transport
(LAT), and has played a leading role in the development of IEEE
standard number 802.3 for CSMA/CD local area networks. He has
also served on thp National Research Council Committee on
Computer-Computer Communications Protocols.
DECweek '85 will take to the road in February,
traveling through the MidAtlantic and Southern States (MASS) for
three months to present programs tailored to customers in each
district. The program will include market- • focused
presentations, technical and management seminars, and product
demonstrations at cities within the districts. DECweek '85 is
designed to help the MASS sales force finalize sales pending in Q3
and Q4 and to develop new business opportunities.
According to John Reilly, MASS Area Marketing
Communications manager, DECweek '85 will extend the momentum of
the Boston DECWORLD '85 show by focusing on Digital's styles of
computing and computing solutions. With a theme of "Making
Connections", it will showcase Digital's ability to connect
products together with a consistent architecture, and to inform
customers about the products and solutions that meet their
applications needs.
If your cost center
has terminals, typewriters or furniture it no longer uses, contact
Digital Idle Asset Listing (DIAL) to redirect them to other groups
within the company that need them. Also contact DIAL if you need
equipment that someone else in the company might have but not
need. DIAL features on-line updating and inquiry capabilities
using a VAX-11/780. To receive a DIAL User Manual and access
information, contact: Idle Material Management, Cathy Kennedy,
mailstop IMM/IMM, RCS code IMMX, DTN 261-3410.
Doug Hammond has been appointed
Corporate Administrative manager, reporting to John Sims, vice
president, Corporate Personnel, in an effort to provide standard
administrative services in a logical and efficient manner. Doug,
who joined Digital in 1983 as manager of Aviation Services, will
oversee the Real Estate and Construction Group, Corporate Space
Planning, Travel, Aviation Services, Domestic Relocation,
Corporate Facilities and Administrative Purchasing. He is a
graduate from Otterbein College.
Paul
McGaunn has joined the Corporate Quality Group as the
Manufacturing interface for Customer Satisfactin, reporting to
Frank McCabe, manager, corporate Quality. He will work on a task
force which is charged with establishing Digital as number one int
he industry in customer satisfaction. Paul, who has been with
Digital for 21 years, has spent the past 11 years in Westfield. He
most recently served as the plant manager. Paul holds a B.S. from
Northeastern University.
Joe Zercoe has joined the Corporate
Sales Group, reporting to Jerry Paxton, manager, Corporate Sales.
He will be responsible for the strategic planning activities of
the Sales organization. Joe, who joined Digital in 1969, has been
Sales manager for both the New York and new Jersey districts,
Sales Program manager for the Technical Group, and most recently,
U.S. Distribution Sales manager. He is a graduate of Fairleigh
Dickinson Universtiy.
Russ Gullotti has been named manager of
Comptuer Special Systems (CSS), reporting to Don Busiek, vice
president of Software SErvices and CSS. He joine Digital in 1977
as CSS's Nashua Manufacturing manager, and in 1979 became the CSS
Worldwide Manufacturing manager. He then joined Computer Systems
Manufacturing for two years as manager of the Salem Plant. He most
recently served as the Business Operations manager for CSS. Russ
holds degrees from Boston University and the University of new
Hampshire.
The Department of Treasury's
tax proposals attempt to implement two far-reaching concepts:
broadening the base and lowering the rates of income tax by
eliminating a wide range of special Code deductions, credits and
exclusions. The tax proposal also indexes the tax system to
inflation to help assure that only real income and gains, rather
than inflation-induced amounts, are subjec to tax.
Because electronics companies currently have
among the highest effective tax rates of all manufacturing
industries, these reforms, if carefully drafted, can offer an
opportunity for an improved tax environment.
The Treasury proposal in its present form
eliminates, however, some incentive provisions important to
electronics companies, primarily the investment tax credit. ACRS,
the system of accelerated depreciation which was enacted in 1981,
would also be replaced with a less favorable approach to
depreciation .
In return for this base broadening, the
corporate tax rate would be reduced to 33 percent. For many
electronics companies, the benefits of this rate reduction may
exceed the loss of ACRS and the investment credit. Moreover, the
Treasury proposals retain the incentive provisions important to
most electronics companies: the R&D tax credit and export tax
incentives.
But the proposals also make changes in the U.S.
taxation of foreign operations which are not beneficial. The
special tax incentives applicable to manufacturing operations in
Puerto Rico could be reduced and eventually eliminated. In a
similar manner, the proposals could reduce the benefits of
manufacturing operations in low-tax foreign countries.
Under the Treasury proposal, several employee
benefit tax exemptions would be eliminated or capped, although
profit sharing and retirement plans generally are not affected.
Also, employees would be treated as receiving additional income
subject to tax to the extent that their employer-provided health
insurance payments exceed $170 per month for families ($70 for
individuals) , and the cost of employer-provided educational
assistance which is not "job related" would be treated as income
for the receiving employee. And incentive stock option plans would
be eliminated for the future, although existing options would
continue. These changes are part of a package which reduces
individual tax rates substantially — including setting a top tax
rate of 35 percent.
The reaction of the high-technology sector to
these proposals has been mixed. Small companies, dependent upon
venture capital, protested the elimination of preferential
treatment of capital gains. Larger companies expressed misgivings
about proposed changes for tax-haven operations. Also, there is
concern over the employer-provided health benefits question.
However, all elements of the high-technology
sector praised the Treasury's endorsement of an extension of the
R&D tax credit, which expires at the end of calendar 1985.
In January, a coalition of companies,
universities and trade associations filed legislation to make the
R&D tax credit permanent. The bill will narrow the scope of
industry activity that is eligible for the credit but will expand
the range of funded university research that is eligible.
*Prepared with Paul Oosterhuis, an outside
consultant to high tech industry on tax matters. Paul is a member
of the law firm of Hogan & Hartson, Washington, DC.