mgmt memo

Vol. 11, No. 3_____________________________________________________________ April/May 1992

"MGMT MEMO" was written by Richard Seltzer in Corporate Employee Communication for the Office of the Presi­dent. It was written for Digital’s managers and supervisors to help them understand and communicate business information to their employees. You can reach Richard at seltzer@seltzerbooks.com

CONTENTS

Focusing on Core Businesses and Products (Ken Olsen)                                                                    

By encouraging the entrepreneurial spirit, we encourage creativity and a variety of ap­proaches to satisfying customers. But the downside is that too many people approach the same marketplace from slightly different angles. This leads to incompatible and overlap­ping projects, which is not only costly, but also confuses customers and sales people. To fix that and to achieve the right balance of entrepreneurial spirit and control, we are combining previously fragmented engineering projects under a common business management structure.

Managing Entrepreneurial Teams: Delegate without Abdicating Responsibility                               

The New Management System is a tool to provide managers with information they need to flexibly respond to changing business conditions and to make timely and accurate business decisions. It is not a measurement system, and it is not an organizational structure for the company. It does not change the basic responsibilities of managers.

Q3 Wrapup - from Corporate and European Perspectives                                                       

Putting Developers in Touch with Customers’ Best Insights (John Manzo)                           

Consulting - Both a Business and a Frame of Mind (Pat Zilvitis)                                           
Although products still provide the basis for our knowledge of technology and our reputa­tion for quality, much of our profit must come from the services we provide, including a wide range of consulting. At the same time, customers now expect our sales people to understand their industries and businesses, and to act in a consulting mode in their day-to-day interactions. In other words, "consulting" is both a profitable business and a new approach to customers.

Digital’s Supply Chain (Jim McCluney and Adriana Stadecker)                                             
During the coming months, Manufacturing and Logistics management will focus on the speed, quality and cost of the processes that deliver products and services to the customer. This means identifying new critical success factors that will measure Supply Chain per­formance across all areas of business.

U.S. Updates Descriptions of Non-Exempt (WAGE CLASS 2 & 3) Jobs                        

Focusing On Core Businesses And Products by Ken Olsen, President

Our strategy is to sell complete solutions that are pre-designed, pre-engineered and pre-tested and can be guaranteed to give results. These solutions normally have features that are unique to Digital, but above all they should be easy for customers to understand and therefore easy for us to sell.

To support this customer-driven strategy, we will always be prepared to make changes in our organization as well as in our product plans.

Over the last few months, we have organized the company into six basic business groups: o Manufacturing/Logistics and Component Engineering under Bob Palmer, o Software Engineering under David Stone,

o Departmental Systems and SME (Small and Medium Enterprises) under Charlie Christ,
o Global Information Systems under Frank McCabe,
o Industry/Product Marketing under Bill (B.J.) Johnson, and
o Services and Consulting under Russ Gullottti.

All top level managers have a dual reporting relationship to Jack Smith and me. Jack is expected to integrate the budgets and plan.

Two of these business groups are chartered to lay out standard solution platforms for the most common business problems. Frank McCabe is responsible for platforms in Global Infor­mation Systems, which includes mainframe computing and large-scale computing networks distributed throughout the world. Charlie Christ is responsible for mid-range and low-end platforms for departments of large companies and also for small and medium-size busines­ses.

The Industry Business Units (IBUs), under B.J., take an intense interest in their custo­mers’ needs and are responsible to ensure we fulfill those needs. They offer value-based solutions tailored for the industries they serve.

The business units that report to Frank, Charlie and B.J. are responsible for the develop­ment of the products and services they need. They may contract with services groups and with the engineering groups in their own organization, in other internal organizations or outside the company to develop complete solutions that customers need. They evaluate all costs, determine pricing, and address all the details of their model, so that they make a profit and grow market share.

As this model progresses through the business, our Systems Integration people take pro­ducts from the above-mentioned groups and combine them with expertise from our Services and Consulting organization to generate special solutions for the customer. The experi­ence we gain in developing these special solutions forms the basis for future pre-packaged solutions to be fully developed by other groups.

As we look at the current business climate, we see enormous opportunity for better cus­tomer solutions, cost savings and improved sales effectiveness by streamlining and simpli­fying our set of complete, pre-tested solutions.

This is a time of major changes in our industry. Many customers want to break their large computing jobs into many pieces, each of which can be done with simple inexpensive compu­ters. They also want choices and interoperability across their applications. But at the same time they want all the discipline and reliability they have today. They want fault tolerance and fast recovery after failure, redundant power supplies and battery backup and networking that always works. In short, they want only products that offer them great reliability and security.

That sort of demand plays to Digital’s strength. We can give customers the choice they want and need in applications and in the computing environment they see and use. But the computing that happens in the background should be transparent to them.

Customers do not care about the internal workings of servers, which perform specific, fixed tasks — any more than they care how their FAX machine is programmed.

Therefore, we will sell only the optimum hardware and operating system platforms for servers, rather than developing multiples for every conceivable combination of operating system and computer type. In this way we can provide the highest reliability and per­formance while at the same time significantly cutting our complexity and our costs.

Focusing our product set and offering pre-packaged systems, with all the critical applica­tions, will enable us to devote our resources to the projects that mean the most to our customers. It also will help us present our messages to them simply and clearly.

Defining the Client/Server Computing Model

The "client/server" computing model is an important part of the company’s product strategy. Ken Olsen, president, provided the following explanation of how we use the term within Digital.

In Digital’s client/server model, computing is done by the clients, and the servers take care of the management and other chores, including database, automatic backup, and all the communications functions.

In this definition, the desktop devices in the office are all clients. The mail server, software server, database, telephone server, print server and all the other devices that back up and support the desktop devices are all servers.

In mainframe computing, the clients are the devices that do computing. For instance, there is a batch client and a payroll client. These might use MVS, VMS or even UNIX operating systems; but they do computing chores. All the backup devices are servers. This way, computing is distributed among many computers that operate independently of one another and are supported by backup servers.

Everyone seems to agree on the value of offering "clients" in whatever combination of hardware platform and operating system that customers demand for the computing they do. But there is no reason why anyone should care how the servers are programmed. In other words, servers do specific, fixed tasks; and the operating system in which they are pro­grammed is irrelevant.

The Changing Role Of Marketing At Digital by Bill (B.J.) Johnson, vice president, lndustry/Product Marketing

My role is to provide leadership for the marketing function, which includes industry marketing, base product marketing and communications. This includes marketing everything from Alpha chips to maintenance service for global systems. With such a broad scope, and with the complex working relationships that different marketing people need with various other organizations within the company, it is impractical to manage all marketing people in a single group. Some marketing organizations report to me, but what matters is not who reports to whom, but rather the strategies, the coordination of activities and the re­sults.

The role of many of our base product marketing people is to understand the competition, the technology, and what customers want and need; and then to work with engineering to help translate that knowledge into development plans. We sometimes call them "product champions," and they often sit near the engineering people with whom they work. Another separate but important activity of base product marketing is associated with launching new products. This includes the announcement and follow-through activities.

Our Industry Business Units (IBUs) are forming close relationships with the account teams in their respective industries. Their strategies have to be intimately tied to the sales programs in the geographies for each of the account units. Basically, the IBUs set the integrated marketing plan for their industries and are responsible for strategic profit- and-loss (P&L) - the results a year from now, which we call "Q5." Results for the four quarters immediately ahead are the responsibility of the account units and the areas, with the IBUs helping them when asked to do so.

In most cases, in each area all of the accounts in an industry couple to a sales manager who works for the IBU. In GIA, where there are smaller markets than in the US and Europe, we have to be creative in how that is implemented.

The IBUs also link with Frank McCabe’s Global Information Systems, Charlie Christ’s De­partmental Systems/SME group, and Russ Gullotti’s Services and Systems Integration groups, regarding platforms and services that are needed across many different industries.

Meanwhile, John Manzo, in his new role as manager of Advanced Technology Marketing, is working to bring together related new-technology projects, focus them, and help move them forward. He started by leading a task force on imaging. Our imaging effort was previous­ly fragmented in dozens of separate projects. Now, thanks in part to that task force, they have been brought together in a single organization under Bill Heffner, who reports to Charlie Christ.

In addition, recognizing that communications, both external and internal, is an important part of our marketing effort, we recently hired a new vice president of Corporate Communi­cations — Charles Holleran, who reports to me. His responsibilities include public relations, marketing communications, advertising, corporate identity, analyst and consul­tant relations, and employee communications (which also reports to Corporate Employee Relations). He is also closely linked with investor and government relations. He comes to us from Travelers Corporation, where he was vice president of Public Affairs. Before that he had 20 years of experience with IBM in a variety of assignments.

We believe that bringing focus to our communications efforts will help us make our lead­ership in business solutions, products and services clear to external audiences. At the same time, we want to make sure that employees relate their work to Digital’s business strategies and markets. We have set the goal of communicating important company news to employees before they read it in the newspapers.

This year, as we go through the budget process, we are doing so from a new perspective. Whereas before Digital’s budget process emphasized technology, marketing is now playing a central role. We can no longer afford overlapping or even competing product sets within the company. To realistically focus our investments, the IBUs, with their close links with the accounts, are helping us to understand the revenue and growth we should target by industry and by geography. Charlie Christ, Frank McCabe, Don Zereski (for desktop), and Russ Gullotti represent product and services strategies and investments. David Stone represents Software Engineering, and Bob Palmer both Component Engineering and Manufac- turing/Logistics. Together we are working to decide which products we need in order to provide the solutions that customers will need both today and tomorrow, and how the in­vestment dollars should be allocated.

Meanwhile, we are looking closely at the IBUs themselves. Over the last year or two, we have seen that in many cases a relatively modest investment in industry-focused marketing leads directly to a large return in revenue. We have 22 IBUs today, some of which deal with relatively large and diverse industries, made up of segments that could benefit from individual focus. If we determine that we can increase revenue by sharpening our focus on narrower industry segments and making incremental marketing investments, we could conceiv­ably end up with as many as 80 IBUs. This could help us respond more quickly to changing market conditions and seize opportunities as they arise.

This kind of analysis is based on the notion that we should treat marketing as an invest­ment rather than expense, and that we should make sure we are putting our marketing dol­lars where they are most likely to bring the largest return.

The New Organization From An Engineering Perspective by David Stone, vice president, Software Engineering  

To fix that and to achieve the right balance of entrepreneurial spirit and control, we are combining previously fragmented engineering projects under a common business management structure.

For example, we used to have many different engineering efforts all dealing with the "Office." Because these resided in separate organizations — in the Field, in the PC group, in my software group and in marketing groups — it was difficult to align their activities. Now we’ve combined those pieces and put them all under Charlie Christ, as part of his departmental computing focus. He also has all of Imaging, which, similarly, used to be fragmented and scattered. We were attacking the Imaging market 20 separate times in a small way, as opposed to once in a big way. Now the goal is to focus and coordinate our activities so we can get the most for our investment dollars.

Here's a quick overview of the organization from an engineering point of view.

In addition to Office and Imaging, Charlie Christ’s organization also includes Modular Computers (workstations); Low-End Networks and Clusters (LENAC); Pathworks, which is the interaction of PCs with servers and our wide-area networks; Local Area Network (LAN) servers; Systems Engineering; and Storage. In other words, Charlie has all of the engi­neering resources necessary to develop products related to departmental computing.

Similarly, Frank McCabe manages all the engineering resources oriented towards large, global information systems. This includes Bill Demmer’s organization, which includes VAX, Alpha and VMS development efforts. It also includes wide-area networking (NAC), related switches and Systems Engineering.

 
Mahendra Patel does Systems Engineering on behalf of both Charlie Christ and Frank McCabe.

Both Charlie and Frank develop products with a family focus. They do platforms of hardware and software that we sell across many different industries.

Bill (B.J.) Johnson’s Industry Business Units (IBUs) focus on specific industry needs. They take the base platforms and package them with applications and services to produce complete solutions for customers. In this, they work closely with Russ Gullotti’s ser­vices and systems integration businesses.

At the same time, Don Zereski, in addition to his role as vice president of the US Area, manages our new PC/Catalog business, which has been very successful.

In other words, in this new structure, Charlie, Frank, B.J., Russ and Don do the overall product and service packaging; and the three geographies take care of the day-to-day business. From an engineering perspective, Bob Palmer's organization and my own Software Engineering group supply all of them with the components they need to build their plat­forms. And Sam Fuller continues to manage our advanced research efforts.

In addition to Manufacturing and Logistics, Bob Palmer manages development of PCs and Intel-based systems. He also has VIPS, which includes terminals, monitors and printers; and Memories and Semiconductors. These are hardware components that are assembled to build systems.

My Software Engineering group includes all the software development efforts I managed before in The New Software Group (TNSG) — such as, Computer-Aided Software Engineering (CASE), Transaction Processing, System Management and Concurrent Engineering — with the exception of Office. All of the various UNIX development projects, which had been scat­tered around the company, are now in my organization. This includes ULTRIX and OSF software, which has been moved from Bill Demmer’s organization to my own. Once again, this change provides new focus for an important effort.

Other pieces of my organization include operating system development efforts for NT; the Japanese Research and Development Center; Engineering Information Management and Techno­logy (IM&T), which puts together internal computer applications for use by all of engi­neering; and Engineering Security, which deals with the security of our networks.

In addition to directly managing my group, I am responsible for software engineering functional management across the company. This includes quality control, release engi­neering, job structure in engineering, training and promotion policies.

I am also responsible for developing the company’s integrated software strategy. In this regard, we need to determine which styles of computing and types of businesses to target with each major pair of operating system and hardware architecture — such as OSF/l on Alpha. And that analysis should be the basis for our decisions on what kinds of layered software to develop for each pair. This approach could help us focus our engineering investments and at the same time could make it easier for our sales force to understand and explain our product offerings to customers.

In other words, for every style of computing — such as complex production systems, or time-sharing, or realtime - we want to have one preferred platform. That way, when a sales person recognizes the style the customer wants, the solution should be clear. This means removing some options for people, but it should give us clearer focus, less cost and more sales.

Recently, our emphasis has been on going after all opportunities with entrepreneurial independence. Now we must focus on the investments that are going to get us the best return. Of course, we still need to encourage creativity in seeking out and identifying opportunities. But now we have a structure that should make it easier for us to make decisions about where and when to invest and disinvest.

In the old structure, many different, entrepreneurial and component-oriented businesses justified their plans based on their own separate sales, contended with one another for resources and sometimes competed for the same customers. Basically, we were blocking our own success in the marketplace. Now for each major market we will have a clear centrally- driven strategy. And, overall, we will have a unified business plan, which should help us focus on the company’s overall profit.

Managing Entrepreneurial Teams: Delegate Without Abdicating Responsibility  

Ken’s memo goes on to say, "We’ve spent a lot of time discussing a manager’s responsibi­lities, often using the words ’manager’ and ’coach.’ The New Management System gives the team manager the data needed to be entrepreneurial, to take responsibility and understand how well the team is doing. It encourages creativity and risk-taking, in addition to thoughtful strategy and fixing problems before they become serious."

Ken said there is some misunderstanding regarding the responsibility of managers. "Some people concluded that if a team manager is responsible, then that manager’s manager is not. Others concluded that they had the authority to decide everything arbitrarily. Both extremes - managers believing they don’t have responsibility and managers making all the decisions for everyone underneath them — can lead to problems," he explained.

"We have spent many hours discussing what it means to coach and manage teams of entrepre­neurial people, and to coach and manage entrepreneurial managers. We need to reestablish the appropriate balance. To clarify this point, in the field we should measure the happi­ness of the customer and the effectiveness of the account team in order to determine the wisdom of our decisions and the way we treat the customer. In engineering, we should review all the projects under a manager of managers for the wisdom behind their projects."

Ken expects that most managers will learn that the more responsibility they take, the more important it is to give responsibility to those under them. "And they will learn that they themselves are still responsible for the results."

Q3 WRAPUP - FROM CORPORATE AND EUROPEAN PERSPECTIVES

At the same time, he emphasized Digital’s long-term financial strategy and the benefits it produces at times like these. "Our strategy is to maintain a very strong balance sheet and a very strong financial position in good times, when others are leveraging and borrow­ing money to grow. Then, when recessions come - and they always come - it is our plan to maintain our product development investments and to continue to support our customers.

"If you keep your customers happy and keep up product development in bad times, when good times come, you’re in position to jump ahead of the others. This strategy enabled us to grow very quickly from nothing to being one of the largest computer companies in the world.

 "We have to remember that even though we have a renewed motivation to cut costs, we must maintain our product development and support our customers. Customers and products are the key to our future."

 European perspective

Reporting to employees in Europe, Pier Carlo Falotti, president of Digital Europe, noted that the disappointing third quarter performance reflects the European marketplace and underlines the importance of the measures already in place to change the way we do busi­ness and invest in future growth.

 "The market is still slow," he observed. "The economy is weakening, even in countries such as Germany and Spain, where only a few months ago we still saw good growth potential. The reduced market growth, and even decreases in some sectors, have forced us, and almost all of our competitors, to look at the way we do business and manage very complex and rapid change.

 "The third quarter results also highlight the importance of the measures that we already have in place, and the significance of the organizational changes that we have initiated. In addition, we have to maintain our high focus on reducing costs and increasing effect­iveness, while at the same time addressing new market opportunities.

 "Our increased focus on industries through business units responsible for profit and loss, will enable us to respond to market opportunities faster, and with a better understanding of what the customer needs," Pier Carlo continued. In partiular he noted our aggressive efforts to take advantage of opportunities in Central and Eastern Europe.

 In addition, the small and medium enterprise market sector is growing fast. "Tradition­ally we have had little focus on this market. Now, through the Digital Equipment Enter­prise operations, we can begin to take advantage of the enormous potential which exists here."

 On the technology front, he noted that the Alpha announcement has been very well received by customers, the press, and industry analysts in Europe. "It has confirmed not only our capabilities in the highly competitive semiconductor industry, but also our rightful place as a leading innovator in information technology." He concluded, "Over the coming months we expect to see an increasing number of companies committing to develop customer solu­tions based on this technology, and we believe this leadership will be one of the corner­stones of our competitive edge."

Putting Developers In Touch With Customers’ Best Insights by John Manzo, Corporate Manager of Advanced Technology

Marketing The memo announcing John Manzo’s newly created position, explained:

John is initially concentrating on applications of technology that provide an opportunity for Digital to establish leadership in the next generation of solutions, particularly the use of information in audio, image and video form. In the following article, he discusses his new role and the challenge ahead.

In the past, Digital’s focus was almost exclusively on engineering and scientific markets. Now we sell to nearly all markets. In going through this change, we may have become the victim of our own success. When we were focused primarily on engineering and scientific markets, our engineers were the most demanding consumers of our own products and tested them to the limit, through their own daily use. We knew what it took to delight engineers and scientists, and we built machines that did that. By the time products made it to our customers, those products delighted customers in ways they could never even imagine be­fore.

Now that we're in other, broad markets, we need to derive our competitive advantage from more than just technology, and we need to develop mechanisms to allow us to understand how our diverse customers will actually use our products and what capabilities will delight them.

I believe there is a hierarchy of customer needs, a model that resembles psychologist Abraham Maslow’s six-stage hierarchy of human needs. In Maslow’s model, only when you satisfy your lower, physiological needs, do you strive for higher levels of happiness and fulfillment. You can represent customer needs in a similar pyramid model, with known needs as the bottom tier. When you meet those needs, you "satisfy" the customer. Those known needs are relatively easy to identify through such techniques as "Voice of the Customer." That work is very important, but it is not sufficient for long-term success because that leaves you in competition with all the other vendors of computer products who have identified those same needs. We want to thrill customers with our products, by not only meeting their known needs but also taking care of the next level — the unknown and unarticulated needs that are at the pinnacle of the pyramid. To me, the realm of delight starts where the known needs end and the unarticulated ones begin.

If you can get in touch with those higher level needs of your customers and build products that meet them, that can be the real source of your competitive advantage. In these perilous times, when technology is becoming a commodity that is freely available to almost anybody, the real differentiator is going to be the degree to which you understand those true delighters and build them into your products.

Before, technology was closely guarded proprietary information. Now, perhaps, this level of market intelligence - understanding the delighters - becomes at least equally impor­tant.

We used to lead with technology when we talked to customers, because technology was the differentiator. Today that’s not the case. Customers only care how much you know once they know how much you care. They’re buying a commitment to solving their problems. They see our products and services as a means to that end, but not an end in itself.

Customers are looking for ways to get a competitive edge or increased efficiency in their particular business. They are interested in technology only insofar as it serves as an enabler, opening up new realms of business practice for them. To be successful, we must design our products in response to an understanding of what will truly delight these customers. We have to look from the customer’s point of view and understand how they will actually apply these capabilities in their jobs and how they will design their practice — their way of using word processing, electronic communication, printing, accounting, etc.

We need to look three to five years ahead and anticipate the unarticulated needs that will arise as customers adopt the latest technology and make use of it in their particular business practices. This is a separate realm from software or hardware. It’s the kind of day-to-day experience we share internally through notes files, It’s complete solutions that come from being with customers, holding their hands, showing them how to use products to their advantage. It involves elements of consulting, education and service.

Ideally, I’d like to be able to transplant the intuition that exists in the mind of our customers into the mind of our product developers - like Spock doing a Vulcan mind-meld in Star Trek. As a practical alternative, we plan to establish one or more Discovery or Innovation Centers.

Superficially, the Discovery Center might resemble an Application Center for Technology (ACT), in the sense that it is a place to bring customers for demonstrations. But ACTs demonstrated existing products and were used as a sales tool. In contrast, we want to give customers hands-on experience with embryonic products and new technologies. Then through a process of guided self-discovery, we want to unlock their insight into how this might end up being used in their own areas. While the Discovery Center may indirectly result in long-term sales, it will be designed as a "museum of the future.

This isn’t a place to show off and do "technology chest thumping." Rather, this center should let customers show off what they could do with the technology. We want to create a place where customers can think freely and creatively about how newly emerging technology could be applied to solving their problems. We want to design it so that it looks and feels significantly different from common work environments, to help unshackle them from their current assumptions and patterns of thought. We also need a means to capture their best ideas and insight and bring them to the attention of our product developers, who are clamoring for just such information.

We also will encourage internal use of this Discovery Center to try to stimulate innova­tive use of technology within Digital. We want Digital to be a very demanding customer of its own products; we want our internal applications to push us to our limits. This is particularly important in emerging new markets, such as multimedia.

We’re in the planning stages now, but expect to move very quickly and hope to have the first customers come through a Discovery Center, which probably will be located in Marl­boro, Mass., by December of this year.

Consulting - Both A Business And A Frame Of Mind by Pat Zilvitis, Manager, Digital Consulting Services Business Unit

As products become commodities, it is increasingly important for us to operate as a "solu­tions" company rather than just a "product" company. While products still provide the basis for our knowledge of technology and our reputation for quality, much of our profit must come from the services we provide, including a wide range of consulting.

At the same time, customers now expect our sales people to understand their industries and businesses, and to act in a consulting mode in their day-to-day interactions. In other words, "consulting" is both a profitable business and a new approach to customers.

This is the next step in the gradual evolution of our sales approach. First, we just sold products. Then we tried to match solutions with customer needs. Then we added systems integration for big projects and called in support people to provide advice in special cases. Now the sales people themselves have to understand and focus on the customer’s business needs. This orientation naturally leads to consulting business; and consulting business then gives us greater insight into the customer’s needs and prepares the way for further sales of products and services.

Even in slow times, our consulting business is growing at double digit rates, and is profitable. We began to focus on this business in 1990, as a result of demand from cus­tomers. At that time, we split our Professional Software Services Group into those who did project work and those who did consulting. Consulting then evolved into a separate business and the projects business is now handled by the Applications Projects Business Unit. Of the consultants, some do management consulting, helping customers design the business processes needed to support their corporate strategies. Others are experts in such areas as networking, desktop, data management, VMS, or particular applications. They can look at business strategy from the point of view of information technology needs and capabilities.

Most business processes in use today were developed 20-30 years ago. Companies today see a need for improvement in three major areas: time-to-market; customer satisfaction and competitiveness. Adapting their processes to achieve their business goals involves change management, and issues that most companies don’t have the expertise to solve on their own.

That opens the door for consulting. The focus for this consulting is CEOs and CIOs who are concerned about business solutions and regard technology as a tool to help get them to where they want to be. They are developing strategies based on business needs and goals and applying technology in support of these.

For this kind of business, we need to get involved with our customers long before techno­logy considerations come into play. We need to be there at the time of demand creation, and, as they are planning their business strategies, help them see how we can help them achieve their goals. For instance, at Banque Nationale de Paris we are involved on a consulting basis as they look at the way they do all their branch banking throughout France. This brings us revenue even before anything is installed, and creates a business partnership with the client.

Also, if we get involved early, the customer may sole-source the follow-on business to us, rather than putting out a request for proposal (RFP) to anyone else. This means that before we ever sell a piece of hardware we lead with services. That generates a bigger and more profitable sale and takes cost out of the selling process.

Digital has been delivering consulting sendees for 30 years, but only recently have we focused on this as a separate business. The consulting we offer today tends to be techno­logy-oriented, but the fastest growing sectors of this business are management and infor­mation system (IS) consulting.

Consulting, in simple form, is basically knowledge transfer. We have experts in our company who are very valuable to our customers because of their knowledge in designing change processes and implementing them. If we can tap these skills and sell them, and then be successful with the knowledge transfer, we’ll be successful leveraging our other businesses, such as Systems Integration.

This does not mean that we should forget about hardware. Being in hardware design and development helps us to have more knowledge and puts us in a unique competitive position.

We compete with the Big Six Consulting firms, other computer vendors such as IBM, and companies like EDS and Computer Science Corporation. We also collaborate and partner with some of these same firms when we have complementary skills to address our customers’ solution requirements. Our relationship with these companies is either collaboration or competition depending on the specific market segment. In the long run, our most formidable competitors are likely to be IBM, Andersen Consulting, EDS, CAP Gemini from Europe, and perhaps a company like NTT from Japan.

The strengths that differentiate us from these competitors include:
 o Depth and breadth of capabilities. We’ve been in the Information Technology Business as a designer, developer manufacturer and implementer for 35 years, so we have broad experience. We help formulate the technologies for communications, data management and computer technology for the future and we can build our services around our knowledge of the direction the industry is taking. This is quite different from companies whose only business is consulting and systems integration

o Commitment to Open Systems. While many customers believe that a company that sells hardware is only interested in steering them toward their own products, hardware is fast becoming a commodity. Services is over 45% of our business and growing rapidly. The solutions our customers require involve multiple companies and multiple platforms. Digital is helping to define standards for these solutions to fit into, and drive them across the industry, and we will provide services that support these Open Systems. Many other computer vendors are still proprietary, and most of the consulting firms have not been involved in developing and driving these standards.

o Ability to implement as well as plan strategies. We're with our customers not only through planning and design, but also through implementation and management. In other words, we can provide a form of "one-stop shopping". High level consulting companies specialize in the planning and design phases, but do not have the expertise to imple­ment. They are trying to grow to become full service vendors, while we already have that capability. Hence our "battle cry" is "results, not reports."

We have many examples where we have been successful at this approach. For instance, Tyson foods had diverse holdings and had acquired several more. Their growth was being impeded because of their order processing system. A Digital expert who participated in the rede­sign of our order processing consulted with them to assess the situation, make recommenda­tions and lead the implementation. They re-engineered their whole process and eliminated the impediments to growth. We call this "Enterprise Engineering" and have developed a portfolio of service offerings in support of our customer needs.

We have about 2,200 Consulting Services personnel in our three field geographies today and these are augumented by consultants and experts associated with other organizations within Digital such as Engineering, Manufacturing, Software Development, Information Systems, Finance, etc., who are available to augment and support our consultants in the field. We also have alliances with many companies outside of Digital whose knowledge complements our own, and we will not hesitate to partner with these companies to address a client’s need.

Not only does our consulting business contribute to the company’s bottom line, but also it is an integral part of our Systems Integration business and can help open the door for our whole portfolio of offerings — including hardware and software products. If we enter early in the planning process and help our customers develop their designs, the odds of success and partnership are far better.

Digital’s Supply Chain by Jim McCluney, Business Operations and Planning Manager for Manufacturing and Logistics; and Adriana Stadecker, Human Resource and Program Office Manager for Manufacturing and Logistics

In the January/February 1992 MGMT MEMO, Bob Palmer wrote about the Manufacturing Management Committee’s committment to lead the re-design of Digital’s customer supply and delivery system - now known as the "Supply Chain." The following article discusses the Supply Chain and how will it impact the way we will deliver quality and reliable products, processes and services to customers at competitive cost and timeframes. This involves changes in the way we think about, manage and conduct many aspects of our business.

During the coming months, Manufacturing and Logistics management will focus on the speed, quality and cost of the processes which deliver products and services to the customer. This means identifying new critical success factors that will measure Supply Chain per­formance across all areas of business.

Our Supply Chain processes must begin with the customers’ needs and end with the satisfac­tion of those needs. Value is not created until the process has been completed success­fully as seen by the customer. Supply Chain processes involve both physical flows of goods and service and informational flows internal to Digital and externally to customers and suppliers.

The Manufacturing and Logistics Management Committee has established a vision of Digital's Supply Chain as: "A flawless, fast and simple delivery of value as perceived by our customers, such that Digital becomes the benchmark toward which others strive."

There are interdependent sets of activities that make up the Supply Chain. One is the customer order fulfillment stream, which begins with a customer purchase order and pro­ceeds through order administration, scheduling configuration, shipment invoicing, deli­very, installation and payment by the customer. The second stream is that of material and service supply, which begins with signals of the need for service, raw materials and purchased goods through vendor delivery and through the various stages of production and supply. These streams intersect as materials and services are matched to customer orders, and finished products then move to an integration process or directly to a distribution channel.

A business process that is critical to Supply Chain execution is the new product or new service creation cycle. We need to link this work and influence such efforts as design for:

o manufacturability,

o orderability,

o installability,

o usability,

o serviceability and

o distribution.

Management of the Supply Chain requires true process integration, which means more than simply having people and organizations interface and cooperate. We view the Supply Chain as a single entity, rather than relegating fragmented responsibility for various segments to functional areas such as Purchasing, Manufacturing. Installation. Distribution, etc. Our intent is to focus and optimize the whole Supply Chain, rather than just the indivi­dual departments within it. This horizontal view of activities covers the flow of goods and sendees from Digital’s suppliers through our own manufacturing and service processes through our distribution and installation processes right through to payment for our products and services by customers.

U.S. Updates Descriptions Of Non-Exempt (Wage Class 2 & 3) Jobs

Over the next few months, Compensation and Personnel teams in the U.S. will be working with a representative sample of managers and employees across organizations to review and update the descriptions of all U.S. non-exempt (Wage Class 2 and 3) jobs.

Technological advances, reorganizations, and changing business conditions have influenced the content of employees’ jobs over time. The primary purpose of this project is to review and update descriptions to reflect the work that is performed today and to estab­lish a process for maintaining up-to-date job descriptions in the future. In addition, new descriptions will be created for jobs that were not previously documented.

Descriptions are used to compare Digital jobs to the external market to insure that our salary ranges continue to be competitive. They also are used to classify employees based on the work they are doing to help maintain internal job relationships, for legal compli­ance, and to pay people appropriately.

After the descriptions have been updated, job evaluations will be validated to insure the jobs continue to be appropriately aligned internally. As part of the U.S. annual compen­sation review, the jobs and pay ranges will then be compared to the competitive market through salary surveys.

After the descriptions are finalized, managers will be asked to verify that employees’ job descriptions best match the work performed. Job code changes will be made only as needed to insure the codes and descriptions represent the work.

When the review and update has been completed (probably in Q2 of FY93), the new descrip­tions will be added to the Job Information System for easy access to all employees. At that time, Compensation will implement an ongoing process for maintaining up-to-date descriptions as the company’s business continues to change.

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