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