Volume 10, #1______________________________________________________________
January, 1991
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
On December 6,
1990, over 500 senior managers attended Digital’s State of the
Company Meeting in Merrimack, N.H. The meeting focused on
Digital’s new management reporting system, quality, open
systems products and strategies, and the production/mainframe
market. The following articles are summaries of the speeches.
State Of The Company Address by Ken Olsen,
President
Ken Olsen Responds To Questions
More On The Management Reporting System by
Lyn Benton, assistant corporate controller
The Open Systems Company By Bill
Demmer, Vice President, VAX VMS Systems and Servers
Ultrix Opportunities by Kurt
Friedrich, group manager, Open Software Group
Open VAX VMS Systems by Ken Swanton,
Marketing Manager, VAX VMS Systems and Servers
The
Production/Mainframe Systems IBU by Bob Glorioso, vice
president, Information Systems Business
Doing the Whole Job
We’re trying to
do a job that, I believe, is more complicated and difficult
than anybody’s ever tried to do in the past.
We have friends
and competitors in the computer industry who have concentrated
a large organization in a very narrow market niche. For
example, Apple and Compaq have done very well that way. Their
strategies are elegant, simple and easy to understand, but
terribly dangerous. I’d hate to be in their shoes or the shoes
of any other niche players right now. If they ever make a
mistake, or if one competitor does things significantly
better, they could have serious problems.
We always have
concentrated on the hard things because that’s what we want to
do. That’s where we find safety, fun, excitement and
challenge.
We’re trying to
take a large company that’s involved in many diverse
activities, and integrate these activities as one, so we
present one integrated image to the customer. IBM does that to
a large degree, but we’re trying to do it much more
extensively.
Complete Systems
We face many of the classic problems of
big companies. First, we have groups who don't
communicate with
one another. That happens naturally in every company, but we
have to fix it.
Customers want a
complete job from us. They want planning and design. They want
hardware, software, networking, applications, installation,
training, and support. We need to do the whole job, but we are
acting like separate groups.
Engineers
probably generate much of the problem. They like to define
their product as a box they can specify and measure and for
which they set the price and the cost with little thought of
the systems’ cost. Then they let the Field design systems with
it, and the Field ends up with a price book so thick no one
can carry it.
Today, Sales has
to take all of the myriad of products, and design a system,
price it and put a bid in. Engineers say, "If we only had more
competent sales people!" But engineers couldn’t do the job as
they, themselves, defined it.
Central Planning
Doing the whole
job takes a lot of planning to make sure every detail is done
for every job we do for every customer.
This is in
conflict with what we say we have learned from our experience
and from the experience of Russia. Centralized planning
stifles creative thinking and the taking of responsibility.
Centralized
planning means centralized budgeting and control. It
eliminates internal competition and risk taking, and it
discourages products and ideas that have not already been
proven by someone else.
The goal we have
taken for ourselves is to avoid the rigidity of central
planning that controls everything, and limit it to the
planning necessary to be sure we take care of all the
activities to which we are committed, and that we have the
tools for every group to accomplish their part of the
operation.
It is
interesting to consider some of the most complex problems in
the universe, like feeding New York City. Can you imagine
anybody in their right mind allowing that entire operation to
go on — the heating and feeding of eight million people on one
little island with only a handful of bridges and tunnels
coming to it -- without any plan? Yet somehow it works, and
they all get fed.
Now nobody in
their right mind would take a fourteen-billion-dollar company
and allow dozens of business units to run independently.
Obviously, you've got to control everything.
What would
happen if we started controlling New York City? They’d all
starve, as is happening in Moscow.
You see the
conflict. Every organization has a tendency to build up staff
and committees and optimize everything. But we can’t run the
company centrally.
Our Faith in Technology
We have faith
that we will win with technology. If we ever back down on
technology and postpone it or stop it, we’ll go into a
downward spiral like others before us. We won't tolerate the
idea of backing down on our investment in technology.
People ask, "Why
do you invest so much in products that come out so fast and
increase the capabilities of computers so fast at a lower
price?" Our answer is, "We have faith."
For 33 years
this company has believed in and depended on the idea that as
we make more capability for a lower price, the demand will
grow even faster. We are not going to stop producing computers
that are faster and cheaper and more powerful, at lower price.
We’re not going to stop investing in technology. History has
proved this is the right course, and that’s part of our faith.
What Happened to Our Profit?
People ask us
what happened to our profit. We didn’t plan to make so little
profit. We had a plan that produced profit, but that plan was
dependent on selling more dollars of computing even when we
were offering great technological improvement.
In the last few
years, our product offerings have grown enormously in speed,
which is only one of the measures of capability. In terms of
MIPS (millions of instructions per second), the systems we’ve
sold have more than doubled each year for several years. And
we have faith that demand will continue to increase even
faster than that — but not every year.
Obviously, when
there’s a recession, or there’s a slowdown in the end-user
business, which we’ve seen for several years now, demand does
not grow that fast. That’s why things have slowed down for us.
But we still have that faith in growth.
We budget and
plan for being a growth company because we believe that demand
grows as we improve the performance and price. That’s our
faith in technology.
What is our
weakness if we do so well and have such faith in technology?
In putting technology first, we put much of our energy and
money in technology, and we never quite get around to doing
the rest of the job.
All the products
we dreamed of having two years ago we have today, and we have
products coming two years from now that are absolutely
wonderful.
We have the
products, but we don’t tell anybody. We don’t even tell our
own Sales department about them. If we have any more money
available, there would be more technology to do.
The answer to
many of our problems is to break the company into pieces, each
one as a separate business unit. That means each business unit
has the obligation to lay out a business plan which
demonstrates they will take care of every detail.
We have the best
hardware, software, and networking; but, for every
application, job, and solution we offer, not only do we have
to offer technology, we have to offer the myriad of details
necessary to define the job, specify the solution, educate our
salespeople and customers, design the system with precision
and elegance, price it with wisdom, deliver it, install it,
and do all the things necessary to make the customers happy.
That is why we
are breaking the company into business units and each business
unit presents a plan, and the Executive Committee and the
Board of Directors listen to each plan.
Basically, we
want to have all the advantages of a big company, and all of
the advantages of a small company. We will treat every unit as
if it was a small company and have them work together to have
the advantages of a big company.
Each business
unit will be measured just like any small company. Out of
this, if it is done right, will come entrepreneurship.
In the positive
sense of the word, an "entrepreneur" is someone who if given
responsibility and assets, lays out a plan and will perform
miracles to make it work. In contrast, if a central planning
group lays out a plan and funds it, it won’t work. People see
it as the central planner’s plan. They feel that they never
have enough money and that the plan was done by someone who
didn’t understand the problem.
A good
entrepreneur, who has a plan and takes responsibility for it
and for correcting it when it is wrong, will make sure it
works.
In
order to make this system work, I have five principles:
o
Everyone works for the Business Units. That is, the president,
the financial vice president, the engineers, personnel, etc.
o
The individual who proposes, does what he or she proposes.
o
No one without responsibility tells others what to do.
o
Budgets are sacred and stable, and not continuously "up for
grabs." o Each business unit reports to a person who’s
responsible, and not to a committee.
The business
unit takes the responsibility to run that business. If things
turn down, they cut the budget, use less money, and make a
good business plan in the end. But we don’t re-shuffle
people’s budgets to follow our latest fad. We don’t thrash
around people’s budgets continuously. If you ask a business
unit or an engineering group to carry on the job, to hire
people, make commitments, lay out plans, they have to assume
their budget is sacred. They, however, have to make
corrections if things go wrong. But an unstable budget is
devastating to an organization. If your resources are always
at the risk of being taken away by somebody else, you never
can be effective as a business unit.
Our system is
very simple. We have three groups of business units. One group
generates products — such as central processors, workstations,
disks, servers, semiconductors and customer services. The
second group consists of those who integrate and market and
develop special products which are unique to their market.
The third group is the people who sell. Each business unit
group makes profit on the cost it incurs.
The account
manager is a business unit manager who makes or loses money on
the investments and sales he or she makes. There is no budget
in the districts, only in the accounts.
What happens to
the district and regional managers? Their job is to help the
account teams and act as quality control for the account
teams. They are measured on how well they help.
People who incur
the cost have to justify the profit made on that cost. People
who are out getting applications have to justify how to make a
profit with them. Everybody makes a profit. If the customer is
not willing to pay for it, we don’t do it.
Obviously, with
freedom comes the opportunity to bend the rules sometimes for
the good of the overall project. But, in general, every plan
shows how every cost we incur will make a profit.
At the end of
the meeting, Ken Olsen, president, answered a number of
questions from the audience. The following is a summary of a
few of those questions and answers.
Why is it that all the promotions at the
higher levels in the Field seem to go to people
in Field Service?
First, that’s
not entirely true. Remember that Bob Hughes, who is heading
our North American sales, is definitely a salesman. He didn’t
come from Field Service.
On the other
hand, Field Service for many years has had a rule that
everybody goes to school two weeks a year, and once in their
career goes to school for six months. They also have had the
business unit approach from the start. Each unit lays out a
budget and is held responsible for that budget, as if it were
a business.
If some other
groups don’t believe in education, don’t believe in running
things like a business, they shouldn’t be surprised to see who
ends up at the top. For people to want to get ahead, the
lesson there is that education and experience pay off.
Will revenue, including OEM revenue, be
reflected in the account P&L?
We measure
business units not for credits they own because they happen to
be sitting somewhere. We measure each as if it were a
business. We don’t use the word "credits." "Credits" means
arguing for something you didn't deserve. We want to give
information to the business unit managers on how well their
investments pay off.
If a business
unit invests heavily in a sale, and then gives the order to a
third party, who gets a 30% or 40% discount, and the net
result is Digital loses badly on that order, you don’t get any
credit for that order. On the other hand, if you invested in
an order and the company made a profit, it’s the profit we
measure.
The Accounts
make the investments in getting the business from their
account anywhere in the world. If an order for an account
comes in a remote town, the local district does not get credit
for that order. Districts don’t get credit for orders; they
just get credit for the help they give. The account has made
the investment, and they use that order to justify the
investments they made in that account. The measurement systems
are primarily there to help the Business Units run their
business.
We’re simply
measuring the return on the investment made. In the
product-line days, somebody owned the medical business, and
somebody else owned the education business, and they’d argue
violently to make sure they got credit for everything that
they possibly could. Then, they spent the money wherever they
felt like spending it. That’s not good business. We're
measuring return on the investments we make: investments in
selling, in integration and in product development. That’s the
obvious business reason for accounting.
You mentioned that technology in terms
of MIPs is growing at 120% a year, and that market
demand is growing rapidly too, but not
every year. Doesn’t that mean that in recession,
if the market doesn’t grow that much,
someone’s going to get hurt?
Yes. In every
industry - automobiles, airplanes, snowmobiles, and computers
- there’s a large number of manufacturers at the start. At one
time there were about 500 making personal computers. At one
time there were about 260 making minicomputers. There were
also a good number of companies making mainframe computers.
Now, in each of these categories, there is only a tiny number
of companies still left. The number has shrunk enormously
already, and it is unlikely that there will be anywhere near
the number we have today if this recession lasts longer.
We plan to be
one of the survivors. That is why we are in a strong financial
position. We probably have one of the strongest balance sheets
of any company in the country. The way to survive,
particularly in a recession is to invest heavily in new
products and maintain a very strong cash position.
We are
embarrassed that our profit has not been higher lately, but
our primary goal is to maintain our strong lead in technology
and our strong financial position and, therefore, to be one of
the survivors.
Networks are strategically vital to
Digital. If this assumption is true, why are we not
planning and investing in the
appropriate level of training for the Field? It seems it’s
owned by too many people with
conflicting agendas, and no responsibility to the budget.
There may be
problems in this area that I don’t see, but I will tell you
the problems I do see. To a large degree we developed Ethernet
as it is known today. We told the world how to make it work.
We made a standard, but then stopped pressing our advantage
and went on to more exotic technology.
We’re going to
turn that around. Now, we are going to be the low-priced
producer, the low-priced seller, and we’ll settle for nothing
less than a very large share of the Ethernet market.
We can do things
better than anyone else. If you look in the back room here,
behind the demo equipment, you’ll see what has been produced
by the group making inexpensive Ethernets. It’s beautiful,
compact and trivial to use. The number of units is growing. We
want to make thin-wire Ethernet, using our components, the
standard of the industry.
Digital’s stock has been selling 20%
below book value, with a total market value of $7
billion. That’s cheap. With AT&T in
the process of acquiring NCR, is there a real danger
of someone taking over Digital?
Life is filled with dangers. There’s
always a danger.
Now, we’re
gentlemen and ladies. We’re gentle and nice. But if someone
did come after us, we’d fight tough - very tough.
Although I am humble, I do sincerely
believe that we are critical to this country.
The issue of MGMT MEMO reporting on the
Heald Pond Woods Meeting said that the company’s
goals are 22 percent return on equity
and 16 percent return on assets. Surely, a profit
ability goal
with no mention of revenue growth rate at which this is to
be achieved is relatively useless in guiding business
management action? Surely, our business objectives
include both revenue growth and
profitability according to market opportunity and cash
flow considerations?
The answer is
yes. I believe that you add both growth and profitability when
you measure the company. To a first approximation, you measure
the corporation on the sum of the percentage of growth and the
percentage of profit, or the percentage of return on assets.
The test of that theory is, when you have zero profit and grow
a large amount, you would rate that equally with a company
that had zero growth and a large profit. I believe that’s
true.
Thus far, we
don’t get agreement internally on the details of how you make
this measurement. What is important is that it does cost to
grow. If you don’t grow, you can cut your costs a lot.
To the
stockholder, this means growth is worth as much as profit, so
we should evaluate both growth and profit.
The reason
people don’t agree with this measurement is that experience
sometimes seems to show that when you grow you make more
profit. What experience does show is that if you grow more
than you plan, you are very profitable. If you grow less than
you plan, you are very unprofitable. But, over a period of
time, growth does have cost.
How do the Business Units set the price?
The
Marketing/Integration Business Units will set the price. They
have the responsibility for planning the details, the
investments and costs necessary to develop, sell, and deliver
the product. Therefore, they have the responsibility to set
the price.
In
their price, they will leave a certain amount for selling or
for giving discounts. Discounts and allowances will only be
given when there is a savings made in the efficiency of
selling. Discounts will be given by the account team, not by
the hierarchy or the Field administration.
Salespeople
incur
costs and make a profit on the costs they incur. We’re not
going ask them to make another 22% on the total system. If we
did that, we wouldn’t be competitive.
But,
of course, if we have the opportunity, if we have a unique
product, we will charge more for that because it’s worth it to
the customer.
Do business units stand alone, or can
they share profit and losses in certain circumstan-
ces?
We
allow freedom. We count return on investments. Sometimes
business units will lose money, sometimes they will make it.
If they lose money sometimes, they’d better make more at other
times.
Basically,
I’m giving our senior managers the opportunity to run
businesses and show they can succeed and make profit with
their value-added efforts.
The
new management reporting system offers Digital a competitive
advantage by helping our decision-making environment. It
should give us the small-company advantage of being fast on
our feet, while having all of the resources of a large
company.
We
are looking at the company in three different dimensions — the
Product and Service Creation Units (which includes software,
services and hardware), Application and Integration Business
Units, and Customer Accounts. Business unit managers will be
accountable for setting their direction and responsible for
the results.
To
be successful, a business unit manager, as an entrepreneur,
must determine the level of activity the customer needs and is
willing to pay for. Entrepreneurs cannot be told what they
have to buy and at what price. They expect and demand the best
in class.
Overall,
the new management reporting system will help us understand
where we are making or losing money and why we all do the
activities we perform today. In simple terms, it will help
ensure the customer is willing to pay for our activities.
We
arrived at this system by considering the dimensions of
Digital and their levels of complexity. The three dimensions
are technology, uses of the product, and customer
relationships. Most companies, when they get large,
divisionalize around the dimension of their business that
presents the highest level of complexity, so they can give
focused attention to the needs of customers in that dimension.
Digital, however, is very complex in all three of those
dimensions. We produce thousands of complex products,
customers put them to thousands of uses, and we have a
multitude of different kinds of relationships with customers.
When
a company has high complexity in all three dimensions, it is
foolish to tell one dimension to manage the other two.
Instead, we want each business unit manager to act as an
entrepreneur would, with the freedom to focus on any one of
the elements that make up Digital’s value chain.
A
business unit might focus on basic technology or solutions or
applications or accounts. Each business unit has the right to
propose a new idea, without being checked by the other two
dimensions.
At
the center of our new management reporting system is the
Executive Committee. They are going to provide the leadership
to help us integrate and decide which directions represent
profitable growth potential for future years,
But
the goal of the new management reporting system is not just to
provide information to Ken Olsen or the Executive Committee.
Rather it is to provide the right information in a simple
enough format to the business unit managers. This information
must be straightforward enough so people can remember it and
work with the various alternatives.
We
will tell business unit managers what profit they have earned.
We will take revenue less the cost of the input they have
received and less the cost of their own specific activities.
If the cost of input and activities is greater than the
revenue, that means we haven’t added enough value, from the
customer’s viewpoint. In other words, the customer is not
willing to pay for the business unit’s work; and the business
unit is not contributing to Digital’s profit. In that case,
the business unit manager will be asked, "Why are we in this
business?"
That
may seem very simple, but in today’s system we cannot do that
effectively because of the number of excuses related to
allocations and "helpers." The business unit managers, as
entrepreneurs, will have to demonstrate the ability not only
to grow but to grow at a profit.
From
a planning and budgeting standpoint, we have developed a
framework to help us go forward while we working the details.
Over the next three months, we are going to use the
information that has been developed and the work that people
have done in terms of sample profit and loss statements and
simulations. But we do not have the luxury of planning a year
and then implementing. With the stock trading as low as it is,
we must start it now and work the exceptions later.
We
will provide entrepreneurs the information they need
immediately. It may be rough and approximate, but it will be
information that they have not had before.
By
the third quarter, we should be about 60% complete, providing
information that can be used for seeing trends and looking at
"what-if" scenarios. We will continue to improve the available
data to whatever range the business unit managers say they
need.
The
point is — we are beginning now.
We
have to make significant changes in the way we think about
planning. The business unit managers will provide the lead
with their new ideas, their enhancements to current ideas, all
in terms of a profitable growth scenario. The functions will
respond in terms of benchmarking, indicating where they are on
their journey to best-in-class, and understanding variable
and fixed costs. The Executive Committee will continue to
review and update corporate models for FY91, FY92 and beyond.
Understanding external factors as a context for the decisions
they make, the Executive Committee will provide advice and
counsel on business unit presentations and provide the
framework in which we will do budgeting, in the fourth
quarter, for next year.
The
focus of "total quality management" is delighting customers on
a sustained basis and achieving undisputed leadership in total
cost. Our objective is to use quality in this sense as a major
market differentiator.
In
every enterprise, there is a value-added piece involved in
meeting customer needs, and a non-value-added piece, where
good people and assets are consumed doing things customers
don’t want. We want to eliminate the non-value added
activities and empower every manager and employee towards
value-added activities only.
A
value-added enterprise concentrates on meeting customer’s
expectations — both their explicit demand (what they say they
want), and their latent demand (where we help them interpret
and determine their real future needs). Products and services
are designed concurrently, not serially. The goals are set up
front and 80% of the quality issues are determined right at
the onset. The products are built in an environment of
just-in-time
manufacturing
processes,
with the statistical process control in place. With service
organizations that are value-added in their approach, customer
problems are solved the first time, rather than on multiple
visits. A value-added enterprise has highly trained sales
people who are very responsive in dealing with customers. The
whole company is highly focused towards the customer.
Digital’s
approach
focuses around four major initiatives intended to empower
every manager and employee to be entrepreneurial in meeting
customer needs, and innovative and disciplined in driving for
continuous quantum improvement across the corporation. We are
striving to exceed customer expectations without defects,
without waste, with best-in- class practices, and total
employee mobilization.
Those
initiatives
are:
o
Voice of the Customer,
o
Benchmarking,
o
Six Sigma, and
o
Just-in-Time Cycle Time.
Voice
of the Customer is our effort to make sure we "do the right
thing." The other three initiatives are intended to make sure
we do that in the most efficient way. Benchmarking aims at
using "best in class" practices. Six Sigma is an approach to
eliminating defects. And the "just-in-time" cycle time
approach makes sure we compress our time-based activities.
Voice
of the Customer consists of four steps:
o
To make sure every one of us is totally passionate and
relentless about solving customer problems while making a
profit.
o
To make sure we have a profound understanding of our
customers’ needs and their perceptions of Digital’s products
and services.
o
To work with the customer to try and anticipate the customer’s
future needs and make sure we meet them.
o
To express those customer needs and how they can be executed
technically.
Everybody
else in the industry is trying to "satisfy" customers. We have
to find tangible ways to differentiate ourselves by
"delighting" our customers. The first step in achieving that
is "contextual inquiry," where marketing or business unit
managers work jointly with the development groups and with
customers. In the classical approach to marketing, you ask
customers what they want, and then respond to their explicit
demands. But customers tell every supplier in the industry
the same thing. To differentiate ourselves, we have to do more
than that. We have to observe how the customer works, and
imagine, with the customer, unique and entrepreneurial ways to
solve their long-term needs. Then, having gathered all of that
information, the marketing and development people, using the
customer’s language, lay out all the technical ways of
executing those items and then make the various trade-off
decisions. This way, we come up with a specification and move
forward to execute it quickly. This process forces heavy
integration between the business units and the development
groups and gets them all much closer to the customers.
Having figured out what is the right
thing to do, the next step is to make sure we have
best-in-class practices in areas that are critical to our
success. Benchmarking is a formal way of looking at other
companies to find out who has the best practices and then
incorporating those in our own company.
The first step in benchmarking is
figuring out the critical success factors for a particular
organization. For example, in some manufacturing groups, the
critical success factors are: customer acceptance, cost,
quality, and time to profit.
To succeed at this, senior managers have
to be personally involved, particularly in the first steps, to
avoid the danger of benchmarking activities that we shouldn’t
be doing at all. We need to know our own operations very well,
and know the leaders, not just within our own industry, but
worldwide. Then we must incorporate the best practices and set
the new standard and gain superiority.
We want to encourage people to help
identify major areas where our what we do differs
significantly from best-in-class. Those are opportunities we
want to go after, and we should encourage people to come
forward and identify them.
Our Six Sigma initiative focuses on
rapidly reducing defects and ultimately eliminating them. This
includes "design for excellence," design for reliability,
availability and cost. We want to get on a path of ten times
growth in reliability every four years.
"Six Sigma" is a term from statistics. In
the real world, no process can be exactly repeated time after
time. There is always some variation of results around a norm.
The goal is to reduce the amount of variation and also to set
specifications at realistic levels so that there are almost no
instances that fall outside allowable limits. A process with
a "six sigma" distribution has only three defective parts per
million.
We have already seen significant success
in this area in the Storage Group, which is on a path of 60%
reduction in all its in-process defects this year.
Historically, Engineering would design a
product, and pass their requirements to Manufacturing.
Manufacturing would then try to make it. Variations in
manufacturing processes relative to the requirements would
mean that a certain amount of material would end up wasted as
scrap or rework. By integrating the efforts of the development
and manufacturing people, roughly 80% of the quality issues
can be resolved right at the beginning.
This
forces a creative tension in the setting of product and
process requirements and goals, designing the product and
manufacturing process simultaneously to jointly meet quality
and cost goals.
This
joint effort does away with a lot of the uncertainty in the
system. Manufacturing no longer needs to maintain extra
capacity to handle rework and scrap, and costs are reduced
exponentially throughout the product cycle. (Typically, what
would have cost a dollar to fix in Engineering, costs $10 to
fix in Manufacturing, and $100 to fix in the Field).
Six
Sigma is not limited to the technical domain. It is applicable
to every organization and every individual throughout Digital.
It is an empowering concept which personally challenges each
of us to eliminate defects from the execution of our tasks. We
want all employees to look at the value-added they provide the
corporation and find ways to improve their work process.
For
example, Don Gilbert, who is responsible for janitorial
services in the Springfield plant, mapped all the processes
involved in this work and then benchmarked them. On his own
time, he visited all the hotels and plants in the area. He
came up with ideas for how to improve janitorial practices at
his facility. He planned how to implement them and went to his
boss and the plant staff and showed them how he could provide
significantly higher levels of services for a lower budget.
That’s the benefit of empowering individuals at all levels in
the organization, letting them drive for excellence.
I
believe we’re already a leader in the industry in cycle time.
The focus of our "just in time" and "A(delta)T" programs is to
compress all our time-based activities even further. This
includes time to market, time to process an order, time to
manufacture through a plant, time to respond to a customer
problem, etc.
For
example, in the Hudson plant, introduction of just-in-time
manufacturing and cycle time techniques helped reduce a
process that had taken five weeks down to one week. That 80%
reduction in cycle time led to improved responsiveness to
customers and dramatically reduced the level of scrap.
Today
25 manufacturing plants in Digital have very active
Just-In-Time A(delta)T processes in place. Typical results to
date across the company are 60% reduction in work-in-process
time in manufacturing.
The
A(delta)T concept involves breaking a process into its
value-added and non-value added elements. You determine the
theoretical level, which includes only the value-added piece.
Then your goal is to arrive at that theoretical level, and
then to challenge that level and strive for further
improvements.
We
have trademarked our term "A(delta)T," and half a dozen
Fortune 30 companies are in the process of licensing and using
it.
We’re also
teaching our vendors. One of our major vendors for storage
parts implemented it and three months later they had reduced
their cycle times by 70% and reduced their costs by 17%.
The foundation
of the Total Quality Management Process is employee
involvement and management leadership. This process requires
the mobilization of the entire work force to drive towards
continuous quantum improvements. You bring teams together to
strive for innovation and to implement it. We have such teams
in place already across most of the manufacturing plants. As
we now drive this approach in the service and sales
organizations, we expect to see increasing teamwork and
continuous improvement.
In closing, we
as managers are responsible to lead the company to achieving
best-in-class in every dimension. Today, there’s a tremendous
ground swell of people getting involved in this. But we need
every senior manager in the company to commit to get
themselves educated in these areas and to provide vigorous
leadership that empowers the people who are doing benchmarking
and reducing cycle times. We have to help employees deal
appropriately with the changes that occur as a result of
those types of dramatic improvements. We need to integrate
total quality management into all aspects of our business.
Always start
with what’s important to the customers, and you can’t go wrong
as you work your way through this.
Since 1987, the
banking marketplace has been growing 6% to 8% per year in
computer expenditures. Our marketshare has been growing at
20% compounded, and our revenue at 25% compounded. Two of the
top ten banks in the U.S. now spend more money with Digital
than they spend with IBM. Today, about half the money that is
transferred in the banking system in the world moves on
Digital computers. In other words, we are really making an
impact in this market.
Chemical Bank
operates their entire retail branch network using VAX
computers. They expect that about 70% of their profits are
going to be on the retail or consumer side of the business.
A year ago we
installed a new trading room at Bankers Trust in Broadgate
London. They are using that system — including 250 VAXstation
computers — to trade about $20 billion a day. Bankers Trust
came to us with a problem, and we jointly developed the
solution. From that project, in addition to the sale, we
developed our DECtrade product, which we now market to the
rest of the banking industry.
There is
enormous opportunity represented by emerging countries that do
not yet make full use of electronic funds transfer. I recently
had dinner with the brother of the new president of
Czechoslovakia. I asked him, "How do you move money into
Czechoslovakia as you want to set up new businesses?" He
answered, "Very slowly." Six weeks is the average time to
transfer money into Czechoslovakia. That is a great
opportunity that we can now take advantage of.
Banks are facing
many problems today, such as consolidations, mergers, and even
failures, which creates ever-changing opportunities. In this
environment, banks need to use technology to get a
competitive advantage. They are not interested in technology
for technology’s sake. Their goal is service and
responsiveness. They are going to buy computing solutions from
vendors who can show them how to increase the level of service
and responsiveness they give their customers.
Banks buy
solutions, not hardware. We need to understand the their
problems. We need to worry about what they have already
installed, and lead with our advantages, such as Network
Application Support (NAS) software, and our ability to
integrate. Rather than have them throw out what they have
currently installed, we want to help them grow from our base.
We need to look at their business from a global,
round-the-world, round-the-clock perspective.
Success in this
arena requires having a complete team focusing on these
solutions. That team includes the Application Business Unit,
Sales, Services and Digital Customer Centers (DCCs).
We all need to
listen sensitively to the issues and problems of customers. We
have to involve them as participants in the planning process.
And we need to design platforms that are based on standard
products. We can’t make money reinventing the wheel each time.
We need repeatable solutions that we can sell over and over
again. We can implement these solutions with the Enterprise
Integration Services (EIS) organization, working with both us
and the customer from the beginning through customizing and
installing.
From this
approach, customers get innovative, but practical solutions
that solve their problems. They get total system integration.
As a result, customers view themselves as valued Digital
partners.
Information
about money, markets, and customers is going to be the key
strategic weapon for the 1990s. We have the opportunity with
our products and with our solutions to be leaders in that
marketplace.
Last month we
announced that we would add the POSIX interface and other open
standard interfaces to our VAX VMS product set. That means
Digital can now call itself "the open systems company." In
other words, every product line that Digital supports today
supports open systems. With the current pressures around open
systems, Digital should take advantage of this opportunity.
What do we mean
by open systems? Customers would like to be able to implement
any of their applications in a vendor-independent way. They
would like to be able to develop an application on one
hardware/software platform, then move it over to other
hardware/soft- ware platforms when they choose to. This goal
can be accomplished if indeed these hardware/software
platforms provide the open, standard interfaces that the
applications are designed to.
In other words,
if we provide a set of open standard interfaces on the
operating system level, a customer or a third party software
company can develop an application that meets those interfaces
and then be able to run it on any hardware/software platform
that provides those interfaces. That is called "portability,"
one of the major features of an "open system."
Today, Digital
supports its open computing environment through its Network
Application Support (NAS) products. The goal of the NAS
strategy is to be able to interoperate across any
hardware/software platform, independent of its structure and
its architecture. It enables us to support client-server
activity and to integrate an enterprise, that has multiple
computer architectures and computer systems from multiple
vendors.
Today Digital
has hundreds of third parties working to develop applications
using NAS capabilities. In this case, NAS products are
software packages coded to standard interfaces that allow
various systems to interoperate and allow applications to
interoperate with other applications across the network.
Some people have
the mistaken impression Digital is not really serious about
UNIX* and is just trying to push the VAX VMS alternative as
its major operating system. Others believe
that Digital has
switched to UNIX and that therefore VAX VMS software is a
dying system. Both of these impressions are wrong.
Today, Digital’s
computer repertoire includes both VAX VMS environment and
ULTRIX/OSF operating system environments. These are the
environments for which Digital will provide full service
support.
In addition to
being a founder of of the Open Software Foundation (OSF),
which supports open interfaces as the vehicle for open
systems, Digital is also the major supplier of the technology
that OSF is putting forth. Our ULTRIX strategy is to be the
first and best with implementations of OSF technology.
Today,
applications written using the POSIX interface for any ULTRIX
system, and later this year they will also be able to run on
our VAX VMS system. Likewise, applications then developed for
VAX VMS systems when using the POSIX interface can be easily
moved over to our ULTRIX system or to other companies’ UNIX
systems.
This is a key
element of achieving open systems. That, coupled with NAS
support of interoperability across a multi-vendor
environment, provides the foundation for Digital to declare
itself as "the open systems company."
*UNIX is a trademark of UNIX System
Laboratories, Inc.
All the various
flavors of UNIX software available in the marketplace today
are in a state of migration. Our ULTRIX Version 4, which we
ship today, is based on the same Berkeley UNIX code that is
used by Hewlett-Packard and SUN. We are going to the Open
Software Foundation’s OSF/1 system, as are IBM and
Hewlett-Packard. Meanwhile Sun is moving to USL’s System V.4.
All of these
current products are competitive, and all are in the process
of moving to a new base. When it comes to the base operating
system, it is really a pretty level playing field. In other
words, we should not let operating system issues get in the
way of selling in the UNIX space.
In fact, Sun’s
transition to V.4 is a major change. They have given all of
their Independent Software Vendors (ISVs) a thick portability
guide, indicating this is not going to
be a very smooth transition.
Sun’s history is
very interesting. They have successfully marketed their
company as a leader in standards, yet Sun’s pattern is
becoming clear. The press and analysts are starting to say
that Sun believes in open standards only as long as they
propose them themselves. Anything they don’t propose, they
fight or ignore.
Digital offers
all of our technology along with other resources of our
Engineering groups to all the standards groups. We accept
whatever the standards groups declare is the standard, and
then we are very aggressive about implementing it. To me, that
is the definition of an open systems company.
Our ULTRIX
software is gaining momentum as the open systems leader. In
the RISC/UNIX line, from Q1 of last year to Q1 of this year,
we grew by over 300%. That is evidence that our message and
our products are working for us.
The cynics who
thought we weren’t serious with UNIX are starting to change
their minds. The OSF consortium is working. OSF is real, and
it is releasing technology very quickly, generating faith and
enthusiasm from the press and customers. Meanwhile, Sun is
becoming increasingly isolated from the rest.
Before OSF,
standards bodies would take years to draft a standard. OSF has
changed all that. OSF supporters believe that a good decision
made now, based on the best available technology, is much
better than a great decision made later. Rather than striving
for consensus, they are looking at all the technology, making
decisions, and moving forward quickly. Of course, if a
standards body does endorse a standard, OSF supports it and
incorporates it into their technology. X/OPEN’s Portability
Guide (XPG) is a good example, and OSF/1 fully complies with
this standard.
Today, with
ULTRIX V.4, we have a great implementation of UNIX software.
We also have great RISC hardware and over 1800 applications.
The press recognizes the DECstation 5000 computer as the best
workstation available and the DECstation 2100 machine as the
best workstation bargain. These are tremendous sales
advantages.
In a few years,
the only major operating systems left (excluding PC software)
will be VMS, UNIX and the IBM proprietary systems. The smaller
vendors, such as Wang and Unisys, are all converting from
their proprietary systems to UNIX. But VMS and IBM proprietary
systems clearly have very long futures ahead of them. They
have significant capacities, and no significant shortfalls.
Nevertheless,
there will be a lot of movement in the customer bases. When
customers move, they are not likely to change from one
proprietary system to another. 1 doubt that we will lose much
VMS business to IBM’s MVS and vice versa. If anybody decides
to convert from these proprietary systems, they are going to
go to open systems. So when customers do decide to move from
VMS or MVS software, we should be there with our UNIX products
to catch that business.
We should
remember, too, that as the other smaller vendors migrate their
installed bases from proprietary systems to UNIX, Digital has
a great opportunity to get this business with our ULTRIX/RISC
products. Some of these accounts may demand the capabilities
and features that are currently available in VMS and IBM
products. And they may not be ready to move to UNIX. In that
case, we have a distinct advantage with our VMS standards
message.
Meanwhile, Sun
and Hewlett-Packard are selling UNIX aggressively. Their
customers love UNIX, and if we are going to do any business in
these accounts, we have to sell UNIX.
The bottom line
is that the bulk of Digital’s opportunities for growth will be
in the UNIX area. We have to use RISC/ULTRIX systems to go
after this new business and growth. We need to learn it, and
we need to sell it well.
When I first
heard the words "Open VAX VMS," I must admit, I had to laugh.
The thought of "Open" and "VAX VMS" in the same sentence
seemed contradictory. It takes a major mindset change to think
about Open VAX VMS systems, because it is a major change, and
a huge business opportunity.
Many in the
press and, unfortunately, many customers are beginning to ask
about VAX VMS software and its future. They are wondering: is
VAX VMS software a proprietary, mature product, that is
primarily sold to the installed base, whose growth years are
behind it?
My message today
is that what is happening in engineering right now, the things
that we are adding to VAX VMS software in the next 12 to 24
months, in the area of openness and prlce/performance,
transforms it into a major growth product, because we believe
we will have the premier commercial strength open system on
the market.
Our strategy can
be summarized into three points: Open VAX VMS software is
open. It retains superiority in commercial strength
functionality and quality. And, it has leadership
price/performance.
There are as
many different definitions of "open" as there are people.
Today VAX VMS software is very open in the sense that you can
connect almost anything to it. We support any desktop from
terminals to PCs, Macintoshes, VAXstations and UNIX
workstations and IBM mainframes in our Network Application
Support (NAS) environment.
In 1991, we will
add key open interfaces to VAX VMS software, when we add MOTIF
and POSIX. For example, POSIX on top of VMS software will
allow you to much more easily move UNIX software to the VMS
system. Today, there are several different types of UNIX in
the marketplace, but it is fairly easy for a software
developer to port his or her application from one to another —
for instance, to or from Digital ULTRIX software, Sun/OS,
HP-UX or IBM AIX. But it’s difficult to get to and from VAX
VMS software. POSIX radically changes that. POSIX makes VMS
software a member of the portability club. It becomes as easy
to port your open application to VAX VMS software as it is to
another flavor of UNIX.
At our Open VMS
announcement last month we actually had a Sun workstation next
to our new VAXstation system, and we showed, with an early
version of our POSIX interface, how you can easily move the
application from one to another. But if you could simply move
it, how interesting would that be? The amazing thing is that
you retain the underlying commercial strength functionality
and quality of VAX VMS software.
What do we mean
by commercial strength? We have the most dependable systems in
our VAX VMS family, as we are the only ones to have
clustering, shadowing, journaling, fail-over, recovery,
two-phase commit and fault tolerance. We have the flexibility
of client-server systems, timesharing systems and now
mainframe systems with unique compatible growth. Our network
prowess is obvious from local to global to network management.
Our Cohesion software development environment allows you to
develop large scale applications in up to half the time of
competitors. You retain these commercial strength capabilities
in the open environment. For example, when a Sun application
runs on open VMS software, it automatically, without
recoding, picks up clustering, shadowing, journaling and
fail-over. That’s what allows us to become the commercial
strength open system.
The third part
of our strategy is price/performance. Many people give us
credit for having the best balanced performance in the
industry, from top to bottom. From speed, to I/O, to storage
connectivity, we have exceptional, balanced performance.
Unfortunately, in certain market segments, particularly in our
traditional technical segments, which still today represent
over 40% of our business, some customers say that VAX VMS
products are slow, not as fast as RISC machines running UNIX.
Over the next two years this will change radically. We expect
our performance will pass all of our competitors, as we add
leadership RISC technology to the VAX VMS environment.
In summary, we
are opening VAX VMS software, retaining our
commercial-strength functionality advantage, while
leapfrogging the industry in price/performance. To me these
are all sort of unbelievable things, but the group who is
making these claims is the group who invented the VAX family,
invented VMS software, invented MicroVAX computers, and
brought you most every VAX system you have had in the last
fifteen years. This is the plan. This can be a very strong
marketing message, as well.
Let’s consider what this message means to
two typical customers. The first is a loyal VAX customer who
says, "I love my VAX VMS software environment, but I’m worried
about its future because it’s closed and slow." This customer
might have millions invested with us, and millions more
invested in software, data and trained employees. They are
getting pressure from their management to consider other
systems. IBM and others are throwing all kinds of information
at them raising questions about where the VAX VMS environment
is going, and they want reassurance. For them, open VAX VMS
systems is the ideal message, as it addresses both of their
concerns. It gives them the confidence to buy today, knowing
they are staying on the leading edge of technology.
This message is also very well received
by the customers of the proprietary vendors, such as Unisys,
Data General, Bull, and even IBM. These customers are often
very uneasy about the future, as unlike with VAX VMS their
vendors are not rapidly adding openness and leadership
performance. They are concerned about being dead-ended. For
example, one Unisys customer told me, "I’m running a
mission-critical application on my Unisys platform. Unisys is
trying to sell me their UNIX platform, but I just don’t think
it has the functionality and quality that I need. It’s just
not ready. I’ve considered VAX VMS systems. You clearly have
the functionality I need. But while you serve good food in
your prison, I don’t want to be in prison again." In other
words, this Unisys customer recognizes the high quality of
our software but is very concerned about a "closed"
proprietary environment.
Once again the ideal message is open VAX
VMS systems. They can have the necessary commercial strength
functionality now, while buying into an open and
price/performance oriented environment as well. If this
customer wants even more openness, because open interfaces on
top of VMS software isn’t enough for some reason — then we of
course have our ULTRIX products. The same standard open
interfaces that we are putting on VMS software, are already on
ULTRIX software. And so you don’t get stuck on either side, as
you can switch later. I believe sales reps will sell a lot
more of both VAX VMS systems and ULTRIX systems when the sales
rep can talk about both.
Our
new organization — the Production Systems and Mainframe
Systems Business Unit is focusing on a large market that we
have, for the most part, not been tapping.
Roughly
half of the total available computer market falls into the
general category of "production systems." We often use the
word "mainframe" in the same context, referring to "mainframe
kind of systems."
When
we first started looking at this kind of business many years
ago, Carl Gibson, in a now classic memo, referred to "the
mainframe of mind." In other words, the customer has a certain
kind of expectation not only from the computer system, but
also from the vendor who delivers it. And that combination
basically calls for a new set of behaviors on our part that we
have not been practicing too much in the past. We have to get
into that "mainframe of mind."
In
the production systems business, the customers are typically
the MIS directors, chief information officers and CEOs who get
involved with mission-critical purchases.
The
major competitor in this arena is IBM. IBM does this kind of
work very well, in all the categories that these customers
require. Tandem has learned how to compete in specific parts
of this marketplace. The Japanese big three are very
interested in the marketplace, but they haven’t got all the
resources in place to compete yet. They have so far limited
themselves mostly to being plug-compatible to the IBM
environment.
To
a certain extent, some of advanced science applications fall
into the same category. Convex and Cray compete for those
applications. But our principal competitors are IBM, Tandem
and the Japanese big three.
The
customers want a real partnership with their suppliers, in
which there is some sharing not only of the rewards, but also
of the risks. The people who make the buying decision are
betting their lives and careers on that decision. They need
that decision protected.
We
have many capabilities in our architectures and our systems to
protect the customer — such as the broad range of products and
performance that we can provide as the customer grows or
centralizes or decentralizes. We can provide them with the
environment they need, at the particular time that they need
it, without rewriting software or retraining people. That is a
major advantage. We also have an "availability continuum"
which is unmatched in the industry.
But
customers need more than that. They are looking for solutions
to their business problems — a full range of solutions. They
want partners who will look beyond their companies’ own
specific offerings and help with other things as well. They
are looking for mainframe class services, as well as products
— sendees of the kind that our Enterprise Integration
Services Group (EIS) can provide.
They
need fundamental products that are highly reliable and highly
available. They need software that works. They need assurance
that as they adapt to new technologies, they won’t have to go
through major transitions internally and spend time in that
transition and lose money in the process. They need to make
sure that the "Digital" they are working with acts toward them
as one company, with a single focal point for them to contact.
They want their account manager to be the boss with access to
all the resources from Digital. They want that account manager
to be able to get the products, services and support, and,
most of all, the responsiveness that they demand in their
environment.
At
DECWORLD in Japan last week, I learned that some of our larger
customers now believe that Digital is a viable vendor across
all of their application needs, not just their science and
technical needs. They are talking to us in a different way
now. They are looking for vendor stability and for performance
that meets their needs and the ability to grow. They want us
to be able to respond to them. We have to leam that their
systems environment is their business.
These
companies
are looking for flexibility. Many are consolidating systems.
Many are distributing. They want to be able to do both, and we
have the best products to satisfy both of those requirements.
We
used to think of reliability and availability in terms of
hardware. Hardware is part of it, but our customers are
concerned about the total system, and how the application
plays in their environment. They don’t measure availability in
terms of "is the central processor running?" but rather "Am I
running my business?" That’s a different model. Fault
tolerance is important, and disaster tolerance is becoming
very important.
In
Japan, because of earthquake problems, the government has just
mandated that major corporations must have disaster tolerance
sites. That is an opportunity for us because we are the only
supplier with a simple, elegant solution.
To
have a "mainframe of mind," we have to be responsive to every
customer problem associated with their system, regardless of
whether the problem originated with us or a competitor or a
third-party supplier. Often, these customers are not price
sensitive, but they are very service and responsiveness
sensitive. When we bid for the system, we have been make sure
that we include charges to cover our costs for doing that and
make a profit at the same time.
We
have been preparing for this business for a long time and in
various ways. In the sendees domain, we have an Enterprise
Integrated Services organization that can deliver everything
we need. We have the kernel of products, people and processes.
We need to make improvements in all areas, and we need to
provide the things they need to easily plan and manager their
environments.
We
need to remember that a "mainframe of mind" does not
necessarily mean we only sell a "mainframe" computer. We are
selling everything that Digital offers in an environment where
the customer has specific "mainframe of mind" requirements.
With
our products, we offer a range of performance and growth, as
well as networking capabilities.
The
role of our new business unit is to focus attention on a class
of customers and competitors and a certain category of needs.
We have to specify those needs and represent them to the rest
of the company. We have to help develop and implement the
strategies that will satisfy those needs and delight those
customers. We also provide some systems knowledge to the EIS
organization and to the Application Business Units to help
them deliver systems that meet the requirements of customers
of this kind. We will provide marketing support to those
areas, as well as to the Product Business Units.
And
we have to help the account manager by providing a level of
expertise to customers of this kind, when called upon.
Our
goal is to profitably delight customers by helping them match
their needs to the technology systems and services that we
offer.
The
"mainframe"
is an environment, not just a box. It includes hardware
support, sales support, software support and consulting
support. Its throughput is measured not in terms of how fast
the job runs, but how much work gets done. Throughput here
really means organizational productivity.
The
key characteristics of a mainframe are reliability,
availability and maintainability. When we set out to design
the VAX 9000 system, the IBM 3090 was the recognized
best-inclass mainframe. Our goals were to do better than
that, and we succeeded in terms of high throughput, numbers of
users, systems performance, and balanced performance.
The
VAX 9000 system offers large memory size (up to two
gigabytes), along with high memory bandwidth (500 megabytes
per second), high I/O bandwidth, and sustained performance.
These are all mainframe characteristics.
Today
the manufacturing problems are behind us. We expect that in
Q3, we’ll be able to make as many VAX 9000 systems as we can
sell.
We
anticipated that during the first year most of the VAX 9000
business would come from upgrading the installed base. As it
turns out a third of the sales to date have come from new
business: new applications, new accounts, or competitive
displacements, where our equipment replaces that of a
competitor. Also, in a number of cases, we’re selling
multiple VAX 9000 systems to the same account. That’s because
these systems are being used in production environments, where
they can't go down. In July 1988, just two and a half years
ago, Digital got into the transaction processing market in a
big way. Today we’re one of the top three vendors, and we’re
taking on IBM, the top vendor, at the heart of its business.
To date, 36% of the VAX 9000 business has come from
transaction processing applications.
We
just recently had a customer advisory board meeting in
Florida, where we brought in senior managers from ten of our
first accounts to hear what we could do better to be
first-in-class. They told us that despite some of the slips in
the program, the installation planning and implementation set
a new standard. It was better than the IBM mainframes they
had installed. They said the performance was better than they
had expected. They felt that, as a company, we were listening
to them.
They
also noted that the mainframe business is a very different
environment for Digital. It requires real partnership, not
just taking the customer out to lunch. It requires helping the
customer be successful, planning and sharing risks, and
communication. We were criticized for our communication. We
need to make sure that we "say what we do and do what we say."
They were also concerned about commitment. When they bet their
business on these applications, they want to know five years
from now that we'll protect their investment and take them
into the future.
They
also emphasized the importance of "systemness." They spend as
much on disks and I/O as they do on the central processor.
They want all of the pieces from Digital to work, not just a
fast central processor.
And
in the area of service, they "don’t want MicroVAX support for
a mainframe environment." They want mainframe support.
Overall
the news was good. All ten customers agreed to be reference
accounts, and overall were delighted.
We
have the product today, and it is a VAX computer. It runs both
VMS and UNIX software, so the operating system is not an
issue. The challenge is. with focus and expertise, to get new
mainframe business in FY91.
Today,
only Digital offers scalable availability. That means that a
customer can select a conventional (VAX 9000) system, a high
availability (VAXcluster) system or a continuous processing or
fault tolerant (VAXft) system. No other supplier offers that
range of choice.
Tandem
does have high availability solutions, but for fault
tolerance, they offer an incompatible product line called the
Integrity S2. Stratus has full tolerance, but they do not have
the range of availability that our VAXcluster systems offer.
IBM has a variety of solutions, but they are not compatible.
Our products are.
High
availability
systems use redundancy to minimize downtime. Fault tolerance,
on the other hand, means continuous processing.
For
example, think of a light bulb. With fault tolerance, you
would say it could never go out. With high availability* you
have a spare bulb nearby and can switch quickly, if need be.
Only
Digital offers both kinds of solutions, with compatible
systems. That is fundamental to our product advantage.
A
customer can select a high availability solution today and
tomorrow, if continuous processing becomes critical to the
operation, he or she can select a fault tolerant solution.
And the code in both environments will be compatible at the
binary level.
We
are leaders in this area. We have installed more high
availability solutions than Tandem and Stratus combined. We
have installed over 15,000 VAXcluster systems, which include
between 80,000 and 100,000 computers in total.
The
success of clusters derives from their range of availability
as well as their range of performance. By adding processors or
storage disks, you can readily upgrade your system
performance. Clusters also protect the customer’s investments
because old processors and old storage devices can be combined
with new ones.
Meanwhile
a growing class of customers requires continuous processing.
For them, the cost of the downtime is simply too great. We
expect that this continuous processing environment will
become the standard in the near future.
In
the early days of computing, businesses always had a manual
alternative for everything they did on a computer. They had
run their businesses manually before, and if worse came to
worse, that could make due that way for a while when the
computer went down. But today move than 90% of business
applications perform tasks that have never been done manually.
If the computer goes down, there’s nothing to fall back on.
This
is true in mission-critical applications like electronic funds
transfer in the banking business. But it is also true of many
retail businesses. For example, at your local video rental
store, if the computer is down, the business probably comes to
a halt. They have no other way to keep track of their
transactions. In other words, fault tolerance is not a luxury.
It is becoming critically important in many markets.
In
summary, the reason Digital
continues to be successful in spite of a very tough business
environment is that we do not just target niche markets.
Rather we have compatible products that cover the entire range
of performance and scalability and that run both VMS and UNIX
software. In the 1990s, success depends on solving not only
just piece, but rather the entire range of the customer’s
problems.
seltzer@seltzerbooks.com
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