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mgmt memo


Vol. 10 No. 8                                                                                                                  Oct./Nov1991


"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


This issue of MGMT MEMO focuses mainly on the commodity business and implementation of the New Management System.




How to Talk about the ACE Initiative                                                                                                 

An industry shakeout, with the formation of alliances and partnerships, has happened with stunning swiftness. No single vendor can succeed alone in this environment. Digital has been the major driving force in development of ACE. This is where Digital will win or lose in PC and UNIX markets.


The Opportunity-Driven Company - Ken Olsen Emphasizes Business Management, Freedom and Responsibility

We need to instill in people the fact that we trust them to be entrepreneurial. We need our business unit managers and account managers to propose their own budgets based on the opportunities that they see, rather than limited to the resources allocated to them by a bureaucracy.


Message to Account Managers - Think Like Retailers and Pump up the Volume (Bob Hughes)    

The Account Business Unit represents an entirely new way of selling to and supporting our customers. It is a very important and complex change and comes at a time when we also have to deal with a number of other difficult changes.


The Importance of Alternate Sales Channels to Digital’s Total Business (Win Hindle)      

Additional sales from indirect channels enable us to increase our volumes and reach the economies of scale needed to support investment in advanced technology.


Digital's Four Businesses from a Value-Added Perspective (Paul Kampas)                                      

In response to external pressure for change, Digital has evolved from a company that focused on one relatively homogeneous business to being in four significantly unique but interdependent core businesses. To succeed in these, we must understand and manage their differences, with different core competencies, channels of distribution and business models.


NMS and the Use of Information Technology -- Building a Knowledge-System Environment (Dave Ehrman)

Today a very important set of data is not captured — namely, the underlying assumptions that generated the plan data. This is the knowledge that was applied to arrive at the plans. If we are to improve our plans, it is the assumptions we have to work on.


The Role of Acquisition in Gaining Competitive Advantage in Commodity Markets (Murv Lackey)

The New Management System demands that we build strategic supplier relationships and drive an "integrated acquisition process" for the entire company. The $4.8 billion that Digital spends externally represents a huge piece of the company’s cost structure, and we have to leverage that buying power as much as possible.


Driving Change through Education (Dick Farrahar)

The New Management System (NMS) represents a major organizational transformation for the company. NMS education is intended to help managers achieve the intended outcomes.


Revising Digital’s Software Business Practices (Pat Spratt)

We intend to significantly simplify our software license offerings, and to do a much better job of ensuring that our offerings allow us to closely link the price we charge with the value of the product to the user.


Update on Software User Interface Standards (Richard Frankosky)                                                     

Participation in the standardization process assumes strategic significance because it affects what products a vendor must build and sell.


Update on Business Activities in Central and Eastern Europe (Alberto Fresco)      

Digital now has well-established activities in Hungary, Czechoslovakia and Poland, and is still considering the scope of its operations in the Soviet Union.


News Items

New Business Unit Focuses on AI Applications and Services                                                              

Digital and SONDA Announce Joint Venture in Latin America                                                           

Digital Opens First African Subsidiary in Morocco                                                                              



How To Talk About - The ACE Initiative


The following article, based on material that has been used in public presentations in recent months, is intended to help managers better understand this important new direction for the company so they explain it to their employees.


The Advanced Computing Environment (ACE) initiative represents a major extension to the way Digital does business.


Our markets have changed more in the past two years than they changed in the previous ten. An industry shakeout, with the formation of dozens of alliances and partnerships, has happened with stunning swiftness. Vendors of all stripes have become aligned in many ways - sometimes on opposite sides, sometimes as "partners" - and these groups will define the industry for the 1990s. No single vendor can succeed alone in this environment - not even IBM.


Digital has been a major driving force in development of ACE and defined much of the ACE technology. This is where Digital will win or lose in PC and UNIX markets.


In simplest terms, ACE is more than 100 hardware vendors — representing well over $55 billion in annual computing revenue - who have agreed to build or support two hardware platforms, two operating systems, many applications, and make them all work together. Basically, these vendors have agreed to this unification of the PC and RISC worlds, and the PC software and UNIX worlds. ACE does this through two standard hardware platforms - one Intel-based and one MIPS RISC-based. Two operating systems, from SCO and Microsoft, will encompass the current PC and UNIX worlds and will both run on both platforms.


ACE was formed to satisfy the most important needs of users and software developers. Users say they want choice, investment protection, and an open future - they want to be able to integrate new technology without messing up what they already have. They don’t want to be locked into one vendor to get these things. Software developers want to be able to develop an application once and sell the same version to big markets. And they want to spend their resources on developing and adding value to their products - not on porting to many platforms and operating systems.


ACE is a unified PC and UNIX environment, offering common applications that run on two CPU architectures. One could also say that ACE is two operating systems, two hardware plat­forms, and applications that run on both of them.


Although desktop systems will be the early volume leaders, ACE vendors will offer Intel- and MIPS-based laptops; PCs; workstations; servers, fault-tolerant systems; and large multi-processing mainframes - all able to run the same software.


Through the ACE platforms and operating systems, ACE users will share data across all ACE systems. The ACE UNIX operating system will unify four competing versions of UNIX into one. In addition, all existing applications written for SCO UNIX, UNIX System V, ULTRIX, MS-DOS, and Windows operating systems will run on one or both of the new ACE operating systems. In other words, while such vendors as SUN, Hewlett-Packard and IBM are moving to new versions of UNIX, we have a head-start in delivering a unified UNIX that works on both Intel X86 and RISC systems.


This means customers can continue to use their current applications - more than 40,000 different software packages. In addition, with such an enormous installed base of sys­tems, ACE will be the target platform for the newest, most innovative applications.


Digital has a big headstart over other ACE vendors today, with ACE-compatible Intel and MIPS systems that customers can order today. Innovative options, upgrades and components for the ACE market will be coming soon. We’ll offer Digital’s layered software on other vendors’ platforms. We’ll also market our components and software not only to end users, but also to other ACE vendors for them to build into their systems. And we’ll play a leading role in integrating and servicing all of the diverse ACE systems.


The Opportunity-Driven Company - Ken Olsen Emphasizes Business Management,

Freedom And Responsibility


Recently, Ken Olsen, president, has explained the New Management System to a variety of audiences. The following article is based on those remarks.


Our goal over the last year has been to break the company into business units, each of which has control and responsibility and the freedom to be entrepreneurial. But instead of the independence and creativity we need, we’re seeing new forms of bureaucracy and arbitrary measurements and limitations.


The New Management System is based on trust. We need to instill in people the fact that we trust them to be entrepreneurial, that the system is designed for them to manage the responsibility that they claim. We need our business unit managers and account managers to propose their own budgets based on the opportunities that they see, rather than limited to the resources allocated to them by a bureaucracy.


The successful entrepreneur sees an opportunity and drives for it. Unfortunately, for quite a few years, we, as a company, have been "resource-driven." Someone decides how much money we have to spend as a company, that amount gets divided up, and managers try to get the most out of their share. This is in spite of the fact that I have repeatedly


emphasized that there should be no fixed limit on resources. We should be limited only by how many good ideas are brought forward.


We want our business unit managers to propose their best ideas, not to box themselves in based on some fixed allocation that someone assigned them. For each market, we need to ask the academic question, "If we had enough resources to become number one, how would we go about it?"


We need to emphasize entrepreneurial business management rather than just arbitrary mea­surements. The New Management System (NMS) is not a measurement system for rewarding business units. It is not a set of constraints and rules. Rather it is a statement of the freedoms and responsibilities of business unit managers.


The New Management System is not a statement of how business units are to be organized, nor is it a statement of rights of control groups and functions who can tell business units what they can and cannot do.


Basically, it is an accounting system designed to supply the information each business unit needs to run its business in a optimum way. It is intended to help business unit managers.


Some businesses and accounts have one goal, and others have completely different goals. The New Management System does not force common goals and common ways of doing things.


Rather, it allows freedom. However, it does contain the reporting system to ensure every business unit reports in exactly the same format.


The account team has to feel it is their budget, and they are responsible for it. If something goes wrong, they learn. If the economy drops off and they don’t sell or their customer loses out, they have to cut back their expenses. They run their account like a business. If someone else tells them what to do, they’ve lost all responsibility and they learn nothing.


Leadership now comes from the business unit managers. There is nobody higher. People without responsibility don’t make decisions anymore. We have to trust them to make com­mitments and manage and budget.


We had a great experience in Europe about ten years ago. All of the individual country budgets for Europe used to go through Geneva, where they were reworked and sent back. As of the day we changed that and said the budgets would not get reworked, the growth curve for Europe went up a different steeper slope. Today, in Europe, every country is run like a business. Europe is now bigger in revenue than the U.S. and growing faster than the U.S.


When we started Digital, we decided not to have a centralized planning group. We believed that central planning limits the breadth of activity and interest of a company to the breadth and interest of the person or persons in charge of planning.


At one time, we had 33 business units — called product lines — each concentrating on a market, industry or product. Often these business units were frustratingly independent. But they were all expert in their market and clearly saw their responsibility in under­standing customers’ needs. Their clear goal was to offer what customers needed, and what sales people needed to take care of customers, and to ensure Digital had the technology necessary to accomplish that.


Having many entrepreneurial groups within one company means we have to strive to be very clear where the freedoms are in those areas in which we want to be entrepreneurial and creative. It also takes enormous discipline to have them all work as one organization.


The freedoms and responsibilities have to be spelled out and thoroughly understood by management and staff.


The company’s management will concentrate on supporting the independence, freedom and entrepreneurial spirit of the business units. They also will maintain the standards and discipline to ensure the various pieces of the company work together as one organization.


Successful new companies usually have a vision or dream of how they will make unique, innovative, entrepreneurial contributions to the market. They put enormous effort into accomplishing their dream, and because they are a new company, they have the freedom to do so.


Very few successful small companies get to be large companies because the same forces that drove these leaders to single-mindedly make their organizations a success limit the expan­sion beyond one person’s dreams. Also, in time, bureaucracy stifles innovation.


Large companies, with enormous budgets, just do not keep up with small companies in the development of new ideas and new products. Yes, they have programs for generating innova­tion. But these programs usually wind up controlling innovation rather than fostering it.


Digital was founded to exploit techniques and attitudes we had seen at MIT, which allow individuals the freedom and independence to create and to take responsibility for what they’ve created, without overwhelming staff or functional and management controls.


Digital has had many great years with many significant contributions to the industry. We introduced computers into many applications where computers had never been seen before. We also have had poor years. The great years were when many groups had the freedom to


create, innovate and take responsibility. The poor years came when staff and functional control stifled creativity and innovation, or when managers who were great successes themselves in innovating did not pass along that freedom and responsibility to others as their own organization became large.


Today, we have the best people in the industry and plenty of assets. We, therefore, should be a much bigger company and significantly more profitable than we are today. The goal of the New Management System is to exploit the assets we have and not stifle them with constraints that organizations impose on themselves.


Message To Account Managers - Think Like Retailers And Pump Up The Volume by Bob Hughes, Vice President, U.S. Sales


To resolve issues related to the new account structure in U.S., Bob Hughes recently fiel­ded questions in a live telecast over the Digital Video Network - the latest in a series of Sales Focus programs. The following article is based on his remarks.


The New Management System is a way to separate and clearly define roles and responsibili­ties. The Field implementation of that plan is called the "Account Business Unit." This represents an entirely new way of selling to and supporting our customers. It is a very important and complex change and comes at a time when we also have to deal with a number of other difficult changes:


o We have just put a new budget system in place. The first go-around on that was primi­tive and took a lot of time and effort on the part of account managers. We will fix that.


o In addition, many account managers are learning how to manage a profit and loss state­ment (P&L) for the first time.


o On top of all that, the economy is weak, which makes it very difficult to sell, o And, we have to meet our goals with fewer resources than we had just four months ago. o We also must retrain and specialize to make sure our customers get timely responses to basic questions about Digital’s products and directions, o And, in addition, once account managers determine the amount of resources they can


afford and need in their business plans, we must complete a final round of downsizing to get to an expense and revenue plan that is just break-even for us.


In a normal year, one of these changes would be enough. It would take all our energy. But we’re doing them all, and we must.


The question is — how can you win in times like these?


You have to know your account very well. Analyze it. Figure out what products and ser­vices that customer is willing to buy. Learn those products. Learn how to use them and sell them. And sell them with minimum support if you can.


If you wait for long-term visions, if you feel you have to sell grand schemes, if you believe that each and every transaction must be profitable, you won’t succeed in this environment.


Some account managers seem to have misunderstood the intention of our emphasis on profit in the New Management Systems. I’ve heard that many are trying to make the same profit number on every transaction so they can meet their annual profit goals. That’s not the way to run a business. Work on volume and on reducing your costs.


Imagine you are the manager of a retail store. You have to think early on about pumping up the volume, increasing traffic into your store.


Today, there are sales reps who are bringing opportunities to account managers and are being told, "We don’t want to do that business because it’s not profitable." The sales rep who brings an opportunity to the table, and gets that kind of an answer, should push back and escalate the decision if it represents a good chance to win and increase volume. Remember, we’re all learning together how to run our accounts like businesses. Let’s not cut off volume just because we don’t make profit on an individual transaction.


Remember how retailers make a profit. In weeks 1-3, they have a pre-season sale to gen­erate demand. In weeks 4-10, the peak buying period, they sell at list price. And in weeks 11-13, they have a post-sales season — like our allowances — to move the product. They never allowance new merchandise, and they remember the old adage - winning is 90% attitude; the other 50% is hard work.


We have a difficult implementation period ahead of us. Each and every one of us will make mistakes along the way. That’s okay, as long as we learn from our mistakes and keep moving forward. I want you to learn to take the risks and learn from them. This company has always gotten ahead because its best people have been willing to take risks to improve the company.


You are doing the right things. I see positive change now that P&Ls are at the account- manager level. I see positive attitudes in most of you. We are doing the things we need to do to turn this company around, and we will succeed.


The Importance Of Alternate Sales Channels To Digital’s Total Business by Win Hindie, Senior Vice President


The information technology industry is going through major dislocations. In the early 1970s, the top five computer companies represented about 75% of all computer sales. By the early 1980s, their share had declined to 60%. And by 1990, these top five computer companies only represented about 38% of all computer sales. In other words, while the marketplace is much larger today, many more competitors are participating than in the past.


Vendors are converging around standards that make it much easier to enter the business - particularly in the desktop arena. There’s also a growing number of companies in systems integration that provide solutions, but do not manufacture technology. Software and services are growing faster than other market segments.


For Digital to succeed in this transformed industry, we need to continue our strong sup­port for standards. In addition, we must use our technology to implement these standards faster than our competitors to stay "best in class." Then we must find ways to make those technologies and standards pay off by reaching the total marketplace.


In this new environment, it is particularly important that we use multiple sales channels. This is because additional sales from indirect channels enable us to increase our volumes and reach the economies of scale needed to support investment in advanced technology. Today, it might cost hundreds of millions of dollars to develop the technology for a new architecture and get independent software developers to accept it, and an equivalent amount for plant and equipment to manufacture that technology. You have to sell a lot of product to justify that kind of investment.


Due in part to these substantial development costs, a polarization is occurring in the industry. Some companies, such as Wang, have elected to withdraw from developing tech­nology and to be solutions providers, creating software for targeted marketplaces. They will base their systems on industry-standard technology that others have built. Others, such as Apple, have decided to be technology companies and are basing their strategies on the use of indirect selling channels.


Digital has decided to be both: to be a technology leader with all the costs associated with development and manufacturing, and also to be a solutions company focusing on speci­fic segments of the market, selling industry-standard technology and integrating it. That’s a challenging strategy which requires the use of multiple channels to the market.


A year ago, Digital formed a Corporate Channels or CSO (Complementary Solution Organiza­tions) Group to give renewed focus to this important part of our business. This group helps the company formulate strategy and develop a framework to reduce potential conflict among channels, to manage the existing channels and create new channels to the marketplace (Cont’d on page 10)


that maximize our total opportunity for reaching the market. They also look beyond Digital at the market as a whole, to understand how our competitors are doing business, so we can plan and react appropriately.


In particular, two business units - the Components Group headed by Jim Willis and the Technical OEM (Original Equipment Manufacturer) Group headed by Dick Heaton — have been formed to take advantage of important opportunities that are opening up. Their customers design Digital products into new products for sale to another set of customers under a new logo.


The Components Group sells such products as thin film technology for storage devices, power supplies, terminals and specialized software. They target several hundred manufac­turing companies that, like Digital, have to decide which parts of their products to make themselves and which to buy from outside suppliers. Where we have unique leadership technology that we’re investing heavily in, we want to market that technology in whatever ways we can to recoup the development costs, to reduce our manufacturing costs through higher volume, and also as a true test of our competitive leadership in that base techno­logy. In other words, we generate profitable revenue and at the same time reduce manufac­turing costs, and allow ourselves the flexibility and competitive advantage of having that capability in-house.


The Technical OEM Group focuses on companies that use computers in the products they make, for example, manufacturers of flight simulators or process control systems. This used to be a very large piece of Digital’s business. But in the 1980s, Digital decided to focus more on end-user solutions. Although that shift was very successful for Digital at the time, it meant that we didn’t participate in the rapid growth of the OEM business over the same decade. In the 1980s, we dropped from a significant market share to a small share of what is today a very important part of the computer industry. Now we’re putting corporate focus on this business once again, and providing engineer-to-engineer support for these customers.


These OEM projects take a long time to sell. But once sold, they last typically for many years. We are still generating revenue from projects that we sold five and ten years ago. This is a particularly opportune moment to rebuild this business, because we now have two new architectures to sell. We’re now selling both the ACE and Alpha strategies to get new design wins for the future decade.


Most of us at Digital are aware that Alpha is a code name for a new computing architecture and family of products that will replace and be totally compatible with Digital’s current VAX systems. And ACE (the Advanced Computing Environment initiative) defines two opera­ting systems and two hardware platforms and applications that run on both of them - unifying the PC and UNIX environments. The ACE initiative allows Digital to be viewed as


a partner in an industry-wide effort to promote standards, and we also can sell technology and components to the other 100 hardware vendors who have joined.


In addition to the components and OEM businesses, we continue to work successfully with our Cooperative Marketing Program (CMP) participants. These are independent software companies that are strategically important to us and with which we have joint agreements. Our direct sales force works in cooperation with the CMPs to deliver solutions to end customers. These CMPs are application-focused. They are identified and recruited by the marketing organizations in each of the countries. The Channels organization is responsi­ble for the overall framework in which we serve our CMPs.


Value-Added Resellers (VARs) represent another alternative channel that Digital plans to use more heavily in the future. These are companies that put together commodity computer products - both hardware and software - into customized solutions and also provide service to their end-user customers. Many of them resell PC and workstation platforms to both large and small customers. They are application-focused and specialize in such areas as computer-aided design (CAD), computer-aided manufacturing (CAM) and in desktop publi­shing. Their "value-added" is their ability to solve problems quickly and efficiently.


Digital recently adopted a volume business strategy that includes the use of a set of VARs and value-added dealers to sell commodity products. Approved and supported by Digital, they will have the right to carry the Digital logo and will become part of the Digital family. They will be an important element in our effort to go after the two-thirds of the information technology market that is in the commodities arena. We need to turn that sales channel on very hard and drive it very fast to gain market share with PCs, worksta­tions, local area networking and other peripheral products.


We will target VARs by application or by market segment. Channels organizations within each country will recruit them, support them, authorize them as Digital resellers and market with them. This approach should significantly increase our sales coverage in accounts we already deal with as well as those that we don’t.


Under the New Management System, we want our account managers to look at all the opportu­nities and to focus their direct sales resources on those opportunities where they add tremendous value, such as systems integration and large projects and departmental solu­tions. We want commodity products such as workstations and personal computers to move principally through reseller channels.


The account manager gets all of the credit for what’s sold into the account, regardless of the channel. Success for Digital is in terms of account share, not transaction control. The role of the account manager is to leverage those channels that exist to help penetrate the account — to increase revenue without adding to fixed costs — and to focus their direct sales resources in areas that are strategically important for the long-term.


It’s very important that we keep abreast of the changing nature of channels in the market­place, that we recognize that the way we operate today is different from ten years ago when the first computer dealers were being set up for PCs. These channels are in evolu­tion just as our industry is; and our ability to build a strong channel program and to continue to evolve it over time will be important for our ability to go after markets and expand our share and continue to grow our business. It’s a very exciting part of the changes that are going on in the industry.


Digital’s Four Businesses From A Value-Added Perspective by Paul Kampas, Strategic Industry Analysis, Corporate Marketing


Over the last ten years, the expanding industry in which Digital competes has come to be called the Information Technology or IT industry. This industry is experiencing an exci­ting, though tumultuous, evolution from being driven by computing and centered on data, to being driven by pervasive networking and centered on multi-media, which includes data, text, graphics, voice, audio, image and full-motion video. For Digital and other IT vendors, these changes bring many opportunities to enter new markets as well as expand in existing ones. They also bring risks — the leading IT vendors and customers 10 to 20 years from now will bear little resemblance to the ones we know today. Success in this increasingly diversified industry demands increased internal diversification.


Text Box: Figure 1. Digital has diversified from one
              to four core businesses.


In response to this external pressure for change, Digital has evolved from a company that focused on one relatively homogeneous business - departmental computing products and services — to being in four significantly unique but interdependent core businesses. These businesses are: Commodity Products, Production Systems, Systems Integration/-


Consulting and Product/Support Services. To succeed in these businesses, we must under­stand and manage their differences, with different core competencies, channels of distri­bution and business models. And we must do so in a large, global firm with capabilities that range, for example, from silicon and magneto-optics to strategy and management educa­tion.


Text Box: Kernel Systems^One method to help characterize and manage these evolving business differences is to organize the many individual IT product and service business segments into a "value-added framework," as shown in Figure 2.


-               IT Strategy & Architecture Consulting & Education Services


-               Business Strategy & Process Architecture Consulting & Education Services


-               Human Systems Strategy & Architecture Consulting & Education Services


Packaged Applications                          - Application/Database Development Services


Customized Packaged Applications - Configuration & Product Support Services Full Custom Applications  - Program Management & Training Services




User interface - Database Management                             -   Configuration Services


CASE Tools - Networks/Distributed Services - Product Support Services Office Platform - Transaction Processing Platform - Training & Operations Services




   Text Box: 'A,V.V.-.Text Box: - Storage - Terminals Kernel Systems            - Kernel Servers - Configuration & Product Support Services


   Personal Computers    - Workstations       - Training & Operations Services


Text Box: Printers Other Interfaces Configuration & Product Support Services • Training & Operations Services


Figure 2. Five-Level Information Technology Value-Added Framework.


As the IT industry develops, customers are increasingly viewing the lower three levels of this value-added framework as a pervasive utility on which they can build applications and strategies (the upper two levels) that directly impact their business. In addition, advancing technology is making the supply of products and services in the lower levels abundant. But in the middle and upper levels, dominated by software and knowledge tech­nologies, there is noticeably less progress in increasing the supply of products and services. The result is that there are significant high-profit opportunities in the middle and upper levels of this framework.


Positioning Digital’s four businesses within this framework provides some interesting insights. For example, the Production Systems and Systems Integration/Consulting busi­nesses are high value-added businesses that should be well-differentiated from competi­tors. On the other hand, the Commodity Products and Product and Support Services busi­nesses are aligned with a low-cost, high-quality business model, and will be more like the consumer electronics and telephone utility service businesses respectively.


This same framework can help show the key strategic trends and industry forces that should shape these four businesses in the coming years:


Commodity Products: Fueled by shrink-wrap software and fast yet inexpensive micropro­cessors, memory chips and small hard disks, this market has experienced explosive growth in the last ten years. The battle for success in the next ten years will be centered around multi-media, network-based computer-supported cooperative work (CSCW). Also impor­tant are object-oriented software and user interfaces based on voice and handwriting. Convergence with the consumer electronics industry will occur as audio and video media (including gloves, joysticks and animation) become integrated into business applications.

Text Box: Figure 3. Positioning Digital’s Four
              Businesses within the IT Value-Added Framework.

Product and Support Services: Business information systems are becoming more reliable, more distributed and more like home entertainment systems. As a result, user involvement is increasing, and labor-intensive remedial services and system management services are


decreasing. Large networks are increasingly managed by fewer individuals. Customers are choosing to out-source system management services as information systems and networks become more utility-oriented, much like telephone services. Major opportunities in this business lie in remote artificial-intelligence-assisted system and network management services across multi-vendor products.


Production Systems: As companies move toward supply-chain integration, where all purchas- ing/production/distribution activities become part of a unified enterprise infrastructure, traditional islands of automation will disappear. Advances in distributed database and distributed transaction management will migrate much of production computing off tradi­tional mainframes. In addition, advances in multi-media will create many new production system applications, particularly in image-intensive applications (e.g., medical imaging, on-line libraries, high-definition television back-end systems, etc.)


Systems Integration and Consulting: Implementing supply-chain integration and its suppor­ting IT infrastructure requires significant investment in business strategy development,


IT architecture design, human systems design, software development, complex program man­agement and education. Systems Integration and Consulting provides the high levels of multi-disciplinary expertise that are needed to accomplish that task. Opportunities in the 1990s include development of sophisticated application software to support complex IT and human systems design, as well as the development of robust object-oriented libraries of reusable application software modules.


In summary, today’s IT industry is complex and rapdily evolving. Success in this environ­ment requires differentiated business strategies and practices in combination with strate­gic coordination and synergy. With the New Management System in place to support in­creased business differentiation and the integrated functions in place to support in­creased business synergy, the job at hand is planning, creating and delivering, at many levels, value added that delights our customers and dismays our competitors.


NMS And The Use Of Information Technology - Building A Knowledge-System Environment by Dave Ehrman, NMS Program Manager for Information Management and Technology (IM&T)


In the current environment, information systems are used mainly to capture, collect and output data that is generated by day-to-day operations. The systems collect information as to how we did yesterday, last week, last month, last quarter and so on. The data collected is sometimes Inconsistent and often there are difficulties in aggregating it, especially if it is worldwide in scope.


Historically, we have sought to improve our information processes by optimizing at the level of plants, countries or individual businesses, with the result that there are very few common processes and very little shareable data. Stand-alone efforts to develop common definitions for data have been very difficult since the root cause (dissimilar business practices) has not been addressed on a company-wide basis.


By providing profit and loss reporting at the business unit level, the New Management System (NMS) makes it clear that we cannot afford to continue these practices. Digital needs one worldwide, consistent and integrated business planning process. But the current information systems environment will not be easily changed to address this need because the installed base is large and will be very costly to replace.


We have a number of different processes for planning and management of plans, including long range plans (LRPs), budgets, forecasts, business plans, and the monitoring of actuals against plans. All this information is captured in computers and, in many cases, captured as unconnected activities. This, however, is only one aspect of the problem.


A second aspect is that a very important set of data is not captured - namely, the under­lying assumptions that generated the plan data. Assumptions are important to capture and track because this is the knowledge that was applied to arrive at the plans. If we are to improve our plans, it is the assumptions we have to work on - in essence, the knowledge.


A "Knowledge Environment" differs from an "Information Environment" because the data is placed in a context of involvement. We really want to know why data comes out the way it does rather than just observing the outcomes themselves. The kind of questions we want to answer are:


o Why should we do this product now?


o Why is the window of opportunity this short?


o Why is the sales volume this much?


o Why are these the customers for this product?


We all want to be able to predict the future with 100% accuracy, 100% of the time. Since this is highly unlikely, the challenge becomes how close can we come? To improve we need to:


o improve our ability to manage risk, respond quickly and in concert to the unexpected; and


o improve our ability to predict external events that may impact Digital and explore how we might respond to them.


To improve our skills at making predictions, we first need to understand how good our previous efforts were, so we can learn from the past. For example, it is one thing to capture the expected sales volume for a new product; yet it is entirely different matter


to capture the assumptions made in predicting that sales volume. To do this means captur­ing both the assumptions we made and how those assumptions actually turned out. Not all assumptions are numeric; however, the computer has the ability to capture and analyze text as well as numeric data.


Next, we need to link the data that is generated each time we do LRPs, business plans, budgets, forecasts, and report on the actuals. The business processes must produce common data since this is the only way data can be aggregated meaningfully. If we use the ap­proach of rewriting the transaction systems first, we will wait a very long time. How­ever, converters can be built to help bridge the time gap until the existing systems can be replaced or eliminated. In the case of assumption data, we have no such legacy of existing systems and so work can begin immediately to capture this data in a uniform manner.


To improve our ability to predict and manage events and risks, we need to capture the events outside our company that impact us. The data needs to be manageable and having it in computer form would allow us to interrogate and search large volumes.


We also need to use tools that will put this data into a context. Great strides have been made through the use of simulation tools. For example, with collected assumption and results data, simulation tools can process this data and determine which elements impact the actual results. From this we learn what are the key variables and how to make better predictions about the future and possible courses of action.


Another important factor is communication. Once having captured the data about assump­tions, we need to let people know about them. Only through the use of computers do we gain the ability to communicate with the breadth and timeliness it takes to be "Best in Class."


The following is a sampling of progress and plans for IM&T support of the New Management System:


o Each of the business units now has the ability to produce P&L actuals systemi- cally. Worldwide P&Ls will be available for a limited number of international accounts.


o Supporting tools, such as the USA Account Managers Workbench, Account Planning, Profitability Models and Effort Tracking, are being used.


o Account Budgeting and Forecast systems are in place.


o Data Warehouses that will assist in NMS reporting, such as the GIA Data Warehouse, are being built.


o Reference tools, such as the Dunn and Bradstreet Worldfile, are in place to sup­port account aggregation and are used to roll up supplier information as well.


o An interim data set for the storage and distribution of Worldwide Business Unit Pricing information is available.


o Data modeling in support of the various business unit organization structures is underway to provide consistent data.


o The foundation for simplifying the access and sharing of worldwide NMS related data is being built. Design and initial development of a distributed data ware­house application is in progress.


o The first stage in the development of a worldwide video conferencing and informa­tion management ability that will support NMS goals for consistent business plan­ning has been completed.


o Design and development of an integrated planning environment is underway.


These accomplishments and plans are only the beginning of the effort to build the informa­tion environment to support NMS, as a start to define Digital’s business and planning architecture. In the coming phases the most important ingredient for success will be teamwork across the businesses, functions and geographies.


The Role Of Acquisition In Gaining Competitive Advantage In Commodity Markets by Murvin Lackey, Manager, Corporate Purchasing


Digital has added new dimensions to its business and is now competing in the commodity arena, with open systems products and services. Success in that highly competitive arena depends on low cost as well as speed and flexibility of response to changing technology and market conditions. Under the New Management System, the business units are expected to provide speed and flexibility of response. And the functions must provide coordination and integration, promoting the company-wide teamwork necessary to drive down costs and help the business units gain strategic advantage.


Increasingly, we are buying products and services that we resell or put together with other parts, products and services for resale. In this environment, we have to do every­thing we can to leverage our suppliers’ assets and improve our own operating asset perfor­mance. Basically, we must start looking at our suppliers as an extension of our company.


A few years ago, we emphasized getting suppliers to deliver "just in time" and at extreme­ly high levels of quality, so we could drive our inventories down. Now we’ve advanced to a higher stage. We still have high expectations regarding delivery and quality, but we also expect our suppliers to be our "partners," in a broad sense of the term - in our efforts to achieve customer satisfaction and business success.


We need to build strategic supplier relationships and drive an "integrated acquisition process" for the entire company. The $4.8 billion that Digital spends externally repre­sents a huge piece (38%) of the company’s cost structure, and we have to leverage that buying power as much as possible.


We have to get our suppliers involved earlier in our strategic thinking to help us better understand the technology choices and trends that exist externally. We want to focus our efforts on our core competencies. We do not want to duplicate unnecessarily the develop­ment efforts of our suppliers or to invest in technology that already exists in the supply base and would not bring strategic value added to Digital. As part of this effort, we also have to do a better job of concurrent engineering of products with our supply base and coordinating the efforts among our suppliers. Getting suppliers involved earlier and doing concurrent engineering with them will speed up the design cycle and improve our time to market.


We’re working closely with Manufacturing and the Product Creation Units to understand our products relative to those of the competition. And, at the same time, we’re giving better information to our suppliers about what we’re going to need and when we’re going to need it. This information can help them plan their technology strategies and manufacturing processes and keep their inventories lower while meeting our requirements. That helps them get better return on assets, and, in the long run, we will benefit from their suc­cess.


With the New Management System, functions like Purchasing must integrate the entrepreneur­ial efforts of dozens of business units. The person in Purchasing that one business unit is dealing with is also aware of what the other business units are doing. We have to ask the right questions. We have to understand the multitude of procurement decisions that are being made across the company and recognize common and shared work that can and should be integrated to achieve higher levels of efficiency, price/performance and customer satisfaction.


Although there are many decision makers in the business units, when they make decisions, we want to make sure they’re getting the benefit of what everybody else is doing in the company. Their link with the acquisition process should not only provide them with lower costs from volume discounts, but also provide them value in terms of the knowledge base that we’re building about what’s going on across the company and throughout the industry. That value should translate into improved margins for their businesses and for the company as a whole.


Much of the benefit of our strategic work on the acquisition process will show up in other groups — Engineering, or Manufacturing or business units. On the hardware side, it will impact the company’s development and manufacturing costs. And on the software side, we are moving towards consolidating negotiations with major third-party application providers to establish company-wide contracts. These contracts will leverage the cost of providing solutions and at the same time reduce the royalties which we pay our software suppliers for those solutions.


As we move through the restructuring of Manufacturing and as our systems integration and service strategies continue to unfold, we need clearer definitions for how we’re going to do business with those suppliers we deem critical to our future over the next decade. Our one hundred most critical suppliers are as important to us as our hundred best customers. We need to view those relationships on a long-term basis. Over the next year, we will complete development of our key supplier program. This program is similar to how the company runs executive partner and key customer programs.


The new integrated acquisition strategy changes how different people touch the acquisition process. For example:


o Business partners in an engineering or services organization work with Purchasing from pre-phase zero or pre-project definition to ensure maximum benefits from early supplier involvement.


o End-users place their orders for approved supplies through an electronic data inter­change (EDI) application,


o Professionals in Purchasing are able to re-focus from routine order processing to focus on strategic acquisition issues in a collaborative relationship with internal business partners and external suppliers.


o And suppliers become a true extension of the company through strategic partnerships.


Basically, the Purchasing function is required to play a very different and strategic role. And we’re asking everyone who touches the acquisition process to understand their own role and the impact of the decisions they make on the overall opportunities available to the corporation. We need to move away from an individual function or business approach to a fully integrated approach to our supply base.


For this strategy to become a reality across Digital, we all must understand fully Digi­tal’s new acquisition strategy and show it supports the New Management System. In addi­tion, we each need to understand our roles in the acquisition process and acquire know­ledge and skills to effectively leverage it across our company.


Without effective communication and education, the effort to leverage the acquisition process for financial and business improvement would fall short of expectations. There­fore, we have created a School of Acquisition Management that is developing curricula to educate everyone involved in the acquisition process - people within Purchasing, managers in functions, geographies and business units across Digital, and also key suppliers.


In summary, there are three major ways in which our work is important to success in the commodity business. One is having the right suppliers involved early in the decision process. Another is speed of response to changing markets and changing customer demands in world markets. And third is keeping costs low to enable us to keep prices low so the company can succeed in markets where price is critical and customer satisfaction is a must.


In all of these areas, the knowledge base is very important - knowing enough about our business and who the suppliers are, who the people are internally so that when something changes you can push the buttons rather than having to go out and build a relationship. Relationships with other functions, geographies and business units across the company and with suppliers become critical. That’s an opportunity and a piece of savings that we hadn’t really addressed before. For this to succeed, it is important that other pieces of the company understand the process and the reasons behind the changes.


Driving Change Through Education by Dick Farrahar, Vice President, Personnel


The New Management System (NMS) represents a major organizational transformation for the company. The New Management System is intended to foster the following outcomes for Digital:


o profit growth for the company as a whole;


o renewal of the company;


o identification of profitable businesses, and withdrawal from businesses that cannot be made profitable;


o enthusiastic customers;


o a leadership position with customers based on partnerships that demonstrate our ability to solve complex solutions through excellent systems integration;


o a global environment, structure and system that empowers managers to be truly entrepre­neurial;


o an open, high productivity environment that encourages interdependence, integration and teamwork company-wide to achieve customer satisfaction; and


o a clear and consistent company strategy that is articulated by senior managers, under­stood by employees, embraced by customers, supported by strategic partners and deter­mines the direction and goals of the company’s entrepreneurs.


The general NMS concepts have been explained at numerous meetings held by managers throughout the company. We are now dealing with the larger issues of fostering behavior and mindset changes, as well as skills needed for the smooth functioning and success of this new way of doing business.


NMS education is intended to provide managers with an understanding of the concepts and skills they will need to help achieve the identified NMS outcomes. Our most senior man­agement wants to:


o empower managers to think and act as entrepreneurs;


o provide a framework for understanding the relationships between the value produced for the customer and our costs;


o instill knowledge required to plan, budget, report and develop action plans using the NMS;


o enable each participant to take responsibility for delighting our stakeholders (cus­tomers, stockholders, employees and suppliers); and


o provide a dynamic forum for change.


Because of the breadth of the material, and the number of employees to be empowered, it is important for everyone to hear the New Management System message from their own manage­ment. Each manager can work with her or his staff to interpret the NMS messages and how they will best serve their, and Digital’s needs. We have prepared a manager’s briefing packet (including tape, workbook and overheads) designed to help managers integrate that information through their organizations. This will also help management ensure an under­standing of the New Management System and how it applies to them. The intention is that managers will transfer that information and personalize it for their direct reports, who would then transfer it to their organizations, once again tailoring and targeting it for their people. Organization Development Consultants have worked with a number of business unit managers to assist them in developing NMS understanding within their organizations.


At the same time, we are working with a number of other training and education organiza­tions, to ensure consistency of content about the New Management System as they incorpor­ate its concepts in their courses. This is particularly important because the New Management System is dynamic and evolving. There will be continuous refinement and im­provement as details of implementation are worked out. It is important that training related to this subject be accurate and current, wherever and whenever it is given.


In the last year, a Development and Education Board of Directors (DEBOD) was formed, chaired by Win Hindle, senior vice president. The overall mission of DEBOD is to formu­late, implement and fund an integrated development and education strategy for the company. Its members include: Bonnie Bedell, Pier Carlo Falotti, Dick Farrahar, Susan George, Bob Glorioso, Win Hindle, Marty Hoffmann, Bob Hughes, Bob Palmer, Dick Poulsen, John Sims, Peter Smith, David Stone and Don Zereski.


DEBOD approved a Senior Management Education Program which was recently announced by Ken Olsen. The goals of the Senior Management Education Program are:


o to implement the outcomes that the New Management System is intended to encourage throughout the company, and


o to foster growth of new profitable business.


Managers of Product Creation Units, Service Creation Units, Customer Account Units, Mar­keting Business Unit and Functions all have integration needs. These 400 managers will experience a week of "action learning," with follow-up teamwork over a six month period developing plans to implement the desired outcomes. This will be followed by another week of "Action Learning" to work company-wide integration and synergy needs. "Action Learning" uses real work to develop skills with "just-in-time" faculty support. For example, you learn international management skills by doing international management work. It is designed to help managers build their skills tailored to the company’s needs. Digital executives will serve as "inside faculty." Many of these processes were successfully used in the Advanced International Management Seminar (AIMS) Program.


Our senior managers need to work together to meet the company’s business needs and profit­ability goals. This program will bring them together for intensive learning in a way that they’ve probably never interacted before. In this kind of experience, information is only a part of the benefit. The building of personal relationships and networks, while driving business solutions, is a critical part of this program. It is important to get these people to interact and learn to work together and teach one another. As program manager for the Senior Management Education initiative, George Mann, Europe HRD&T manager, and his team (Sharon Brownfield, Education Programs Manager; Libby Finn, US Management Education manager;MarshaCormier,MarketingHRD&EManager;SusieRheault,T&NHRD&Emanager;and John Fisher, Finance Training consultant) will be working to insure these goals are met.


These initiatives will provide opportunities to encourage entrepreneurship, enthusiasm, leadership, teamwork, creativity, courage, accountability and responsibility. Every single manager in this company must treat their responsibility as if it were their own profit-oriented business. At the same time, they must drive toward leveraging Digital’s company-wide capability toward providing solutions to customers and returning maximum profitability to the company.


Revising Digital’s Software Business Practices by Pat Spratt, Software Business manager


Across the computer industry, software licensing practices are being widely debated. Customers say that the price they pay for software often doesn’t reflect the value they receive and unnecessarily influences their choice of hardware configurations. For in­stance, a customer who already owns a VAX 6000 Model 510 might want to run a new applica­tion. A hardware upgrade to a Model 520 would provide the necessary capacity. But the way we license software today, that customer would have to upgrade all existing software licenses at considerable cost, even though the additional capacity would only be used for the new application. Because of that artificial constraint, the customer might well opt to buy several workstations instead of upgrading the existing VAX system, which would have been the more natural solution had it not been for the added cost of software.


Over the next two years, we intend to significantly simplify our software license offer­ings, and to do a much better job of ensuring that our offerings allow us to closely link the price we charge with the value of the product to the user.


We believe that as customers implement heterogeneous networks of servers, computing will become a resource, very similar to a utility. Over time, we want to move our licensing model toward a utility model, in which customers pay for software based on use rather than based on the capacity of the hardware on which it resides.


Today, the customer buys a capacity license for an application, which means that anybody who is authorized to log onto a specific system can use that particular piece of software. This capacity pricing is based on the assumption that everyone with access to the system can and will use a new application. We will offer the alternative of "user licenses." This pricing strategy recognizes that in many cases the new application is being purchased for the use of one or a few individuals. This approach should make software from Digital far more affordable than in the past, competitive with the cost of workstation software, and more competitive than software on multi-user systems.


There are two types of user license. A "Personal Use License" gives the right to use a particular piece of software to the named individual. A "Concurrent Use License" allows use of the software by any user, on a first-come-first-served basis. Concurrent Use is like checking a book out of a library: if a copy is available, it can be checked out; and once a book is checked in, another user is able to check it out. That might be the most economical approach when a number of people occasionally use the application.


We’re bringing the advantages of workstation and PC software licenses to multi-user sys­tems. We believe that this style of licensing is also appropropriate for client-server computing environments and equally appropriate on timesharing systems and that it will spread rapidly.


It makes hardware upgrades to existing systems and clusters much more attractive for handling new applications, rather than the alternative of purchasing a new workstations, local area network (LAN) or a smaller timesharing system. This is becuase the number of licenses (and, therefore, the cost) is a function of the number of people who are actually using the application, and is completely independent of the size of the system.


Today, every time you make a hardware purchase decision, you have to make an equivalent software decision with it. We want customers to be able to make those two decisions independent of one another.


Basically, we will provide a set of business practices that supports profitable growth of our software business by providing fairness and choice to customers. Fairness relates to the relationship between price and value, as perceived by the customer. Choice gives them the flexibility to configure and reconfigure their information systems to best meet their changing business needs, to add capacity and redeploy hardware and software independent of one another and at competitive cost.


Update On Software User Interface Standards by Richard Frankosky, Principal Engineer, Human Factors Group


Activity on standardization of software interfaces has reached dramatic levels and is playing an increasingly important role in defining the software marketplace.


Presently 14 different international groups and committees are working in this area. These standards efforts fall into two categories: standards for software portability across platforms and standards which specify human-computer interaction.


In software portability the major effort is towards standardizing a window manager system for use across vendor platforms (X Windows seems to be the de facto standard here).


The second category includes the largest number of participants and the greatest amount of activity. Standards in this category focus on such areas as standards for the use of interaction dialog, use of colors, icons and other graphic elements, screen design, con­tent and operation of on-line help and error message facilities (user guidance) and re­lated items of screen-based user interfaces.


What motivates all this effort on user interface standards? Through the 1970s and 1980s the human computer interface received relatively scant industry attention. Except in such professional groups like the Human Factors Society, the software user interface was of secondary importance to other features and functions of the application software. Two significant changes in the industry have given rise to the importance of standardization in user interfaces.


Vendors of software applications are now conscious of the significant costs involved in developing software applications. The user interface for these applications often accounts for as much as 50% of the total code. Costs increase when, in seeking larger market share, developers port applications and user interfaces to run on the variety of platforms in the market place (DOS PCs with Windows, OS/2 PCs with Presentation Manager, Apple Macintoshes, UNIX workstations, and a host of minicomputer-based operating systems). In some cases applications and user interfaces have to be totally rewritten. Vendors see standards as a means to achieve cost-effective software application portability across many platforms.


The cost of platform diversity is also evident to the users of software applications. In order to maintain independence from a single hardware vendor many large customers became multi-vendor houses. Users are now aware of a hidden consequence of this independence. Support and training costs for the different applications are high and fixed. Training is not a one time cost. It must be done on an on-going basis to keep up with employee turn­over rates and revisions to the applications. Productivity and cost savings have never materialized for those users who neglected a commitment to training employees to use the different tools and user interfaces. Users view standards as a means to human portability - allowing users to move from platform to platform and application to application without having to go through expensive periods of learning and retraining.


The second important development in the software industry has been changes in the process of technology standardization. In particular, the standards development process for Infor­mation Technology has changed dramatically. In the past, standards were developed around existing products in common use. Standards were thus an abstraction of concrete products. Since the mid-1970s we have seen a shift to standards that anticipate the creation of products and help define markets.


This evolution is clearly evident in the software user interface standards arena. Parti­cipants are made up of vendors, vendor consortia, user groups, professionals and regula- tory/safety bodies. Each has a unique strategic business or market interest to advance or defend.


Vendors and consortia see user interface standards as a way to software portability and reduced costs. A vendor would also benefit in terms of market share if their particular architecture became an industry standard.


From a customer viewpoint, standardization is a means to user portability and producti­vity.


For Japan’s software industry, software standards provide a clear set of product guide­lines and the quickest path to a competitive position in software markets.


In addition, groups such as the Human Factors Society, labor unions, insurance companies and governmental health and safety agencies anticipate a variety of potentially adverse consequences unless user interfaces are standardized to optimal human requirements. They see standards as a means of protecting jobs and the health of workers who must use the technology.


In the past, an existing technology with significant market share became the industry standard. In the future, standards will be forged largely by the standards committee process, and in so doing will determine the market. For examples of this we have only to witness standards such as Open Systems Interconnect (OSI), which had no product antece­dent; UNIX, which started out as only a small niche market product; and, X Windows-Motif, which began as a hybrid of academic and industry design labs with no customer base at all.


Participation in the standardization process assumes strategic significance because it affects which products a vendor must build and sell. For participation to make sense for us, Digital must have a plan for the role it intends to play in the software industry. Competitors are aware of the emerging role of standards and are actively participating in various user interface standards groups. Japanese companies, in particular, are taking a highly visible and active role in developing software user interface standards. And nationally, companies such as IBM and Apple are jointly pursuing arrangements to secure their strategic goals in the software marketplace.


Currently, Digital pursues business objectives through participation in the Open Software Foundation (OSF). This, however, is only a workstation-oriented market and does not ac­count for Digital’s position on other platforms and user interfaces in its product lines. If Digital is to become "best in class" in software and interfaces, it must develop a plan for the direction and role it intends to play. In addition, it must begin to advance and defend that plan not only in the marketplace but also in the standards arena.


In summary, by playing an active role in software user interface standards, Digital could: o gain insight into the position and strategy of competitors,


o obtain information on the research efforts of other participants, thus leveraging research dollars;


o keep informed about the direction and trends in standards development as a means of predicting market direction and product requirements; and


o convey a message of leadership in technology and support for standards to customers.


Finally, since standards development helps shape software markets, Digital can use its participation in the International Standard Organization (ISO), the American National Standards Institute (ANSI), and the European Computer Manufacturer’s Association (ECMA) to advance and defend its strategies for growth.


Update On Business Activities In Central And Eastern Europe by Alberto Fresco, vice president and Country Group manager


Digital has been moving purposefully to participate in the emerging markets of Central and Eastern Europe since the beginning of 1990. It now has well-established activities in Hungary, Czechoslovakia and Poland, and is still considering the scope of its operations in the Soviet Union. The West Berlin operations center, established in March 1990 to meet the needs of customers seeking opportunities created by the unified German marketplace, is now fully integrated into the German subsidiary.


Digital’s operations in Hungary have been very successful. The joint venture, formed in February 1990, has now become a fully owned subsidiary of Digital, employing 75 people. Results for the first full fiscal year make Digital the leading computer vendor in Hun­gary, showing about $16 million of revenue.


In March, Digital established a fully-owned subsidiary in Czechoslovakia with offices in Prague and Bratislava. Simultaneously, Digital began working with three local companies: Kancelarske Stroje in Prague, Datasystem SOFT in Bratislava and VUVT in Zilina. Many opportunities have been presented by the installed-base of "Digital-like" systems; Digital has offered a special upgrade package to customers looking for more reliable and up-to- date technology.


Digital now has about 40 employees in Czechoslovakia and is expecting to double this number before the end of the fiscal year. The company is already involved with several large projects, including a $7.5 million contract to create the network infrastructure for an information system that will play a key role in Czechoslovakia’s effort to privatize its economy.


The first steps towards participation in Poland were taken at the beginning of this year. In June, Digital opened its own office and started hiring people. There are now 30 em­ployees in this new subsidiary and several contracts are under way.


Digital has taken a more cautious approach to a start-up in the Soviet Union, and is now finalizing the scope and focus of its operations there. We attended the COMTEK exhibition in April this year and saw an extremely high level of interest from potential customers, government officials and the media. We have an office in Moscow and have received an accreditation to establish a wholly-owned subsidiary. The initial focus will be on Russia, Ukraine and the Baltic States.


Digital has long been committed to a policy of introducing information technology into new markets, and has been encouraged by agencies of the US and a number of European Govern­ments to respond to the rapid changes taking place across Eastern Europe. We support the development of new and more appropriate export regulations for most Western personal computers and other commonly available technology products and the reduction of restric­tions on sales of mainframes, telephone exchanges, machine tools and other more sophisti­cated products. We believe that information technology can often be the lubricant of change and, along with the open exchange of ideas and information, computers will play an important long-term role in restructuring the economies of Central and Eastern Europe.

News Items

New Business Unit Focuses On AI Applications And Services


The Knowledge-based Applications and Services (DKAS) business unit has been created as part of the Corporate Artificial Intelligence Technology Center (AITC) in Marlboro. Dennis O’Connor, director of the AITC, is the DKAS business unit manager reporting to Dan Infante, vice president, Information Management & Technology.


DKAS generates revenue on a worldwide basis by delivering products, consulting services, and training to external customers that have complex information technology requirements. To meet those requirements, the DKAS uses knowledge-based systems, traditional technolo­gies, third party products and emerging technologies such as imaging and object-oriented systems.


The DKAS consulting and training services are jointly managed by Frank Lanza and Jack Rahaim. Frank is responsible for the consulting/training, delivery, and operations func­tions. Jack is responsible for the marketing and business development functions.


DKAS has two groups in Europe. The European AI Technology Center in Valbonne, France, managed by Ed Orciuch, provides training and consulting services to customers and solu­tions to internal Digital organizations. The Knowledge Systems Development Group in Galway, Ireland, is developing Digital’s Knowledge-based Advanced Resource Management Architecture (KARMA) for internal use and provides consulting services to customers. The Galway group is managed by John Harhen under the auspices of the Management Strategic Systems Program directed by Neill McCormack at the AI Technology Center in Marlboro.


Digital And Sonda Announce Joint Venture In Latin America


Digital and SONDA (Sociedad Nacional de Procesamiento de Datos Limitada), its most suc­cessful distributor in Latin America, have announced their participation in a joint ven­ture. Within the framework of this new relationship, the two companies also are creating a new entity — DEAL (Digital Equipment America Latina). DEAL will be responsi­ble for marketing and logistics support in all 14 of the Latin American countries where Digital has distributors. The formation of DEAL is the latest step in Digital’s accelera­ting investment in the markets of Latin America.


"Through this partnership, Digital’s Latin American customers gain a leading solutions supplier in DEAL, which will be a key distribution arm for solutions running on Digital platforms throughout Latin America" said Dick Poulsen, vice president, GIA. "Distributors will now have the resources needed to develop the vitally important systems integration business in their countries. Working jointly with a distributor, we can now broaden that distributor’s market access."


Headquartered in Santiago, Chile, DEAL will continue to offer SONDA’s leadership solutions — such as STF, a financial transactional system — on Digital platforms to an established base of over 400 clients in a wide range of industries. In addition, this new partnership puts SONDA in a position to expand its applications focus and provide systems integration to customers on a worldwide basis.


SONDA was incorporated in 1974 and has achieved success in providing systems integration products in the Latin American market. In its 16 years as a Digital distributor, SONDA has grown to become a company with annual revenues of $50 million and a 20% market share in Chile. In addition, the company has expanded its reach and now does business in nine countries outside of South America.

Digital Opens First African Subsidiary In Morocco


Digital’s first African subsidiary recently opened in Casablanca, Morocco. The subsidiary enables Digital to offer Moroccan customers technical resources and a support structure more closely adapted to their needs.


An office in Rabat will be entirely devoted to commercial activities and customer support. The future calls for a network of service centers. Digital Morocco is also supported by exlusive contracts with a network of marketing partners, each one recognized for its competence in specific sectors.


Digital technology is used by several government agencies including the Foreign Affairs Ministry, the Finance Ministry and the National Electricity office.



Lyn Benton has been promoted to vice president. In this capacity, she will be responsible for the integration of the business unit plans, implementation of the New Management System, and corporate financial planning and analysis. Lyn has been with Digital since 1979 and has held positions as Manufacturing plant controller in Westminster, group con­troller Small Systems Manufacturing, and Finance/Operations manager Low End Systems. Before joining Digital, she was manager of operations analysis at the Foxboro Company. Prior to that, she held senior management positions at several other manufacturing com­panies.


Jean Bonney has been appointed director of the External Research Program (ERP) within Corporate Research, reporting to Sam Fuller, vice president, Corporate Research and Archi­tecture. ERP is a program that sponsors academic researchers worldwide to work on prob­lems of strategic importance to Digital. Jean has been manager of Strategic University Research in ERP for the past four years. She has also held markting management positions at Digital since joining the company in 1984.


Barry Braunstein has been appointed DECathena Marketing manager, reporting directly to Dick Crosby in the NAS Systems Management Group, and "dotted-line" to Jim Neumann in Digital Network Services. Barry was involved with Project Athena at MIT in his previous job as Marketing manager for Engineering Education and Research in the Education Industry Marketing group. DECathena evolved from Project Athena, a development project created to provide a high quality workstation-based distributed computing environment for research and education at MIT. DECathena is a software product developed to help solve the prob­lems of managing large numbers of distributed heterogeneous workstations.


Mike Kalagher has been appointed to the newly created position of Marketing Operations manager. In this role, Mike will assist Bill (B.J.) Johnson, vice president of Corporate Marketing Planning, in the creation and implementation of processes for improving marketing across the company. The first 14 of Mike’s 22 years at Digital were spent in the Services Organization, where he established many of the market-focused support groups and ultimately became Corporate Support manager. In the early 1980s, Mike was Product Line manager for the Computer Service Business. Later, he took leadership roles in Order Processing and became U.S. Administration manager.


Jack MacKeen, vice president, has been appointed to head the Government Systems Business Unit. Jack will lead Digital’s Government Team, with responsibility as a business unit for Marketing, Sales and Service to the U.S. Federal Government. He will also manage the development and support of unique Government solutions on a worldwide basis. Jack joined Digital in 1961 as an engineer. Progressing through a variety of increasing engineering, marketing and product line management responsibilities, he was named corporate vice presi­dent, OEM Group, in 1985; vice president, Corporate Channels, in 1987; and vice president, International Accounts Marketing, in 1989.


Deb Nicholls has been appointed chairperson for the DECworld 92 program. Deb has been with Digital for thirteen years and has held senior management positions in the Field, Marketing and Engineering. She currently reports to Bill Strecker, vice president of Engineering, where she manages the overall Engineering product planning process. In her role as DECworld chairperson, Deb will work closely with the geographies and the business units to ensure a coordinated, quality program. Peter Zotto and his team will continue to provide the infrastructure and support for DECworld events. These events will begin in Boston (April 27-May 15) and culminate with DECworld Japan in November 1992.  privacy statement