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Volume 4, Number 3______________________________________________________
April/May 1985
Digital
Gains
Entry To Brazilian Minicomputer Market
Digital
Forms
Board Of Directors For Europe
Update
On
Customer Satisfaction
Digital
Begins
Transition To Picture Badges
Treasurer
And
Controller Named
Electronic
Business
Cover Article
Digital's
Opportunities by Win
Hindle, vice president. Corporate Operations
Over the last several months, the competitive
environment and the U.S. economy have combined to put significant
pressure on the computer industry, and thus on Digital. We plan to
respond by increasing the effectiveness of our operations as we
work toward greater profitability.
Digital is currently in the best product
position in the industry with our integrated set of products. Our
new VAX/VMS systems — VAX 8600 and MicroÂVAX II — plus Ethernet,
DECnet and our unique clustering capability give us a real edge
for the foreseeable future. We shipped 140 VAX 8600s in Q3, which
is due to the superb work of our VAX 8600 Manufacturing and
EngineerÂing teams, and customers are excited about the high-end
applications possiÂble with clustered 8600s. In addition, we
shipped about 100 Micro-VAX Ils to test sites in Q3, and have
received very positive reports back on these systems. These two
products give us enormous opportunities to lead the industry and
make major gains in market share during the next year.
At the same time, our cost structure is geared
for a much higher volume. We are not achieving the return on
investment we need to achieve to be regarded as a leader in the
industry. Thus, the game plan is clear -- we must conÂtinue to
work toward achieving the goal of having the most satisfied
customÂers in the industry while reducing our costs.
We are in a great position to achieve these
goals. But it will take a lot of hard work. Other computer
companies have the same challenge and many have chosen drastic
measures to cut costs.
Our approach has been to involve all of our
managers in the task of inÂcreasing our effectiveness, for we need
total involvement to make it happen.
All managers are now reviewing their proposed
FY86 programs, plans and budgets in order to streamline expenses.
This re-evaluation of our FY86 plans is a healthy and necessary
exercise to achieve the goal. Some proÂgrams which we might like
to start will not be affordable. It will be
difficult, but these programs will have to be
removed from our plans. The competitive environment dictates that
we move ahead only on programs that are essential.
Obviously, we do not want to detract in any way
from our ability to become number one in the eyes of our
customers. We will continue to offer the best products and
services. Customer satisfaction must be our primary goal, and all
budgets and plans must support this effort.
Every employee has the ability to directly and
indirectly affect Digital's ability to be more effective. Each
person can do this without sacrificing quality, service, or
customer satisfaction. It is up to all of us as manaÂgers and
supervisors to understand how our groups' tasks can be simplified
or in some way done better.
We need to be particularly sensitive to our top
performers right now. It is up to each of us to let them know we
recognize their contributions and value to Digital. They are our
greatest asset, and they need to know it.
We are embarked on a new period of
competitiveness in the computer industry. Today we have the
products, the assets, and the people to achieve our ambiÂtious
goals for the company. We are counting on the leadership of every
manager to make it happen. It will be a challenge, but it will be
immensely satisfying when we meet it.
A recently signed agreement with a Brazilian
firm opens the previously closed Brazilian market to Digital
minicomputer products. Brazil, one of the 10 largest computer
markets in the world (about $1.5 billion per year in hardware and
software purchases) closed its minicomputer and microcomputer
markets to foreign competition in 1978 in an effort to foster its
indigenous computer industry. Digital, through its 11-year-old
Brazilian subsidiary, was only permitted to sell its largest
VAX-11/780 configurations.
Mow, under a long-term licensing agreement,
Elebra Computadores, a private Brazilian company, will be able to
manufacture VAX-11/750 computers and sell and service them in
Brazil. At first, Elebra will assemble and test VAX- 11/750S from
subassemblies imported from Digital's Burlington, Vt., plant.
Eventually, Elebra plans to produce modules for the VAX-11/750S it
manuÂfactures and develop applications software. In addition to
helping Elebra's manufacturing start-up operations, Digital will
train Elebra's sales and service staff, license software, and
provide a wide range of peripherals, parts and components.
Computer users in Brazil will now be able to
purchase medium-sized VAX systems from Elebra Computadores and
large VAX systems, such as the VAX- 11/780, VAX-11/785 and VAX
8600 from Digital's Brazilian subsidiary. The two-year effort that
culminated in this agreement — the first of its kind for Digital —
involved the cooperation of many organizations, including
Engineering, Manufacturing, Field Service, Educational Services,
Software Services, Finance and Legal. Ron Spinek, manager, GIA New
Ventures, led the development of this project.
In keeping with the goal of one company with
one strategy and one message, a Board of Directors has been formed
for Digital Europe. This group of senior managers will play a
major advisory role for Europe and the corporation, helping to
promote better integration between them.
This Board will hold its meetings in Europe.
"It will help make sure that we have a mutual understanding of
value and cultural differences, enabling the company as a whole to
become more aware of and sensitive to the issues and concerns of
Europe," explains Ken Olsen, president. "The Board will provide
feedback, advice and perspective to the European organization from
a Corporate, non-functional perspective, reviewing the overall
strategic direction of Europe and of individual European
countries.
"The success and rapid growth of Europe make
this dialogue particularly important. We want to achieve better
understanding of strategic issues that are unique to individual
countries so we can provide support at the corporÂate level. The
Board will also give formal visibility to the successes, issues,
and problems of European country organizations and functions. In
general, it should help give the Company a more international
focus, develÂoping the international understanding and perspective
of senior corporate managers."
Jean-Claude Peterschmitt will assume the
responsibility of chairman of the Board for Europe. He will
continue to focus his attention on Digital's European presence, on
issues related to new opportunities with other comÂpanies,
customers, and governments, and on our relationships with the
European community. Pier-Carlo Falotti will assume the
responsibility of President of Digital Europe. All reporting
relationships to European and corporate management shall remain
unchanged.
The members of the Board, who will each serve a
two-year term, represent a broad spectrum of the company's
operations:
o Don Busiek, vice president, Software Services
and CSS;
o Pier-Carlo Falotti, vice president; and
president, Europe;
o Bill Hanson, vice president, Manufacturing
Operations;
o Win Hindle, vice president, Corporate
Operations;
o Jeff Kalb, vice president, Low-End Systems
and Technology;
o Jim Osterhoff, vice president, Finance;
o Jean-Claude Peterschmitt, vice president; and
chairman of the Board, Europe; and
o Peter Smith, vice president, Computer-Aided
Engineering and Manufacturing.
Beat Stiefel has been asked to serve as
secretary to the Board.
This April, Engineering held a four-day
conference -- "International OpporÂtunities and Differences" --
to stress the importance of designing products for worldwide
markets and of using worldwide resources. The meeting opened
with an assessment of the company's progress on quality issues
since last year's Forum 84. Here we summarize those opening
remarks. (A report on international marekets and opportunities
will appear in the June issue of DECWORLD.)
"The primary goal for Digital is to become
number one in customer satisfacÂtion in our industry within three
years," explained Frank McCabe, manager, Corporate Quality.
"Achieving this goal is the fastest way to improve profitability
for our customers and for Digital. Customers will get products
with high reliability, from a Digital that focuses on systems -- a
Digital that is predictable and easy to buy from. Digital can save
$500 to $800 millino yaerly by implementing a quality improvement
rpocess in every function of the company
"Motivation and commitment, while necessary,
aren't sufficient to accomplish these goals. Quantum improvements
in customer satisfaction come from quanÂtum improvements in our
processes, skills, methods and customer focus. For example,
cross-functional breakthrough teams using new tools and methods
are now in place to achieve 100-percent problem-free
installations. Kembo Zunzanyika chairs the 11/750 system team,
Jack Worthington the 8600 team and Tony Mongillo the MicroVAX
team. Each of these teams has members from Engineering,
Manufacturing, Field Service, Area Management Centers, Storage
Systems, Distribution and the Software Distribution Center. To
spread new knowledge and skills, cross-functional training for all
managers will comÂplement existing function-specific quality
workshops.
"All managers and individual contributors in
Digital are important to the company achieving this number one
goal," Frank emphasized. "To this aim, individuals should review
their current goals to make sure that, where appropriate, they
support improvements in the four major areas of customer «
satisfaction:
o making it easy for customers to do business
with Digital,
o problem-free installations,
o predictability, and
o reliability.
"This is your contribution to helping Digital
become a more profitable, healthy company in the years ahead," he
concluded.
"Quality means exceeding customers'
expectations," emphasized Bill Hanson, vice president,
Manufacturing Operations. "We've made improvements, but we still
have a long way to go in meeting that goal.
"In Order Administration, a year ago it took an
average of 45 days from receipt of an order to get back to the
customer with a commitment on a delivery date. That's now down to
19 days, and our immediate short-term goal is under 10 days. In
meeting those committed delivery dates, our 'slip performance' on
systems is now under 2 percent; and on everything else it’s under
4 percent. We review problems of that kind on a weekly basis. The
major problems relate to new products.
"In addition, the number of 'ship waivers' —
shipping partials or substiÂtutions — is under 1.5 percent. We now
deliver complete systems, not substitutes, and we're aggressively
addressing problem-free installation for systems. We've upped our
reliability goals, and, in the important area of inventory, we
expect to do $300 million better than budgeted by year end.
"Manufacturing must continue to work on cost
visibility and systems inteÂgration and must upgrade its
engineering skills and focus on problem prevention."
Bill (B.J.) Johnson, vice president,
Distributed Systems, summarized the progress in Engineering since
Forum 84. "We updated the corporate product strategy with 'styles
of computing, and we refocused our organization to match that
strategy.
"Management gets what it inspects, not what it
expects. So it's important to make sure our organization and
measurements match our strategies.
"Our reviews of business units now have a more
financial orientation. We must recognize the financial impact of
development time and the importance of meeting customer
expectations regarding time.
"And while considering our own improvements in
these areas, we must remember that the competition is not staying
still. They also are improving. We must measure ourselves not just
against where we were, but against where the competition is and
where our customers expect us to be."
Digital has begun a transition to picture
badges for employees in organizaÂtions and facilities which have a
business need for this level of security. The decision to change
Digital's longtime badge system was made after careful
consideration of business and asset-retention issues facing the
company and our customers.
In this highly competitive industry, the need
to protect proprietary inforÂmation, products and processes is
felt by Digital as well as its customers. Employees in the Field
have reported numerous instances where customers have refused to
accept a Digital badge as positive identification for entry.
ToÂday's industry standard calls for photographic employee badges,
similar to those used for state motor vehicle licenses. In
particular, government conÂtractors, the banking community, and
customers who need personal computers serviced in their homes are
sensitive to the need for a tighter identificaÂtion system. Some
U. S. states have even passed laws which prohibit a person from
entering another person's home to deliver, install or service a
product without photographic identification.
"The marketplace now demands a more positive
means of employee identificaÂtion," says Ray Humphrey, Corporate
Security director. "Coincidentally, this changeover, driven by
business requirements, will also assist in providing a more
disciplined approach to the protection of our valued resources —
our people, our information and our products. The existing badge
has become an uncontrolled collector's item, with both current and
former employees posÂsessing numerous copies. Employees from
across the corporation have
recognized the need for a more efficient and
effective identification system and have verbalized their concerns
throughout the past year."
The new gray-and-white employee identification
badge will feature a color photograph of the employee. In addition
to the employee's name and badge number on the front, each badge
will include the individual's signature, issuing site and issuance
date on the back.
The entire U.S. Field population will make the
transition to picture badges during May and June. Other functions
and facilities which have a business need are beginning their
planning process. The program was piloted in New Hampshire last
summer and fall, when more than 4,000 Merrimack-area employÂees
received picture badges.
The process is being managed jointly by the
Personnel, Security and FaciliÂties functions. Initial
implementation is being coordinated by Corporate Security.
Ilene Jacobs has been named Treasurer and Bruce
J. Ryan has been appointed Corporate Controller. Both report to
Jim Osterhoff, vice president and chief financial officer.
Ilene joined Digital in 1974 as manager of Cash
and Investments, Corporate Treasury. Since then, she has held
several management positions in Treasury, including manager of the
Treasury Group. She was appointed Assistant TreasÂurer of Digital
in 1981. As Treasurer, Ilene is responsible for managing Treasury,
customer financing, tax, risk management, and customs. Before
joining Digital, she served as Cash Management Officer for Shawmut
Bank of Boston. Ilene received a B.A. from the University of
Massachusetts, Amherst, and is a graduate of the Advanced
Management Program at Harvard Business School. Ilene replaces Bill
Helm, who was serving as both Treasurer and Field Finance manager.
Bruce has been serving as acting Corporate
Controller since 1983. He joined Digital in 1969 as Field Finance
manager. Since then, he has served in various finance management
positions, including Finance and Administration manager of the
Computer Products Group; Manufacturing Controller, Galway,
Ireland; and Finance and Administration manager of the General
International Area. As Corporate Controller, Bruce is responsible
for financial planning and analysis, budgeting, internal audit,
external and internal reporting, accounting policies and
procedures, and corporate management reporting. Before joining
Digital, Bruce held financial management positions with
GTE/Sylvania Corporation. He received a B.A. from Boston College
and an MBA from Suffolk University.
Gary Bahr has joined Digital as
Corporate Compensation and Benefits manager, reporting to John
Sims, vice president, Personnel. He will have overall
responsibility for planning, developing and
delivering Compensation & Benefits programs. Gary comes to
Digital from National Semiconductor CorporÂation, where he served
as director of Compensation and Benefits since 1978. Before that,
he was employed by Booz, Allen and Hamilton for 10 years. Gary
began his 22-year career in Personnel as a generalist at Procter
& Gamble. He has a Bachelor of Science degree from the
University of Illinois and an M.B.A. from Xavier University.
Bobby Choonavala has been named head of
the newly created Far East ManageÂment Center, which is based in
Hong Kong. He will report to Jerry Witmore, vice president,
General International Area (GIA). Bobby was named interÂnational
Sales manager in 1983 after five years as European Sales manager.
He joined Digital in 1966 as a Project Engineer in Maynard, and
two years later became the first manager of the company's Dutch
subsidiary. He then served as a district manager in Europe before
becoming manager of the former South-West Region in Europe from
1973-1978. He holds a B.S. degree from the University of Bombay
and an M.S. degree in electrical engineering from the Technischer
Hochschule in Aachen, Germany.
Dick Fishburn has been named manager of
Corporate Field Finance, reporting to Jack Shields, vice
president, Sales and Service, and Jim Osterhoff, vice president
and chief financial officer. Dick will be responsible for
worldÂwide Finance and Administration within the Field
organization. He joins Digital from ANR Freight System, Inc., of
Golden, Colorado, where he was senior vice president of
administration for the the last four years. Prior to that, he
worked in a variety of international and domestic finance
posiÂtions at Ford Motor Company.
Gary Gottschalk has been appointed Group
manager of the Distributed Systems Central Quality Group,
reporting to Bill (BJ) Johnson, vice president, DisÂtributed
Systems. In this position, Gary will play a key role in
estabÂlishing Distributed Systems as a quality leader in the
industry. Gary joined Digital two-and-a-half years ago, and has
been managing the Customer InforÂmation, Training and Technology
functions within the former Systems and Clusters Central Quality
Group. Prior to joining Digital, he worked for the Westinghouse
Advanced Systems Division, in design and development,
manufacÂturing automation, operations, and program management
capacities. He holds a master's degree in electrical engineering
from Washington State University.
Laurence Megson has been named manager
of Manufacturing Effectiveness for Europe. He will report to Henry
Crouse, vice president, European ManuÂfacturing, and John Sims,
vice president of Personnel. In his new job, Laurence will lead
the planning and help implement major changes needed as Europe's
Manufacturing organization increases its contribution to Digital's
business in Europe. In addition, Laurence will be the European
ManuÂfacturing Personnel manager. A Digital employee since 1980,
Laurence most recently was the manager of Employee and
Organizational Development in Corporate Personnel. In this
capacity, he led the development of organiÂzation performance
technologies. He came to Digital from Procter and Gamble, where he
held positions in the U.S. and Europe. Laurence has a law degree
from Manchester University, England.
John Rose has been appointed manager of
the Personal Computing Systems Group (PCSG), reporting to Jeff
Kalb, vice president Low End Systems and TechnoÂlogy. He will be
responsible for managing personal computing development efforts in
support of the company's overall product strategy. A Digital
employee since 1976, John was most recently Technical Support
Group manager, reporting to Don Metzger in the Process &
Design Support organization. Prior to this position, he was
Operations manager of the former Central Engineering organization.
Before joining Digital, John worked at IBM for eight years. He
holds B.S. and M.B.A. degrees and has done extensive graduate work
in optics.
George Shea has recently joined Digital
as director of the TelecommuniÂcations Industry Marketing Group,
reporting to Bob Hughes, vice president, Business and Office
Systems Marketing. Before joining Digital, George was vice
president and general counsel for National Data Corporation, an
AtlanÂta, Ga.-based firm. At National Data, George was responsible
for legal, regulatory, communications planning, contracts,
acquisitions, stockholder relations, risk management, engineering
and lobbying for the company. Prior to joining National Data, he
held several senior sales/marketing and general management
positions. George is a graduate of Colby College and has a J.D.
degree from George Washington University.
For those of you who may have missed it, the
March 15 issue of Electronic Business carried a cover article
about Digital. It is based on an interview with Ken Olsen, other
senior managers, and industry analysts.