Richard Seltzer's
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Articles
about DEC
mgmt memo
.
Volume
6, #6
August, 1987
Digital's
Energy
Situation by Jim Rogers, corporate manager, Energy and
Environmental Affairs
Bob
Palmer
& Dom Lacava Take On New Responsibilities
Management
Training
Begins For Job Evaluation And Classification Project
Year-Round
Salary
Management Tool
In January, a Semiconductor Task Force was
formed to examine issues related to sources of supply for
semiconductors and investments in related technolÂogy. Created by
a joint action of Jack Smith and Win Hindle, and chaired by me, it
includes representatives from the systems engineering groups that
are users of semiconductors. It serves as a forum to discuss and
develop strateÂgies to ensure that Digital has sufficient supplies
of critical parts and that the technologies used to design future
generations of Digital computers provide significant competitive
advantage.
Through this task force, we are able to look at
issues from a variety of viewpoints and develop plans that make
sense for the company as a whole. When we arrive at consensus on
an issue, we elevate it to Jack Smith's staff, and then to the
Executive Committee.
Current issues revolve around our sources of
supply. Semiconductor OperaÂtions has been very successful in
meeting the company's semiconductor needs despite increases in
demand that were not forecasted. We have done so through
utilization of our manufacturing capabilities in Hudson, Mass.,
and through our excellent relationship with the vendor community.
So even though demand last year was more than 30% above budget, we
were able to meet it without spending more money on items other
than material than was in the plan. But we have to be prepared to
deal with future contingencies.
We are having on-going discussions about which
semiconductor technologies we should build internally. If a
technology is generally available from a multitude of merchant
companies, then we are not concerned about having that capability
internally. If on the other hand, the sources of supply are
dwindling and we have systems that would be dependent on one or
two supÂpliers that also compete with us for systems business,
then we may need to develop an internal source of supply.
In the past, the goal was to concentrate our
semiconductor manufacturing resources on a few technologies.
Today, though, the company is significantly larger, and the
semiconductor industry has gone through significant downÂsizing
and consolidation. The availability of critical components is
changÂing in the marketplace. So there is a lot of discussion
about which other technologies we should be investing in and in
what manner. It is important that these issues get a full hearing,
with inputs from all the groups affected.
We also want to develop global sourcing. In
other words, we would prefer to buy components from those parts of
the world where we sell. Thus we want to develop appropriate
sources for supply from the European semiconductor industry.
International trade is also of critical
interest to us, because of the threat of interruption of supply of
critical parts and the reality of increased costs. We look
carefully at proposed government actions and, through Government
Relations, (managed by Bruce Holbein, a task force member) explain
to government officials how their policies could affect both
producers and users of semiconductors, so that they do not
inadvertently harm our business. For example, as originally
drafted, the recent trade sanctions imposed against Japan by the
U.S. would have directly impacted us. We identified language in
the sanctions that needed to be changed, and Government Relations
was able to call attention to the impact of the proÂposed
sanctions and thereby affect a change in the proposal so as to
avoid having the sanctions applied to critical components and test
equipment that the company imports.
We are attempting to have the same impact with
regard to proposed sanctions against Toshiba. In retaliation for
Toshiba having sold sensitive technology to the Soviet Union,
Toshiba products might be embargoed from the U.S. If so, that
could have a significant impact on users of Toshiba products, of
which Digital is one. We are seeking language in the legislation
that would exempt, from the embargo, components that are essential
to U.S. computer products. Once again, Government Relations is
helping clarify ambiguities in the language, so the legislation
will not cause unintended damage to our business.
Another point of discussion is the possibility
of Digital's participation in Sematech, a proposed consortium of
U.S. semiconductor manufacturers and users, semiconductor
equipment manufacturers and government agencies. The goal of this
consortium is to develop tools and technology related to advanced
semiconductor manufacturing in order to restore the
competitiveness of the U.S. semiconductor industry. It would
identify areas of commonality and drive specifications for
semiconductor manufacturing equipment, help set standards and pool
technical resources to work on major problems in advanced
semiconductor manufacturing. Its end product would be the
processes necessÂary to manufacture the most complex memory and
logic circuits. In effect, that would mean that manufacturing
know-how would no longer be as signiÂficant a competitive
advantage among U.S. semiconductor companies. The competitive
advantage would move to a higher level — primarily in circuit and
system design, an area where Digital has a significant advantage.
Digital's new Computer Integrated Research
(CIR) strategy and the recent announcement of the VAX
Supercomputer Gateway with Cray Research, Inc., provide research
customers with integrated solutions — from the lab bench to the
supercomputer.
Our goal is to help the enterprise manage its
most valuable asset -- reÂsearch information — efficiently and
economically to gain a competitive edge in the market. The CIR
strategy combines Digital's standard products with hardware and
software solutions to meet the unique computing needs of the
research environment. It allows customers to integrate their
research activities and then share the results of these activities
with the rest of the organization.
Today's laboratory and research computing
market is a $7 billion business, and growing at 20% yearly,
according to various market studies. To build on Digital's 30 plus
years of leadership in this important market, LDP works closely
with scientists to understand their computing requirements. In
conjunction with engineering, marketing partners, and OEMs, we
develop strategies and bring to market products that address the
changing computing requirements of laboratories and research
organizations.
The VAX Supercomputer Gateway, which can
function as part of a VAXcluster, is an example of a product that
works within the CIR framework. The gateway was recently announced
by Laboratory Data Products (LDP) in cooperation with the
Engineering Systems Group (ESG), High Performance Systems (HPS),
U.S. Programs and Cray Research. The VAX Supercomputer Gateway
offers scientists and engineers working at any Digital workstation
on a DECnet network transÂparent access to supercomputers and
greatly improved performance. Coopera- • tively developed by
Digital and Cray Research, a leading supplier of superÂcomputing
systems, the VAX Supercomputer Gateway provides a direct
connecÂtion between VAX and Cray systems.
Supercomputer power is essential for processing
highly complex mathematical models and simulations for research
and engineering markets. The largest Cray supercomputers can
process more than one billion floating-point inÂstructions per
second, which is an enormous computing capability. They are used
in research applications such as simulation, computational, fluid
dynamics, and molecular modeling. In the engineering market, for
example, customers involved in oil exploration and production draw
on increasingly complex modeling tools to characterize reservoirs
and define drilling locations. VAX systems used as front ends to
the Cray offer customers the power of supercomputers and the
interactive computing and program developÂment capability of VMS
software.
The average cost of a Cray system is $15
million. For every dollar spent on the supercomputer itself,
another dollar will be spent on associated comÂponents —
front-ends, workstations, storage, peripherals, and networks. Of
the approximately 150 customers worldwide using Cray
supercomputers, about half of those already have VAX systems
installed as front ends.
Development of the
VAX Supercomputer Gateway helps us capitalize on our networks and
our compatible architecture to give scientists and researchers the
ability to do their computing jobs where they need them done in
the most effective way, and to give them access to the computing
power of the rest of the organization. The VAX Supercomputer
Gateway is based on VAXBI technolÂogy and enables up to five times
faster data throughput between VAX and Cray systems over existing
connections. These connections include HYPERCHANNEL from Network
Systems Corporation and FEI from Cray Research.
Linking workstations, departmental computers,
VAXclusters, and networks to Cray supercomputers makes integration
from the bench top to the superÂcomputer -- the heart of the CIR
strategy — a reality today and a commitÂment for tomorrow.
Digital facilities worldwide are doing an
excellent job keeping energy consumption and cost increases to a
minimum with a total 1986 energy bill of about $107 million or
1.4% of revenues. Electricity represents 90% of that bill.
Although costs are important, we have to
provide for our increasing energy needs, particularly for computer
equipment, and our main concern is for the reliability of
electricity supplies. Reduced reserves of generated elecÂtricity
and distribution bottlenecks have reduced the quality and
reliabilÂity of power to several Digital locations in New England
and elsewhere. Contingency plans are in place to deal with supply
problems that could affect our operations, and more facilities are
installing back-up power and uninterruptable power systems for
critical processes and operations. This trend will continue, and
some facilities may install co-generation systems in order to
improve the reliability of their power.
Overall, our electricity consumption is about
one third for lighting, one third for cooling, and one third for
computer equipment and manufacturing processes. We get heat from
our lights, equipment, and people. We expend a lot of energy
cooling, but very little heating. In most of our buildings in the
North, we don't have to heat until the outside temperature gets
quite low. The only exceptions are a few buildings that need heat
for process and associated ventilation systems.
Because we do very little heating and a lot of
cooling in most of our facilities, it turns out that our
facilities in the North actually use less energy than our
facilities in the South, where we have to cool much more. During
the winters in the North, we can take advantage of "free cooling"
for our computer rooms and processing equipment -- using outside
air or chilling water in a cooling tower and running it through a
heat exchanger system.
Not only are more people using computer
equipment throughout the company, but as our computers get more
powerful and smaller, more computers can fit into less space. That
means that a computer room today holds more equipment
In addition, many people have the mistaken
impression that it is better for computer equipment to be left on
at night and over the weekend, rather than turning it off and on.
That might have been wise 15 years ago when electriÂcity cost a
fraction what it does now, and when some electronic equipment
contained vacuum tubes. But today it just means higher electricity
usage and cost.
Digital facilities continue to implement cost
effective opportunities for reducing energy consumption and costs.
Many, especially those in manufacturÂing, have had aggressive
programs to improve energy efficiency and reduce waste when it can
be identified. Forty-six Digital facilities presently have energy
management systems. Many facilities have installed "free cooling"
systems, variable speed motor drives and new lighting systems that
provide a higher quality light while using less power.
In the last year, we initiated an Energy
Investment Program whereby plants that have identified energy
saving projects can submit them directly to our office. We can
facilitate funding, as long as payback is within two years. This
program, which started in Manufacturing, is being expanded to
other parts of the company.
The premier issue of The Quality Review,
published by the American Society for Quality Control (ASQC),
chose Digital as one of the ten best companies in terms of
"quality of products and services." Digital was the only computer
company to make the list.
The magazine explained its selection process as
follows: "To produce its 1987 feature on "America's Most Admired
Corporations," Fortune surveyed 8,200 senior executives, outside
directors, and financial analysts for their opinions on what are
the nation's best, and worst, companies. They then allowed us to
noodle their raw data to come up with the ten highest-ranking
companies in the category of 'quality of products and services.'
The top ten, listed in order, are: Dow Jones & Company, Inc.;
Merck & Co., Inc.; The Boeing Company; The New York Times
Company; Rubbermaid Inc.; CaterpilÂlar, Inc.; Digital Equipment
Corporation; The Procter & Gamble Company; and, tied for ninth
place, Anheuser-Busch Companies, Inc., and The Coca-Cola Company."
ASQC is the international professional
organization for quality and quality- related technology. It has
53,000 individual and corporate members in the U.S. and 61 other
countries.
Jack Smith, senior vice president, announced
several organizational changes, effective June 15. Bob Palmer,
vice president, Semiconductor Operations, and Dorn LaCava,
manager, Micro Systems Development (MSD), now report directly to
Jack, as members of the Manufacturing/Engineering/Product
Marketing Staff. In addition to MSD, the following organizations
now report to Dorn: Terminals Business Unit (managed by Larry
Cabrinety), Worksystems Group (Steve Teich- er), Personal Computer
Systems Group (John Rose), Process Development Engineering (Bill
Picott), Personnel (Les Koch), Finance (Lyn Benton, acting).
Applications (Ron Ham) and Planning (Sharon Wulf, acting).
Bob Palmer joined Digital in 1985. His
responsibilities include semi-conÂductor engineering,
manufacturing, acquisition and test marketing. He was one of the
original founders of Mostek Corp, and last served as executive
vice president of Semiconductor Operations for United Technologies
Corp., which acquired Mostek in 1980.
Dorn LaCava, a 10-year veteran at Digital, has
held several senior-level hardware and software engineering
positions. Since 1984, he has managed the creation of the highly
successful MicroVAX family and led the dramatic turnaround in the
PDP-11 business.
Bob and Dorn are taking over responsibilities
which were previously handled by Jeff Kalb, vice president,
Low-End Systems and Technology, who has left Digital.
Rob Ayres has been appointed Corporate
Operations Personnel manager, reÂporting to Win Hindle, senior
vice president; Jim Osterhoff, vice president, Finance; and John
Sims, vice president, Strategic Resources. Rob will be responsible
for providing personnel leadership to the corporate operations
organizations (Corporate Finance, Administration, DIS, Legal,
Corporate Planning, Purchasing, Marketing Communications, and
Public Relations). In addition, he will be a member of the
Personnel Management Committee (PMC). Rob has been with Digital
for 17 years, most recently as Group Compensation and Benefits
manager for Manufacturing/Engineering/Marketing.
John Barrett has been named European
Field Service manager, reporting to Dave Grainger, vice president,
Field Service, and Pier Carlo Falotti, president, Digital Europe.
John was most recently UK Services Director and a member of the UK
Board of Directors. Having joined Digital in 1966 as senior
computer technician in his native Scotland, John then progressed
to Scottish Branch Field Service manager, Field Service District
manager in Manchester, England, and in 1977 was appointed Field
Service manager for the then North Europe Region, which included
the UK, Ireland and the Scandinavian counÂtries .
Jon Caputo has been named director of
Corporate Program Management, reportÂing to Don Busiek, vice
president, Software Services, Computer Special Systems,
Educational Services. In this newly created position, Jon will
provide program management focus to enhance Digital's ability to
manage large customer projects and programs worldwide. Jon is a
15-year veteran of Digital. His most recent assignment was as U.S.
Sales Support manager. He was the Western Regional SWS manager and
the New York District Sales manaÂger, and also won the Baton award
in FY83.
Marty Ford, who has been the European
Finance and Administration manager since 1983, is returning to the
United States this summer to work on several corporate finance
activities, reporting to Jim Osterhoff, vice president, Finance.
Prior to his European assignment, Marty was U.S. Area F&A
manager.
Bob Gregorio has been named Corporate
Employment manager, reporting to Carol Burke, manager, Corporate
Personnel. In this position, Bob will be responsiÂble for setting
employment directions and strategies to insure that they meet
Digital's present and future business needs and plans. Bob
previously was with Field Personnel where he has held several
positions over the last 12 years, most recently as U.S. Operations
Human Resource manager.
Daniel Latham has been appointed
director, Telecommunications and Utilities Industry Marketing,
reporting to Bob Hughes, vice president, Service IndusÂtry
Marketing. In this position Dan will have strategic marketing
responsiÂbility for the Telecommunications Industry, managed by
John Hart, and the Utilities Industry, managed by Brian Premru.
Dan brings with him 12 years of experience in the industry. He
joins Digital from Ameritech Communications, where his last
position was vice president of Service Operations, and prior to
that as vice president of Marketing and Operations.
Laurie Margolies has been appointed
Corporate Employee Relations Programs manager, reporting to Erline
Belton-Willis, manager, Corporate Employee Relations. In this
position, Laurie will provide functional leadership for
company-wide Employee Relations programs that support policy and
ER stratÂegy. Laurie has been with Digital for the past seven
years. She was most recently Human Resource Planning and
Development manager for GIA ManufacÂturing and Engineering.
Earl Mason, Manufacturing Finance
Controller, will become European Finance manager, reporting to
Pier Carlo Falotti, president, Digital Europe, and Dick Fishburn,
manager, Finance, Sales and Services. In this position Earl will
function as senior finance officer to Digital's operations in
Europe. He will continue to be a member of the Corporate Finance
staff. Prior to joining Digital in 1985, Earl held various senior
level financial, operating and marketing positions at AT&T.
Dave Oran has been promoted to senior
consulting engineer, reporting to Tony Lauck, corporate consulting
engineer in the Distributed Systems Architecture group. Since
joining the group in 1979, he has been responsible for the DNA
Session layer, Digital's technical strategy for IBM SNA
interconnection and the initial SNA gateway architecture. He has
been a principal contributor to the Onen Svstems standards
strateav and was the original architect for the
Joe Ricevuto has joined General Services
Industry Marketing, reporting to Peter Robohm, director, General
Services Industry Marketing. Joe will be Industry Marketing
manager for the Wholesale, Retail and Distribution Industries. He
comes to Digital from AT&T, where he spent nine years, most
recently as manager, Computer Systems International.
Victor Vyssotsky has joined Digital as
the director of Digital's research laboratory, which is being
established in Cambridge, Mass. He reports to Sam Fuller, vice
president, Corporate Research and Architecture. Victor comes to
Digital from AT&T Bell Laboratories, Murray Hill, N.J., where
he was the executive director of the Information Sciences
Division, responsible for research in computing, robotics,
mathematics, statistics, speech processing and related topics.
Victor also was associated with the development of computing
hardware and software for the Safeguard missile defense system. In
addition, he worked on computer systems which automate various
business procedures of telephone companies, including engineering
systems, design systems, inventory and logistics systems,
real-time monitoring, and control systems.
As part of the Job Evaluation and
Classification (JEC) Project, a nationwide training effort will
begin in October to equip all managers with the skills needed to
start classifying their Wage Class 4 employees in Q2, FY88.
To date, several hundred managers and employees
have participated in the project by identifying benchmark work,
detailing the components of that work through the completion of
questionnaires, and ranking the benchmark jobs using five work
factors selected as most representative of the major componÂents
of Wage Class 4 work at Digital. The five factors selected at the
outset of the JEC project are: participation in decision-making;
impact on financial results; management or influence of people;
problem-solving and complexity of the work; and qualifications for
the job.
"As we begin to classify employees using this
new system, it is clear that managers will play a critical role in
the successful implementation of the project, and in the long-term
success of the system," says Kathy Robbins, JEC Implementation
manager.
The kickoff for implementation of employee
classification will be a series of training sessions which will
begin in early October. The first audience will be Personnel and
line managers responsible for training the rest of Digital
management. The training includes an overview of the JEC Project
and specific Digital strategies. In addition, the training will
cover: how to administer the Job Profile Questionnaire (JPQ);
information on both job evaluation and employee classification;
expectations of Personnel and line management in completing the
project; expected questions with an opportunity to review
appropriate answers; an explanation of the key systems, job
descriptions, and tools which will be used to implement JEC; some
suggesÂtions for helping organizations to manage the changes which
will result from the implementation of JEC; and an opportunity to
interact with many key project team members in an informal panel
discussion.
All Personnel professionals, PA/PSAs, and line
managers will receive a reference guide to help them successfully
classify Wage Class 4 employees. The binder will include slides to
help them make presentations to employees, and a videotape will be
available at all sites to help inform employees about JEC.
Implementation itself will begin in October
with a representative sampling of both benchmark and non-benchmark
work in selected organizations throughÂout the U.S. After the
successful completion of the classification of this sample of
employees, classification will be completed in the rest of the
country.
"Managers have the primary responsibility to
ensure that they and their employees are well-informed and that
employee concerns and questions are addressed as the
implementation process gets under way," says John Sims, vice
president, Strategic Resources.
Tools, reference materials and resources will
be available to help ensure a smooth transition to the new system.
Managers will be notified when trainÂing sessions in their area
are scheduled.
With the August release of SMS version 3, the
Salary Management System will become a year-round salary
management tool. Reports generated by the system will help
supervisors and managers understand and manage the dynamics of
delivering salary increases throughout the pay program year.
In addition to the features previously
available on the system, these reports allow managers to measure
actual increases against salary plans and assess how deviations
from plan affect overall business objectives. Because this
information will be available all year, managers will have time to
respond by adjusting remaining salary plans if necessary, through
PAWS (Personnel Administration Workstation) before the end of the
current pay program year.
Specifically, with SMS V.3, supervisors can
produce reports that:
o track actual salary increases against planned
increases,
o measure performance against plan for pay
program metrics -- promotion, frequency of increase and
participation rates,
o list information about employees whose pay
increases vary from plan, and o remind supervisors when employees'
reviews are scheduled.
By helping supervisors manage spending,
promotion, frequency of increase and participation rates
year-round, SMS V.3 enhances the company's ability to meet its
basic pay objectives: competitive pay, pay for performance and pay
equity.
Using SMS V.3 during salary planning,
supervisors can test on-line how various individual salary plans
affect a group's total spend plan. SMS V.3 also retains the usual
pre-planning tools that project performance ratings, rank order
employees by performance and align them by range position. And
salary plan roll-ups will continue to provide a tool for salary
plan summary and analysis.
Supervisors and managers will receive more
information on year-round SMS from their local Personnel
organizations.