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Volume 8, #4_____________________________________________________________________ June, 1989


Letter From Ken Olsen


The Executive Committee Responds To Employee Questions


Digital’s Response To The Changing Competitive Environment by Jack Shields, senior vice president, Sales, Services, and International


A Fresh Look At Recent Product Advances by Jack Smith, senior vice president, Engineering, Manufacturing & Product Marketing


Update On The Apple-Digital Joint Development Effort by John Rose, group manager, PC Integration


Digital Is Rapidly Reducing CFC Use


Teamwork Leads To New Business Model For The Education Market by Roger Strickland, Marketing manager, Education Industry Group


Digital In The U.S. Adopts Policy On Illegal And Controlled Substances


Using Digital’s Logo by Jim Perkins, attorney, Corporate Legal Department; and Gene Kusekoski, manager, DIS Electronic Publishing Program


Digital Selects Olivetti As Pc Supplier In Europe


Enterprise Integration Services Organization Formed


Low-End Network And Communications Strategic Business Unit Formed




Next Digital Quarterly Report

Letter From Ken Olsen


We had to delay salary increases in the U.S. because of difficult changes Digital is now facing, due to both internal and external pressures. These pressures come from shifts in the general business climate, from competition, from advancing technology and from the changes we’ve made in the way we do business.


This is an exciting, fast moving business, and we must continue to make substantial in­vestments in the technology and products we need for the future. When sales in the compu­ter industry in general slow for one reason or another, we have to reduce our costs and better focus our efforts to maintain profit levels.


We need to shape the company into business units we can understand and manage and that can set clear directions for the sales force. We need to focus our efforts and assets toward customers, and make sure the people who deal directly with customers have good training and clear signals.


We have the best people, the best products and magnificent technology. We’ve been able to introduce products faster this last year than we’ve ever dreamed we’d be able to do. We’ve promised a 50 per cent improvement each year in our VAX systems. We’ve introduced a whole line of UNIX-based systems.


We’ve just got one problem: while we were developing products and technology, we needed to sell more of what we had. We’ve been through pressures like these before and handled them well. It’s all part of being in a dynamic business.


At times like these, managers should look at employees as they would their own families. You’d encourage them to grow and to learn. You would be firm with them and hold them to plans.


You’d also challenge them and make the job exciting. That’s what we should do with every­one who works for us. When we find that we have an imbalance of people — too many here and too few there, too many with this skill and too few with that — it’s our responsi­bility to work that out thoughtfully and with careful consideration.


If we do that right, then I believe we can grow to become a much larger company with about the same number of people we have today. That means jobs are going to get bigger, and opportunities will be opening for our people to grow.


The Executive Committee Responds To Employee Questions


Q: How should I handle the tough questions employees are asking me, i.e., the individual problems of matching people and skills and work?


A: Base your responses on some of our core values, and remember that there is no all-en­compassing formula. "Do the right thing" truly applies here. Treat people with respect. Listen to them. Work with them and also manage them. Don’t set false expectations, and remain open and honest at all times. Give people responsibility and be clear about the goals and expectations you have of them.


Q: What should I do with the suggestions people bring to me?


A: If the ideas are sound and resolution is within your realm of responsibility, take action. If good ideas require additional approval or cooperation, take responsibility to champion them. We want to encourage employees to look at the part of the business where they work and make suggestions. Good ideas come from everywhere.


Q: In 1982, the delay in salary increases was worldwide. Why did the Executive Committee decide to institute a U.S.-only salary delay this time?


A: U.S. sales have been flat in FY89, and profits are down necessitating a review of our cost structure. Business in Europe and GIA is strong. This action will be reviewed on a country-by-country basis to determine whether similar steps are necessary.


Q: How long will the delay in salary increases be in place?


A: The delay begins on July 2. It will be closely monitored and reviewed at the end of the quarter.


Q: Will all people in the U.S. be equally affected by this?


A: Yes. It applies to both exempt and non-exempt employees. And whatever the length of the delay, it will be the same for everyone.


Q: If we have nearly a billion dollars in cash, why do we need to do this?


A: This is a highly competitive business. We need this cash reserve in order to make substantial investments in future products and technology. New product development is a necessity, not a luxury. We have to address our cost problems so we can afford these necessary, on-going investments.


Q: Will an employee’s salary review date change permanently?


A: Yes. Every employee’s salary review date will advance according to the length of the salary increase delay. In addition, the timing of an increase also may be extended further based on the employee’s performance and position in the salary range.


Q: In the U.S., should performance reviews continue during this period? If so, how will they be used?


A: Yes. In the U.S., performance reviews should continue. Following policy, an employ­ee’s job performance should be reviewed annually. Performance ratings should be enter­ed onto the Employee Master File. These may be used as the most recent ratings when Salary Planning begins.


Q: Were alternative actions considered?


A: Yes. We have taken steps to minimize external hiring, except in critical areas, and to minimize discretionary spending. Overall, we are striving to operate more efficiently. This means we need more people in some areas and fewer in others. We have to remain flexible.


Is this a prelude to a layoff?


There is no layoff planned.


Are there too many employees?


There’s an imbalance in the supply and location of employees. There are too many people in some places and too few in others; too many with some skills and too few with others. That’s what happens when technology and work requirements change.


Q: Employees who have been with Digital for several years have seen this "state of the company" before. What steps are being taken to assure that we won’t keep having the same problems and issues every three to five years?


A: Given the dynamic state of the computer industry, we expect that the "state of the company" will always be changing. This is normal and we will always be somewhere on the change curve. With each business cycle we expect to become smarter.


Q: Why is the company having these problems today? Didn’t our strategies work?


A: During the last several quarters, revenues were less than anticipated, and our product has changed to meet customer needs. Thus, we have to adjust our cost structure.


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Q: What is the company doing to respond to flat sales in the U.S.?


A: We’ve got the products that customers want now, and we’re making changes to help bring that message to them more efficiently and effectively. To put more focus on dealing with customers, the U.S. is implementing innovative programs like "All Hands on DEC" and is continuing programs like the Executive Partnership Program that help leverage sales. Everyone is currently helping our U.S. sales force close orders.


Q: What about early retirement programs?


A: These measures aren’t being considered.


Q: Is Digital considering any other programs that would encourage people to seek employ­ment elsewhere?


A: Our primary efforts will always be focused on investing in the reskilling and develop­ment of our employees. As in the past, we will only enter in other types of programs if they are compatible with our values. Anything of this nature would be implemented on a business-by-business basis.


Q: What is the likelihood of a takeover?


A: It does not seem likely. We are not seeking to be taken over and have made it clear that we would resist such an attempt. The stronger our business and the higher our stock price, the less likely such an attempt becomes.


Q: What should I do if I think I might be more effective elsewhere in the company?


A: You should make sure that your skills are being used to their fullest advantage. If you believe you can contribute more in another part of the company, see your manager and discuss this honestly and openly. If you want to leam new skills that are needed by Digital, you and your manager may explore new possibilities for training and profes­sional development.


Q: I’m hearing that we all have to maximize our contributions. What does that mean?


A: We need all employees to contribute their best and ensure that they are doing meaningful work. We all must be willing to develop new skills. Workinglonghourswon’t necessarily maximize your contribution, although some people have to do that once in awhile when there is a business need.


Q: Why are so many things changing all at once?


A: Styles of computing are changing. Customers want more power and capabilities right on the desk. The product mix that we sell has changed accordingly and so must our cost structure. We have new leadership products, but these products need new organization and cost models to optimize our marketing and selling efforts. We are working very hard to make these changes as rapidly as possible.


Digital’s Response To The Changing Competitive Environment by Jack Shields, senior vice president, Sales, Services, and International


There is tremendous turmoil in the computer industry today. Mergers, acquisitions, shake­outs, and failures occur every day. As quickly as competitors go out of business, new ones take their place. Aside from Hewlett-Packard and IBM, the list of the companies we consider our top competitors has changed completely over the last 10 years.


In addition, our competition was primarily U.S.-based. Now we face more international competition, as well as our U.S. competitors in a global arena.


It’s an exciting and challenging time for which we’re extremely well positioned. But to meet this increasing and diverse competition, we must be more efficient and effective at executing our strategies. In so doing, we’ll come out stronger than we are today.


In particular, we need to do a better job of integrating the various groups that represent Digital to the customer. Over the years, we have developed strong, capable, and outstand­ing functional organizations in the Field. Ironically, because of that very success, it has become even harder for us to integrate the groups, so that we can present one solution and one face to the customer. Dave Grainger is taking on this challenge as part of his new role as vice president of U.S. Sales and Services.


Our European organization, because of its multi-country environment, has already looked closely at the problem of interfacing with customers with cross-functional teams. We are learning from their experience and are adopting what is appropriate for use in the U.S.; GIA is moving in a similar direction in its larger countries.


To make it easier for the customer to do business with Digital, we want to decentralize decision-making to the district level. We will maintain profit and loss responsibility in the different service groups, but their goals will be integrated so that we can respond quickly to competitive situations and customer needs. If our bid prices need adjustment, a local-level individual will decide on behalf of the company.


We’ve also been working to get customers closer to our Manufacturing organization. In­stead of having intermediaries between the customer and the manufacturing plants, we are facilitating a closer coupling. Thanks to this effort, we’ve already seen significant reduction in the number of weeks of backlog and inventory required to successfully manage the business.


We expect to achieve major advantages in sales efficiency and manufacturing as we develop more complete solutions for our customers and package our products that way. Today, we still have more of a component than a systems approach and are not doing as much as needed to package complete systems. When there are many components, it is difficult for sales reps and customers to configure systems and to quote and process orders, etc. The solu­tion to this problem starts in the Engineering organizations, and we’re working with them on that.


Meanwhile, technology is changing. Standards and open systems are becoming more important to our customers, many of whom are turning to distributed computing, using smaller, more cost-effective systems. That means there is more pressure on us for productivity in selling and competitive pricing. Over time, these changes will play to our strengths as the leading company in distributed systems, local area networking, and systems integra­tion.


Another area of competitive advantage is our account management program. We need to add broader geographic account coverage to our traditional approach so we can take advantage of our international size and scope. That is why we are asking the account managers for our largest accounts to plan the resources required to support and execute our strategies with those accounts. The account manager will develop the strategies, draw up the plans, and budget the resources required. The district managers will respond to these plans and assign appropriate resources to the accounts.


Wherever in the world the account is headquartered, plans will be developed by the people who are responsible for that customer. We intend to manage about 200 accounts this way.


This is a major competitive advantage for Digital with its large multi-national accounts — one strategy implemented across broad geographies. It will also help us work together more collaboratively on a global basis — fostering cross-geographic, as well as cross­functional teamwork.


A Fresh Look At Recent Product Advances by Jack Smith, senior vice president, Engineering, Manufacturing & Product Marketing


Eighteen months ago, I was concerned because this company had a problem, and few people seemed to see it. Many customers were looking for workstations, and we didn’t have what they wanted, and we didn’t even look like we were heading in that direction. Our product lineup needed to be refreshed.


Eighteen months ago, we compared our products and our strategy to IBM and felt good. Meanwhile we were letting Sun and Hewlett-Packard increase their share of the workstation market. The lesson here is that you can’t just measure your products against your biggest competitor. You’ve got to measure them in each market segment against the best in the industry, no matter how big or small the competitors might be.


Now we have the best of the best. Tests show it, and our sales people are hearing it from customers. In the last 18 months we’ve made amazing changes in our product strategy, adding VAX and RISC workstations and servers, UNIX* and DECwindows software and more. We’ve made a rapid change that has let us take advantage of the fastest-growing part of the computer market.


In some ways, what is going on now reminds me of 1968, when there was a major shift in computing style from mainframes to minicomputers. Today we’re seeing a shift from time­sharing to a workstation style of computing. Our new desktop products are bringing ad­vanced computing to people who could never use it before. This is an exciting, expanding market, with new applications. Thanks to the changes we’ve made over the last 18 months, we’re positioned to be leaders in this fast-growing market.


When we announce our new products, sometimes we don’t toot our horn as loudly as we could. We like to emphasize the continuity and evolution of our product strategy. We’ve done this within the context of our unified architecture. As a result, the compatibility that we offer from the desktop to the data center is unmatched in the industry. The continuity of our product strategy and our commitment to preserving past investments is highly valued by our customers. Our architecture is the key to providing this capability for our custo­mers, and has also enabled us to extend our environment to support multiple vendor plat­forms.


In addition, this architecture has helped us respond to market changes so that we stay competitive. Our ability to build on existing designs, or "product platforms," enables us to move new products from ideas to the production line very quickly. These platforms give us tremendous flexibility; but, given the fast pace of technology, there is no room for complacency. A machine you announce today can become obsolete in just a few years. We have to stay ahead of new technologies and changes in the market.


So I feel good now about our products. But we need to stay watchful and flexible and willing to adapt. We have to continue to respond to the needs of customers and to the opportunities offered by new technology. That’s how you make quality products and make unique contributions to the industry. That’s how you succeed in this business that we’ve chosen and enjoy.


*UNIX is a registered trademark of American Telephone & Telegraph Company.


Update On The Apple-Digital Joint Development Effort by John Rose, group manager, PC Integration


A year and a half ago, Digital made two strategic announcements - the Joint Development Agreement with Apple* and the Network Applications Support Program (NAS). Today, Macin­tosh* integration is an important part of Digital’s desktop strategy; and Apple and Digi­tal are on schedule in their joint development effort.


Just last month, Digital licensed its Local Area Transport (LAT) technology to Apple as an extension of the existing Apple/Digital joint development and technology exchange agree­ment. On May 9, Apple and Digital made six new application programming interfaces (APIs) and tools available to application developers. These announcements reflect the priorities Apple and Digital had set to provide enabling technologies and developer tools first, as a foundation for future products.


The goal of Network Applications Support is to offer end users common access to services located anywhere on the enterprise-wide network, regardless of their desktop device, and without changing the desktop environment to which they are accustomed. Those environments include VMS, UNIX, MS-DOS, OS/2 and Macintosh operating systems. The network services we will provide include basic connectivity, applications access, communications, and information and resource sharing. NAS is the context in which to understand the development effort between Digital and Apple.


The Apple-Digital effort was initiated in response to requests we both had from customers. This agreement calls for Digital and Apple to share such proprietary technologies as VMS, DECnet, Macintosh OS, and AppleTalk* software; to get our engineers working together to develop technical specifications; and to develop connectivity products for the seamless integration of the Macintosh and VMS environments.


The joint development program seeks to integrate Macintosh and VAX computers into a common information environment by providing greater functionality to users and integration be­tween AppleTalk and DECnet network systems. This required developing the enabling techno­logies and architectures, engineering collaboration on connectivity products, and working with third-party developers.


File sharing is one of a number of services we will offer that allow Macintosh users to share, gather, store, and distribute information from various sources located on an enter­prise-wide network, without having to be concerned about the differences between VAX and Macintosh computers. The file service allows Macintosh users to share files stored on a VAX/VMS server. And if VMS Services for MS-DOS software is running on the same server, then Macintosh and MS-DOS users can even share files. Macintosh file sharing capability is available from third-parties such as Alisa Systems and Pacer Software today. Digital has licensed the file and print services for Macintosh from Alisa Systems for inclusion in our future Macintosh integration product.


Digital and Apple customers also want to be able to easily share documents that contain text, graphics, spreadsheets, scanned images, and data among different applications and systems. And independent software developers are eager to write applications that will handle such documents easily, regardless of the environment. Therefore, Apple will sup­port Digital's Compound Document Architecture (CDA) with DDIF (Digital Document Inter­change Format), which provides a complete environment for the creation, display, printing, filing, retrieval, processing, distribution and interchange of compound documents and their data.


We also plan to provide access from Macintosh to Digital’s Rdb/VMS relational database products, by offering both SQL/Services and CL/1 clients for Macintosh, which will open up enterprise-wide databases to Macintosh users and application developers.


In addition, Digital and Apple are working to allow terminal emulation of Digital termi­nals by Macintoshes for access to computers on the DECnet/OSI network. The terminal emulator we offer for Macintoshes will use LAT technology to provide efficient, multi­session capability and take advantage of the speeds offered by Ethernet. This will bring Digital’s enterprise-wide networks, applications, and processing right into the Macintosh terminal.


Digital and Apple also are jointly developing support for the X Window standard. The X Window system is an industry standard set of software components that let developers build applications with a modern, graphics based interface independent of hardware platforms. The Macintosh X server will allow a Macintosh to act as a display device for VAX DECwin- dows clients without losing the user-friendly interface functions of the Macintosh.


Communication services under development include electronic mail for Macintosh users on a Digital network.


Apple and Digital have focused much of their early efforts on independent application developers because they will be important to the ultimate success of this program. Last August, we delivered the technical framework specification to developers, defined the long-term standards to be used, and delivered three technical specifications.


In May of this year, we made the key APIs and tools available to developers. Digital and Apple are delivering the open interfaces so developers can focus on high-value capabili­ties for users and build a new generation of cooperative networked applications.


A standardized framework with open interfaces and tools means that developers get a long­term, stable development platform and they can now concentrate on applications that de­liver end-user value. Developers can now concentrate on user applications where the real value and creativity are to be found.


In sum, Digital will sell, distribute and support a Macintosh integration product set, resulting from the joint development effort with Apple, worldwide. With these products, Macintosh users will be able to use any VAX/VMS system as a high-capacity file server, database engine, print server, mail server and router, and compute server.


*Apple, Macintosh, and AppleTalk are trademarks of Apple Computer, Inc. CL/1 is a trade­mark of Network Innovations.


Digital Is Rapidly Reducing CFC Use


Last year, Digital announced its intention to reduce and, where possible, eliminate its use of chlorofluorocarbons (CFCs). By the end of 1988 Digital had already reduced its CFC use by more than 55% (compared to the base year of 1986). This was in response to world­wide concern that these materials react in the upper atmosphere to destroy the layer of ozone that filters out ultraviolet radiation.


CFCs are commonly used in many applications — from cleaning circuit modules and chips during manufacture, to air conditioning, and to refrigeration in cafeterias. The same properties that make CFCs safe for use as solvents also make them stable enough to get to the stratosphere where they react with the protective ozone layer.


"Recent scientific findings are prompting countries around the world to step up their restriction and elimination programs. They are now aiming to reduce CFC usage by 80-85% of 1986 levels by 1995," says Stephen Greene, manager, Corporate Environmental Affairs.


"We believe our reductions in CFC use in 1989 will be just as impressive as those in 1988. But Digital will soon face the problem of diminishing returns — trying to deal with critical applications where no substitute for CFCs is available or where a great deal of research still must be done. The problem is made more difficult as new CFC materials are added to the list of targeted chemicals."


One high visibility area where progress has been made is cafeterias. Digital is now using styrofoam trays and food containers that were not made with CFCs, and, incidentally, a recycling program is being tried out to deal with plastic waste.


Digital is now using aqueous (water-based) cleaning for most of its circuit boards, and has had promising results in using aqueous cleaning in surface mount and storage device manufacturing processes.


Halons, which are used to protect against fire hazards and which are included in the CFC restrictions, have no known substitutes. But Digital is working to reduce or eliminate the fire hazards the halons protect against. This work also involves new plastic formu­lations.


"By combining technical knowledge with management commitment, Digital is doing its part to protect the ozone layer," concludes Steve.


Teamwork Leads To New Business Model For The Education Market by Roger Strickland, Marketing manager, Education Industry Group


Six months ago, Digital changed the way it does business in the education market, with introduction of a series of programs known as the "The Education Initiative." We changed the way we deliver products, services and support to respond more directly to the needs of our education customers and to increase our market share over the next five years.


Historically, schools have been primarily interested in getting increased computing power. Computer manufacturers, including Digital, responded with research contracts, equipment donations, etc., to provide low-cost ways for institutions to get the processing power they needed.


Today, the cost issues that institutions face go beyond hardware acquisition. With the widespread proliferation of workstations and personal computers, the need for software applications for students, faculty, researchers, and administrators has grown tremendous­ly. As a result, it has become increasingly difficult for schools to tie all this equip­ment and software together in useful ways and to control the cost of network management, software acquisitions, software support, hardware service, training and user support. In other words, the problem shifted from acquiring computing power towards controlling the overall cost of ownership.


In the Education Initiative, we give customers choices, letting them share certain re­sponsibilities with us — reducing our costs — and in return we offer them reduced cost of ownership.


In the first program, Campuswide Software License Grant, we grant virtually all non-roy- alty software licenses at no charge to educational institutions. This grant covers more than 190 layered products plus the VMS operating system and the ULTRIX operating system. Unlike other vendors’ grant programs, the software can be used for any function-adminis­tration, research, instruction or MIS. We give the school one license, and they decide how they are going to distribute the software across the campus, without paying further fees. In return for the license grants, Digital asks the school to set up a central resource for managing the licenses, tracking them and reporting to us on their use.


Before, educational institutions had to be very selective in their software purchases. Now they can give users access to a wealth of software technology, allowing them to exper­iment and learn, with no concern about licensing cost.


In addition, software for which Digital must pay a royalty fee and products for personal computers is made available to the education community at discounts of 40-75 % off commer­cial list price.


A related program — the Education Software Library — offers support for a portfolio of VAX software products that are widely used in the education community, including the VMS and ULTRIX operating systems and more than 40 layered products. In this partnership, the school establishes a central site on campus to handle purchasing and distribution of software and first-line support for users. In return, Digital provides, at reduced cost, initial media and documentation, updates, and direct access to senior software support specialists for those calls really needing Digital’s expertise.


In a new hardware self-maintenance program, the Campus Service Agreement, the customer also is required to set up a technical assistance center, which handles initial on-site labor. And Digital provides all the products and services essential to successful self­maintenance, including backup technical specialist support on an as-needed basis. The charge is only about 28% of the DECservice monthly contract fee.


Another program, the Education Grant Program, provides grants toward the purchase of new systems packaged with paid-up licenses for VMS, ULTRIX, DECnet, or VAXcluster software


Finally, the TEI-DECdirect program offers education customers an automatic 30 percent discount on products that can be ordered through DECdirect and the Electronic Store and special discounts on VAXstation 3100 and DECstation 3100 workstation systems.


The Education Initiative provides customers with easy-to-implement programs that reduce their overall cost of ownership. And it gives the sales force a powerful tool for build­ing stronger relationships with customers at a high level, developing new areas of oppor­tunity within accounts, simplifying the negotiation of special allowances, and closing business. It also opens the door to making long-term, campus-wide sales in addition to one-time sales to individual departments.


The Education Initiative provides customers with easy-to-implement programs that reduce their overall cost of ownership. And it gives the sales force a powerful tool for build­ing stronger relationships with customers, developing new areas of opportunity within accounts, simplifying the negotiation of special allowances, and closing business. It also opens the door to making long-term, campus-wide sales in addition to one-time sales to individual departments.


We arrived at this plan by re-evaluating the needs of a particular set of customers and readjusting our overall business model for them. These customers were more interested in their total cost of ownership than in hardware price. Working as a cross-functional team, including the Software Products Group, Services, Marketing, Sales, and Business Manage­ment, we focused on our total revenue stream, rather than just the initial sale. We were able to identify ways to reduce our on-going cost of doing business with these customers and to put together a package of discounts, grants, and service agreements that not only satisfies these customers but also provides Digital with a healthy profit.


The Education Initiative is now a factor in closing virtually all education sales. As of early May, some 120 institutions had signed up for the Campuswide Software License Grant program alone, and another 380 were in the process of completing a contract.


Response from customers has been very positive. The president of EDUCOM, the leading education computing association, said, "I hope that this announcement sets a standard to which the whole computing industry will aspire. It is really a strong measure of Digital’s commitment to higher education."


Digital In The U.S. Adopts Policy On Illegal And Controlled Substances


In order to comply with Federal regulations in the U.S., Digital is required to publish an employee policy on illegal and controlled substances. This policy must be part of a program that will also include information on the Employee Assistance Program (EAP), supervisor training, and, in some specified cases, procedures for identifying drug users. The laws are still being developed and defined by the U.S. government and the courts. Digital and other companies are reviewing and commenting on the regulations and their interpretation.


"Digital has no plans to implement a company-wide drug testing program," explains Erline Belton, manager, Corporate Employee Relations. "Our intention is to limit drug testing, if required, only to the areas required by law or legal contract.


"We have always had a concern for the privacy of our employees and we value the importance of trust in our work environment. However, we also understand the issues involved with


Employees found to be in violation of this policy are in violation of Personnel policy, section 6.24, "Employee Conduct," and are subject to discipline up to and including ter­mination.




Employees may seek or be referred for voluntary assistance in order to address problems associated with substance use, abuse or dependency. Digital provides an employee assis­tance program (EAP) for all employees across the United States to provide such referrals.


Managers who suspect substance abuse outside the work environment should limit the scope of their direct management to unacceptable workplace behaviors and performance, in accor­dance with Personnel policies, unless otherwise required by law or legal obligation.


Such laws or legal obligations may require that an employee be removed from a particular position. Managers should work with Personnel and EAP to advise the employee of assis­tance options. On questions regarding law or legal obligations, Personnel should consult with the Law Department.


From time to time, Digital may be required to implement programs for identifying illegal drug use, including drug testing. All programs must be approved by the Executive Commit­tee.


In implementing this policy, managers must be sensitive to employee concerns and aware of the potential liability of issues involving allegations of illegal conduct or discussions of employee medical situations. Personnel policy 6.18, "Employee Privacy," is a key reference in this regard.


Using Digital’s Logo by Jim Perkins, attorney, Corporate Legal Department; and Gene Kusekoski, manager, DIS Electronic Publishing Program


One of the most valued assets of any company is its corporate logo. Our logo gives in­stant source recognition to our products, services, and literature. We must protect it through proper and consistent use, and must ensure that those outside the company do not misuse it.


Digital’s logo is registered in the U.S. Patent and Trademark Office. Under the U.S. Trademark Act, a composite design mark, i.e., one containing a word in special typography inside a design such as our seven rectangular blocks, has to be used in the form regis­tered. Failure to so use such a trademark can possibly lead to loss of rights in it when it comes due for renewal. Similar provisions apply under foreign trademark statutes.


Beyond the legal reasons, it is important to display Digital’s logo consistently for marketing reasons. We want it to be instantly recognizable to our customers and the general public as a source-of-origin designator for our goods and services. The combina­tion of lower case letters within seven rectangular boxes is the most essential element of Digital’s logo as registered. Other than the specific word processing facsimile provided below, a graphic rendition of the logo should be completely faithful to the printed mas­ters as published in the Company Identity Manual. The only acceptable change is symmetric size scaling. If you cannot use the electronic form below, then do not use this logo in your document at all.


Sidney Diamond, former Commissioner of the U.S. Patent and Trademark Office, summed up this legal and marketing policy well: "There should be a special form for the trademark and it is important to stick to it. Many companies issue style sheets and specifications, sometimes in the form of engineering drawings, giving the exact proportions of the letters and proper relationships among all parts of the mark. To avoid blurring the image of the trademark in consumers’ minds, a standard form of trademark display should be established and appropriate steps should be taken to see to it that this form is used without departure."


Managers should keep in mind that:


o The logo is used as a graphic element, never within a sentence.


o When referring to the company within text, you should use our trade name "Digital" in upper-lower case.


o Using "DIGITAL" in all caps signifies its use as a trademark or a service mark.


o The term "DEC" should be used as a trademark for our products and as a service mark for our services, but not in reference to the company itself (apart from its approved use on stock market quote tapes).


It is obvious that the logo must be properly used on all documents that may be seen out­side the company, but employees must take the same care with documents for internal use only. For example, internal misuse of "THERMOS" by employees of its owner, King-Seeley, was a factor that prompted a U.S. Federal Court to declare that this one-time trademark for vacuum bottles had lost its trademark significance. This decision indicated that if the employees inside a company did not even use their company’s trademark correctly, that is convincing proof that it isn’t a trademark that the courts should protect.


All employees are responsible for correctly using Digital’s logo and the trademarks of Digital and other companies in both internal and external documents. A periodically updated list of trademarks can be found in our Corporate Videotex Library. Select "AD­MINISTRATION" from the main menu, then "LAW", or type "VTX LAW" at DCL.


An electronic copy of the logo approved for use in word processing can be extracted from the Company Identity VAX NOTES conference (IAMOK :: COMPANY IDENTITY). That conference also includes detailed information on the use of the logo in graphics applica­tions, electronic publishing documents and in videotex. Be wary of opinions expressed in general discussion forums such as VAX NOTES conferences other than the Company Identity conference, as these may or may not reflect correct legal positions regarding trademark and logo usage.


General questions on style sheets or the Company Identity Manual may be directed to Peter Phillips @CFO. Specific questions on the use of electronic forms of Digital’s logo may be directed to Gene Kusekoski @VRO.


Digital Selects Olivetti As Pc Supplier In Europe


Digital and Olivetti have reached an agreement under which Olivetti will supply Digital with personal computers for distribution throughout Europe. The computers, to be manu­factured to Digital specifications in Olivetti plants based in Italy, will be marketed and serviced through Digital’s sales and service groups.


Olivetti shipments, comprised of systems based on Intel 80286, 80386SX and 80386 micro­processors, will form the basis of Digital’s new family of DECstation PC products for European customers and will be a key element in Digital’s European range of desktop sys­tems. Olivetti, based in Ivrea, Italy, is the largest European information technology group and among the top 10 worldwide.


Enterprise Integration Services Organization Formed


The Enterprise Integration Services (EIS) organization has been created to position Digi­tal as a leader in systems integration and in integrating the enterprise for our custo­mers. Based on successful systems integration pilots in the U.S., Europe and GIA, EIS maximizes Digital’s ability to solve customers’ systems integration problems. These solutions typically range from a $1 million custom-designed solution to complex, multi­geography, cross-functional, multi-vendor programs from $50 million on up in which Digital would act as a prime contractor or a major subcontractor.


Russ Gullotti has been named vice president, Corporate Enterprise Integration Services, reporting to Don Busiek, vice president, Professional Services. Russ joined Digital in 1977 as Nashua plant manager. In 1979, he became Computer Special Systems (CSS) Worldwide Manufacturing manager. The following year, he joined Computer Systems Manufacturing as Salem plant manager. He rejoined CSS in 1982 as U.S. Area manager. He also served as Worldwide Business Operations manager and as CSS manager. Most recently, Russ was vice president of CSS.


Bill Ferry has been appointed vice president, Enterprise Integration Services, U.S., reporting to Russ and to Dave Grainger, vice president, U.S. Sales and Service. Bill joined Digital in 1978 as a finance manager in Software Services. He was appointed Cor­porate Software Product Services manager in 1980, and named U.S. Software Services manager in January 1986. In March 1987, Bill was appointed vice president, U.S. Software Services.


A major focus of EIS is to maximize cross-functional support, skills, and resources neces­sary to win and deliver business worldwide. To accomplish this, the EIS manager, in addi­tion to managing the Software Services function, the Systems Integration business, and the Program Management Office, will be responsible for the host management of Educational «     Services and CSS in their respective geographies.


Also reporting to Russ will be David Barlow, vice president, EIS Europe, and Jerry Mon­tague, vice president, EIS GIA. David and Jerry will also report to their respective geography managers — Pier Carlo Falotti (Europe), and Dick Poulsen (GIA).


Low-End Network And Communications Strategic Business Unit Formed


A new group, the Low End Network and Communications Strategic Business Unit, has been formed, reporting to Ralph Dormitzer. Jim Liu will be directly responsible for managing the engineering. This SBU will focus on connectivity solutions for low-end products within a departmental workgroup, and for connecting these workgroups with enterprise networks. The focus of the business unit is to provide low cost, easy-to-use solutions


that fit the low end business models for highly competitive markets. Its work will com­plement that of Networks and Communications.


Ralph has been with Digital since 1982, and has held various management positions in Engineering Technology and product development. He was also one of the key contributors to the development of DECconnect system, DEC423 technology, Thinwire Ethernet and low cost Ethernet packaging.


Jim also joined Digital in 1982. Since then, he has held engineering management positions responsible for the development of DECconnect system, DEC423 technology, T1 and Ethernet fiber backbone, cable simplification, and low cost Ethernet development.




Tom Colatosti has been named Organization and Workforce Development manger, reporting to Dave Grainger, vice president, U.S. Sales and Services. In this position, Tom will be providing leadership to the entire U.S. organization to optimize resources. He will be responsible for establishing the strategic framework and directing program teams to posi­tion the organization and the workforce to meet the business challenges of growth, profit­ability and quality. Tom joined Digital in 1973. He served for five years as the U.S. Finance and Administration manager and four years as the Canadian Finance manager. Most recently he was the assistant corporate controller.


Dick Doerr has been named director, U.S. Worksystems Sales, reporting to Dom LaCava, vice president, Low End Systems, and Dave Grainger, vice president, U.S. Sales and Services. Dick will be located in the Palo Alto, Calif., area. He joined Digital in 1986 and most recently served as Area Sales manager in the Southwest Area. Prior to Digital, Dick spent 14 years with Xerox Corp.


Joe Ford has been named Marketing manager for Digital’s Field operations in the Far East, reporting to Bobby Choonavala, vice president, Far East Operations, and Bruce Ryan, vice president, GIA Sales and Marketing. Joe has 17 years of Digital experience in sales, marketing and product line management. Most recently Joe has been managing the U.S. Sales and Marketing Programs organization.


George "Bud" Keating has been named GIA Field Service manager, reporting to Don Zereski, vice president, Field Service, and Dick Poulsen, vice president, GIA. Bud joined Digital in 1981 and has held a number of positions in Field Service at the corporate level. Most recently, he was manager of the Business Ventures Group and was also responsible for the introduction and start-up of the Field Service Enterprise Services business.


Doug Wood has been appointed manager, Channels Architecture and Planning, reporting to Joe Arayas, Channels Business Strategy Group manager. Doug will be responsible for developing and managing Channels Marketing’s strategic planning activities, and for developing Digi­tal’s Channels Portfolio - the mechanisms for providing what the customer desires. Doug has over 10 years’ experience at Digital in sales and sales management and eight years in product marketing, where he developed and managed Digital’s electronic engineering and technical CASE markets.


Next Digital Quarterly Report


In the U.S., the next edition of the Digital Quarterly Report is scheduled to be broadcast Tuesday, June 6, at noon and again at 4 PM (Eastern Daylight Savings Time). The program will feature excerpts from the recent State of the Company meeting, which included presen­tations by Ken Olsen and a dozen other senior managers. In addition, Jack Shields, senior vice president, will appear on the program to discuss recent business developments.


The June 6th broadcast will focus on the Company philosophy and values; an overview of our cost structure and its future implications; the objectives of Digital’s new Corporate Enterprise Integration Services; and the steps being taken to simplify operations and increase sales in the U.S. You can find the location of the Digital Video Network (DVN) closest to you in LIVE WIRE, by selecting item 99 on the U.S. News menu.  privacy statement