Conference 7.286::digital

2348.0. "Transcript of 1/27/93 Engineering Update DVN" by MYCRFT::PARODI () Wed Jan 27 1993 19:41

    
    Please recall that this information is DIGITAL Internal Use Only.
    

Transcript of Engineering Update DVN, January 27, 1993
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Bill Strecker, Vice President of Engineering:
=============================================

Welcome to Engineering Update. I'm Bill Strecker, Vice President of
Engineering. I'd like to share with you today some of the things that
are happening in Digital Equipment Corporation that are of particular
relevance to Engineering.

First I will talk about some of the Corporate changes and the results of
those changes. Then I'll move on to Engineering and talk about the
changes and results occuring there. Then I will turn the discussion over
to Bob Supnik, who will give you a product strategy update. And finally,
I'll turn the discussion over to Paul Branstad, who will introduce our
Engineering Excellence Program.

Let's start with the Corporate changes. There are three areas that I
think are of particular significance. The first is around management
values, the second is around Corporate Organization -- with particular
focus on our business units -- and third, the formation of the Senior
Leadership Team.

In terms of management values, I think there are many similarities
between Bob Palmer's administration and the previous administration. The
first is integrity -- integrity not only in dealing with internal issues
but also in dealing with our customers. Second is a respect for the
individual; respect for individuals' different characteristics and the
contributions they can make to the Corporation. Third is fiscal
conservatism. And fourth is technical excellence -- technical excellence
is viewed as a differentiator in our products and services.

On the other hand, there are a number of management values that are
different. Perhaps most important is the notion of teamwork. In the
previous administration, we believed that competition was the way to get
internal excellence. Bob Palmer believes that teamwork is the way to get
internal excellence.

Second is rapid, formal decision-making -- this is in contrast with
consensus decision-making. In the future, you can expect decisions to be
made quickly, driven by data.

Third is accountability. Accountability means that when we commit to do
something, we do everything in our power to accomplish it.

Fourth is a clear corporate strategy. In the past, our strategy was
merely the concatenation of the strategies of hundreds of different
units. We will now have a single corporate strategy linking everything
together.

And last, but not least, is focus on the customer. Too much in recent
years we have focused on internal things -- politics, personalities, and
so forth. In the future, the focus is going to be on the customer.

The Corporate Organization is really quite simple. It consists first of
five Customer Business Units,  a Multivendor Service Business Unit,
three Product Business Units, and finally, functional organizations for
Engineering, Manufacturing, Sales, and Professional Services. Of
particular significance is that Engineering no longer is viewed as a
business or a collection of businesses.

Perhaps the most significant elements of this organization are the
Customer Business Units. There are five of them, and the particular
grouping of industries was a result of considerable extended discussion.
The industry groupings were made on the basis of similar solutions and
applications, and also on the types of dynamics going on in those
groupings -- we are  all familiar with the coming merging of the
communication and entertainment industries.

The remaining Customer Business Units are: Discrete Manufacturing and
Defense, a traditional area of strength for Digital, Financial and
Professional Services, Consumer and Process Manufacturing, and finally,
Health.

These CBUs have major responsibilities in the Corporation; most
significant is profit and loss responsibility. The CBUs have
responsibility for setting the strategies in their respective industry
groups, and responsibility for marketing. Most significantly, the CBUs
are responsible for the allocation of sales, technical support, and
professional services resources, to serve their particular customers.
Also, the CBUs are responsible for industry-specific products and
applications -- these products and applications can either be secured
directly by the CBUs or contracted to Engineering.

The Product Business Units are somewhat different from the product
business units we've known in the past. They are focused on standardized
products, even commoditized products. They include personal computers,
disks, and  terminals and printers. The intent in creating Product
Business Units is to create new business, off the traditional Digital
base. Indeed, if it were not the intent to get this business, these
units would not have been created in the first place.

Responsibilities of the PBUs include profit and loss, marketing, and the 
development of distribution channels. Significantly, the PBU
responsibilities also include engineering.

The Senior Leadership Team was created by Bob Palmer. It replaces
previous committees like the Executive Committee and the Strategy
Committee. Selection of the words "senior leadership team" is
particularly important -- leadership as opposed to management, and
teamwork as opposed to a committee. The Senior Leadership Team includes
Bob Palmer, the nine Business Unit managers, and the functional managers
of Sales, Engineering, and Manufacturing. 

Of particular importance is that three of the Business Unit Managers
have just been hired from the outside. These individuals bring industry
expertise and a different perspective on management; they are a very
welcome addition to the Senior Leadership Team.

Let's move on now to Corporate results. As you have observed in Q2, for
the first time in many quarters our revenue growth has exceeded our
expense growth, and therefore our losses have narrowed. As you know if
you follow the stock market, this produced an extremely positive
response. I think Wall Street is now believing that Digital is in the
process of turning around.

However, we achieved much of that turnaround by controlling expenses and
extensive downsizing. In order to continue our turnaround in the future,
we need future revenue growth. The principle responsibility of the
Business Units is to generate this revenue growth.

Now let's turn to Engineering. When we started forming our new
Engineering organization in October, we set down a number of goals. The
first was meeting the CBU requirements -- not only for products and
technology but also meeting those product and technology requirements at
an affordable expense level.

Second, we wanted a unified product strategy. Not necessarily a simple
product strategy; not necessarily a product strategy containing just one
thing. But indeed a product strategy that would cover all the areas we
are doing, and would link them together in an orderly and consistent
way.

Third, we wanted to identify selected areas of product and technology
leadership, indeed areas in which we could command a significant
position -- a #1 or #2  position -- in the industry.

We also wanted a simple Engineering organization, one where it was clear
who was doing what and who was accountable and responsible. 

Next we wanted Engineering excellence. In my view, Engineering is a
machine -- a machine that turns product requirements into products. Of
particular importance is the excellence of that machine -- How efficient
is it? What is the quality of the products it produces? How well does it
respond to the input requirements?

And last, a significant Engineering goal was fun. I can remember a few
years back, when being in Digital Engineering was fun. It is difficult
to have fun as a specific goal, but I believe if we achieve the
preceding goals, Engineering will be fun again.

That is an ambitious set of activities and we recognized that we could
not achieve them all at once. So we divided this restructuring process
for Engineering into several phases.

The first phase focused on getting Engineering expense down, creating a
new Engineering organization, and rationalizing our products. When I
talk about rationalizing our products, I do not mean reducing the scale
or scope of activities we are engaged in, but rather identifying those
areas where there is clear overlap, clear duplication, or clear internal
competition, and eliminating that.

Engineering restructuring phase two focuses on Engineering excellence,
linkage to the CBUs, and a certain refinement of the leadership areas.
We recognized that it would be impossible to achieve all of these
activities at once, so I have included a phase three, which is
fundamentally the implementation of Engineering excellence, and the
recognition that we need to continually improve in everything that we
do.

Now, what are the results of this? We have completed phase one over the
last several months. This was an extraordinary effort; an extraordinary
effort made by everyone in the Engineering organization, and certainly
one that was achieved with considerable pain. But we did emerge with a
new organization and we solved our Engineering expense problem. We
achieved significant product rationalization and now we are beginning to
start phase two.

I'd now like to introduce the Engineering organization. It consists of
six major groups and a Technical Director's office. 

First is our computer systems group, managed by Bill Demmer. It includes
all of our hardware and operating system development.

Next is our Networks group under Larry Walker.

The Software group, managed by Dennis Roberson, includes all software
above the operating system and the network.

Our Systems Engineering group is managed by Mahendra Patel. Systems
Engineering is a new activity in Engineering. It includes two major
efforts: the first is ensuring that the products of the first three
groups all work together. And the second is providing a linkage to our
customers in our Systems Integration organization.

Our Product Marketing group is managed by Bob Jolls.

And finally, our Research group is manager by Sam Fuller.

Our Technical Director is Bob Supnik.

I'd now like to move to product strategy. In doing so I would like to
introduct Bob Supnik, VP and Technical Director for Engineering. In
Bob's presentation, I'd like you to focus on two areas. First, our
product rationalization, and second, how we are moving to identify key
leadership areas. Bob?

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Bob Supnik, VP and Technical Director of Engineering:
=====================================================

Thanks, Bill.

I will be talking about our Product Strategy. The Product Strategy is a
work in progress. There are some issues that we understand and many that
we do not. Your help is going to be needed to resolve them. I'd like to
inform you today of where we stand, what we know, and where we are
going.

The starting point for a discussion of product strategy has got to be 
Digital's corporate strategy, as enunciated by our president, Bob
Palmer. This strategy for the corporation has two essential points.
First, that we are going to be #1 or #2 as a vendor of selected
technologies, products, and services, to the general information
technology market. Second, we are going to be #1 or #2 as a vendor of
information technology solutions to selected industry markets.

These bullets have two points in common. The first is that, whatever we
do, we are going to be #1 or #2 at it. We are going to be very good and
we will measure that by market acceptance. Secondly, we are going to
select what we do; that we will not try to be all things to all people.
Rather, we will choose the products, services, technologies, and
solutions where we can in fact attain leadership in the market.

With this as grounding, the approach to the product strategy is
four-fold: 

First, to get close to customers, to understand their requirements in
detail. 

Second, to build on our strengths, to build the products, services, and 
technologies that reflect what we know how to do well. 

Third is to focus -- to do a few things and do them right. 

The fourth is to achieve excellence in our products, our processes, and
our results. 

I'd like to go through each of these in a little more detail:

Getting close to customers means that we have to understand the highly
varied ways that customers use information technology. We have to
understand that customers vary widely in their knowledge of computers,
what they expect from them, what they are willing to pay for them. And
that what is right for a Technical OEM client may not be right for a
banking client or a healthcare client or some other industry.

Another important point about customers is that their computing
environment typically does not look like ours. Our environment is
entirely focused on  on our products. Our customers' environments are
filled with many people's products -- lots of PCs, lots of Macintoshes,
lots of other equipment. We have to recognize that as a reality of their
business life.

We also have to recognize that customers think in terms of business
requirements and solutions. They are looking for competitive advantage
from computers. They want their inventory to be less, they want their
financials done sooner. Our job is to understand how to translate
customer requirements into information technology solutions.

If we get close to customers we can then in fact employ what we are good
at -- build on our strengths. This implies that we in fact do understand
what we're good at and what our core competencies are. We have to be
extremely honest in our appraisal about what we are good at and what we
are not good at. We have to benchmark these capabilities against other
companies in the industry, and repair the deficiencies that are critical
to our business.

If we do that, and we understand customer requirements, we will be able
to build real business opportunities from these competencies, and we
will be able to use customer requirements and long-term market
opportunities to develop a program for long-term technology and skill
development.

The third aspect is to focus, to choose a few areas and do them right.
We are focusing on three areas. The first is to achieve leadership in
networking.  The second is to deliver balanced base systems based on
Alpha and Intel technology. And the third is to build distributed
systems that work, for customers worldwide. Let me talk about each of
these in some detail.

Leadership in networking has a simply-expressed goal, that is, DEC is
the vendor of choice for networks, regardless of size. We bring several
advantages to this area. First we have extensive experience with medium-
and large-scale networks. Second, we have the hardware and software
capabilities needed to build networks of all sizes. And third, we have
been a developer of high-performance networking technology for more than
10 years, from Ethernet in the late 1970s and early 1980s, to Gigabit
technology today.

Leadership in networking will express itself in hardware, software, and
service capability. In terms of hardware, we need to address the
requirements of the market for cost-effective mass networking, typically
done through hubs today. And at the other end of the spectrum, we want
to be able to deply very high-performance local area network switches,
particularly based on ATM  technology, so that we can wire campuses and
eventually enterprises for high-speed communications and transfer.

Turning to software, we need to support -- throughout our software
domains -- all the popular protocols in the market: TCP/IP, Netware,
OSI, DECnet and so forth, but in proportion to their market share. Our
investment has to be keyed to the return we will get from these
protocols. We must also supply a universal distributed computing
environment, one that encompasses not just the standards of the UNIX
world, but the far more numerous standards of the PC world.

On top of this distributed computing environment, we need to be able to
provide core services -- print services, file services, etc. -- that
work throughout the user's computing environment. The simple test ought
to be: log in anywhere, print a file anywhere, transfer a file anywhere.

Backing this up needs to have network management that is practical, that
is easy to use, that makes these large and complex networks scalable and
growable, but also lets small networks be installed by people who are
not experts. If we can master networking for the volume user, we will
have a long-term competitive advantage.

Let me turn now to the question of base platforms and hardware. Our goal
is to  have a full line of Alpha AXP and Intel x86-based desktop and
server systems, that are provably leadership in all the attributes of
system design: cost, performance, time-to-market, quality, and function. 

We have a set of advantages to bring to bear here. We defined and we
built the Alpha AXP architecture, the highest-performance RISC
architecture in the world. We have three decades of experience in
providing balanced system designs that are highly cost-effective. And we
have a focus on high-performance I/O, graphics, and networking, for the
future.

Our base platforms can be characterized into two sets: PC and
workstation products, and server products. We want to have desktop or
single-user system products that have leadership cost and performance.
And we want to have server products that have leadership performance and
scalability. Both sets of products need to be able to accomodate the
commodity cost structure that the PC has created in the industry. This
implies that we will use the PC design culture throughout our hardware
product set. We will use desktop and deskside packages from the PC
industry. We will use the PCI and EISA I/O busses that are becoming
standard there. And we will have components -- memories, disks, cables
and connectors -- that are standardized and based on the PC standards.

In our current product set, VAX and MIPS, we will enhance products to
meet customer demand by upgrading the processors in current systems as
long as our customers require it. And likewise we will continue to
support our customer investments in their current I/O solutions: XMI,
TURBOchannel, and Futurebus+.

On the operating system side, we have three platforms that we support:

OSF/1, which is the world's first 64-bit unified UNIX -- OSF/1 has great
potential in many areas of computing, not only technical and scientific
computing but also commercial computing. And we intend to drive it as
the standard for the world of UNIX-based solutions, which is today a $30
Billion business and  growing. Our goal, returning to the original
corporate goal, is to be #1 or #2 in the UNIX business.

Our second platform is OpenVMS. OpenVMS provides high-availablility
production computing, particularly in complex, transaction processing,
and high-availability systems. OpenVMS has an enormous installed base,
roughly $50 Billion, and we should see to it that our customers have no
reason to switch to other solutions.

Our third operating system platform is Windows NT, which is DEC's window
to the PC market and the PC world. It offers us the opportunity of
creating a volume desktop market for our products. It also will be the
LAN server of choice as PCs grow into full-scale distributed computing
systems. This  leads to my next topic, which is the focus on distributed
systems that really work.

One of my colleagues at the Systems Research Center on the west coast
defined a distributed system as something that can destroy your entire
day's work  without you knowing which system was actually responsible.
Distributed systems hold the promise of a breakthrough in cost-effective
computing for even the largest-scale problems. But to make that promise
into reality requires dealing with complex issues of manageability,
predictability, scalability, availability, and so on. We intend to make
distributed systems work in three critical areas: commercial computing,
workgroup computing, and technical computing.

Our advantages are that we have technology that is leadership in
distributed systems -- in making distributed systems reliable, in
partitioning problems among distributed systems, and in integrating
distributed systems from multiple vendors. 

In the commercial space, we will be able to use distributed systems
technology in several different kinds of appliations. We can use it in
broad-based commercial computing -- banking and insurance -- where
people are looking to do mainstream commercial computing at
cost-effective levels. Secondly, we can use distributed computing to
downsize mainframes, to replace the glass house with collections of
small and nimble machines in the office and elsewhere. And third, we can
use distributed computing to help the small and medium enterprise to
grow seamlessly from a central foundation.

We will base these commercial solutions on OSF/1, on OpenVMS, and on SCO
UNIX, as appropriate to the market. Our challenge is that we must
transform the technology capabilities in distributed computing that I
talked about earlier, into full-scale solutions that work, that are easy
to apply, easy to sell, and easy to integrate.

A second opportunity in distributed systems is workgroup computing -- in
helping PCs and collections of PCs scale up to larger missions. Here we
are going to be helping people who have PCs and PC LANs transition their
focus from individual productivity to organizational productivity, and
from occasional or intermittent availability to continuous availability.
Our challenge here is to leverage the industry desktop and multimedia
investments, and to combine them with the core competencies that we
have, so that we can provide solutions to customers.

The third area for distributed systems technology is technical and
engineering computing. We have the opportunity to again be the leader in
technical and scientific computing with Alpha AXP workstations, Alpha
AXP servers, and what are called "farms" or collections of these things,
that can run parallel problems.

In addition, we can have leadership in applied engineering computing --
the use of computing to design, to build, to control, to do real-time
applications. Again, this implies a focus on the problem of changing
enabling technology into solutions: compilers, applications, graphics,
networks, multimedia, systems integration, service, availablity, and so
on.

A keystone to achieving the goal the Corporation has set for itself --
to be #1 or #2 in products and solutions -- is to achieve engineering
excellence. The cornerstone is that we have to be #1 or #2 in the
products, services, and technology that we commit to. This commitment to
being #1 or #2 -- to leadership -- applies to every component, every
deliverable, every process, and thus it applies to every engineer in
this company.

If you do not personally feel that commitment, if you do not see that
commitment in the products you are working on, then we need to change
what is happening. The measurement criteria for this has to be very
clear: we measure against the competition and we benchmark. The
competition is not the rest of Digital; it is H-P, it is Sun, it is IBM,
Apple, Compaq, and so forth. This is a brutally competitive industry and
we need to focus on our real competitors and not on each other as the
people to beat.

Leadership in products is a simple thing to get. We have to solve real
customer problems. We have to solve them sooner than the competition. We
have to solve them with higher quality and at lower cost. It is really
that "easy," if you like.

This commitment to being #1 or #2 means that we have to be #1 or #2 in
all the critical metrics, not just in a few. We have to be leaders in
cost -- the total cost of the product; the cost to design it, the cost
to build it, the cost to service it , the cost to support it, and
eventually the cost to retire and replace it. We have to be leadership
in performance. We have to be leadership in quality. We have to be
leaders in time-to-market and in function that really solves customer
problems. 

And one that I would like to call out especially, because I think it is
not something we've focused on in the past, is leadership in
ease-of-use.

Achieving excellence in product results implies to me that we have to
have excellence in our development processes. We need to have
development processes that permit us to do products quickly, to make
sure that they work, to make sure that they achieve customer
satisfaction. This will mean planning them correctly, executing them
correctly, manufacturing them correctly, and servicing them correctly.
And all of that means underlying processes that really work.

Another key to excellence is to have open and clear communication
throughout engineering and across functions. We have to tell each other
what we are doing, and what we are not doing. We have to know, from the
Customer Business Units, what the market requirements are, and when they
change. And we have to be prepared to move quickly and crisply to adjust
to changing market conditions.

Lastly, achieving excellence implies that Engineering is going to be a
fun and exciting place to work. If it isn't going to be fun; if it isn't
going to provide personal satisfaction to the people who work here -- to
you and to me, management, secretaries, draftspeople, everybody -- then
we will not make our best contribution over the long term, not
sustained. And we will not have  the excellence that is required. 

So what are the next steps? As I said at the beginning, the Product
Strategy is not finished. These are not the 10 Commandments on stone
tables ready to roll. Rather, we are developing the product strategy and
we intend to refine it and improve it constantly.

This implies a commitment to frequent, bi-directional communications on 
technical, business, and strategy issues. It also implies that we will
have clear and rapid processes for closing the many unresolved issues.
These include what we are doing about multimedia, about office, about
CASE, and so forth. 

There will be formal processes and forums for solving these problems.
For example, we have re-instituted a regular technical strategy review
function that brings together the technical directors in Engineering
with people from the Customer Business Units, the Field, and Marketing,
to address some of these critical problems right away.

Another thing I want to do with some urgency is to jump-start us into
looking at new opportunities for the Company and for Engineering. I
believe that the market has never had more opportunities for new
products and services. These include the whole world of portable and
mobile computing, the ability to provide extremely high levels of
availablity -- amounting perhaps to fault tolerance through networking
and software -- and lastly new user interface paradigms that will permit
us to deal with computers in the way that is natural to us rather than
natural to computers.

In closing I would like to say that the hard work is going to go on --
probably forever. Alpha, for example, which I've worked on for the last
four years, was a continuing challenge -- nerve-wracking, sometimes
gut-wrenching -- but also a lot of fun. And that is the challenge we
have for DEC as a whole, and for Engineering as a whole. We need to beat
the competition, we need to make money, and we also need to have fun
while we do it. I hope you will join me in meeting this exciting set of
challenges. Thank you.

---------------------------------------------
Bill Strecker, Vice President of Engineering:
=============================================

Thanks, Bob.

We are now starting phase two of our Engineering restructuring program.
As you recall, phase two is focused on Engineering Excellence.
Excellence in meeting and identifying customer requirements, excellence
in our Engineering process, and excellence in selecting technologies.

To implement our phase two process, we are bringing in an outside
consultant, Booz-Allen & Hamilton. Many of you may be questioning why we
are using an outside consultant. I see three important advantages.

First, Engineering Excellence is a difficult process. It is important to
get started on it and an outside consultant can force us to do that.
Second, the outside consultant can help us separate the forest from the
trees. And third, our outside consultant has substantial experience in
doing this for other firms, and the lessons learned from doing that can
help us do this much more quickly.

To kick off our Engineering Excellence Program, I'd now like to
introduct Paul Branstad, Senior VP, Booz-Allen & Hamilton. Paul?


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Paul Branstad, Senior Vice President and Partner, Booz-Allen & Hamilton:
========================================================================

I'm Paul Branstad, Vice President and partner of Booz-Allen & Hamilton.
We are working with Bill to help achieve the mission he has defined for
Engineering: achieving excellence. What I'd like to do today is describe
a little bit about the scope of the project, our role and your role, and
what it is all designed to lead to and when.

This effort has two major thrusts. The first of these is to develop and 
implement the market-based, Business Unit-driven approach to
Engineering. What do we mean by those words? What is the project trying
to capture?

It is trying to capture, first of all, that the mission of Engineering
is to be driven from the market back. And that the solutions that
Engineering works with the Business Units to fulfill are solutions which
meet customer needs -- as customers define those needs, not as Digital
would define those needs. Solutions which have cost, performance,
functionality, and ease-of-use advantages that customers will recognize
and be willing to pay for.

The second major thrust is to develop and implement a world-class
development process, a process that causes Digital to achieve quality of
design and execution, to the specifications defined from the market
back, each and every time -- across the full scope of Digital's
development efforts. In brief, what this means is selecting the right
things to design and designing them in the most efficient way.

This project has a very tight timetable, a timetable geared to meeting
the overall goals and objectives that Bob Palmer has established. It
must be completed by May of 1993. But what does completed mean?

Completed doesn't mean a sterile consulting project which is all done,
wrapped up in a bow, and put up on the shelf by May of 1993. If we do
that -- if that is all we do -- we will not have caught the need for
implementation for FY94. So while the project has to be completed by May
of 1993, that means concurrent development and implementation, in synch
with the overall schedule to make 1994 the key year for Digital's
turnaround for success.

This is a joint effort, joint where Booz-Allen & Hamilton supports
Digital, but where Digital leads. This is a Digital-defined project. DEC
brings  business knowledge, the experience of it's people, and a
detailed understanding of the substance of their products, the
customers, the services, and solutions that need to be provided.

Booz-Allen & Hamilton is integrated with the Digital team. What we bring
is objectivity, experience for other clients, our independence, a
willingness to call the shots as we see them, and a dedication to this
particular effort. My role and the role of the Booz-Allen team is
concentrated on achieving  Engineering Excellence for Digital.  We also
bring a source of "best practices" from work we have done at similar
(other but non-competitive) clients. And we act as a catalyst and a spur
to change.

The DEC team has many and varied roles. We will be working with a large
number of you. Not all of you, which is in a sense the purpose of this
video, but with many of you. We have divided you up into several
buckets, the first is content resources, part-time but expert -- the
people who know the various subject matters, who understand the
organization, who can give us the insight to collective team needs about
the best of Digital and the relevance of what we will do to make sure it
accomplishes Digital's mission.

The other resource pool is dedicated resources. This is an integrated
team of Booz-Allen and Digital people working side by side. The
dedicated resources are full-time Digital employees working with
Booz-Allen under our collective  direction. The overall direction of
this project comes from the Steering Committee, which is both Bill
Strecker and his executive staff, and the  connected resources in the
Business Units, in Sales, in Marketing, in Corporate Manufacturing, in
Services, and in IM&T.

What are the deliverables? What are we on the hook to do? Going down
this side, the Business Unit-driven Engineering, our first deliverable
is to build an appropriate interface with the Customer Business Units
and with other functions. On the other side, our first deliverable is to
identify areas of improvement in cost, time, and quality, via a
comparison of the best of Digital's practices with the best of what
Booz-Allen knows to be practices used by other successful people.

A second deliverable is to develop and implement market-based, Business
Unit-driven criteria for project screening and budgeting. I mentioned
early on that we have to do this project in a way which catches the
rhythm of preparing for FY94.  That requires that we play a hand in
("we" being this project and not Booz-Allen) in helping to screen and
prioritize the 1500-odd Engineering projects projects that are currently
in the works. We need to do that in a systematic way, in a way that
tries out the process we are developing for having Business Unit-driven
Engineering.

On the world-class development side, the second deliverable is to define
the integrated approach to product development that incorporates the
best practices that are the initial focus of identification. 

The third thing we must do is bring this through to implementation. That
includes providing project management tools that can connect up all the
levels -- the Corporate Strategy level, the market planning level, the
functional planning level, and the operations management level. And it
means a sequential and well-planned implementation and roll-out,
starting with a combination of the old for the most urgent, and the
areas that are most ready to be prepared to lead the kinds of changes
this effort will be designing.

What are the principles that will underly the design of this effort?
They are few and they are straightforward. There is no rocket science
involved in this effort. An integrated architecture for overall planning
and development, an  architecture that connects up to the Corporate
planning and strategy, the market planning that is driven by the
Customer Business Units, the functional planning by the supporting
organizations, and the operational management of the day-to-day
activities, particularly those activities that relate to product
development.

The second principle is that Business Unit needs and requirements must
be integrated with solutions. They must be market-backed and
customer-responsive. They must be focused on the critical high-value
needs as customers define them. They must leverage Digital's focus for
technical advantage, and on  specific competitors at specific market
segments. They must integrate those solutions to appropriately leverage
what Digital can do because of its market scope. Solutions in common,
without genericizing those solutions. And they must address the
configuration mangement issues so that Digital's overall product
offering is both simplified and synchronized.

The third principle is to use process to empower, not to restrict. To
achieve the necessary levels of cross-functional integration, to assure
that the  design team can find the creative solution to the bounded
constraints,  constraints which reflect the strategic objectives of the
project, the performance objectives of the product, the technology and
architecture  reestrictions which allow this to be a Digital solution,
and the economic constraints of both development and production.

These processes will be tailored by type and scope. But there will be
only a few -- a limited handful of types -- so that everyone in Digital
will know which process management approach is going to be used for
which projects. And they will be designed to fit Digital's capabilities,
the skills of its people, and the experience that Digital has had both
with its successful and its less  successful products. 

What does all of this mean? It means we are working collectively to
achieve the Excellence in Engineering mission that Bill Strecker has
outlined. But that mission in itself is part of the Excellence in
Digital mission that Bob Palmer has outlined. Excellence in strategy,
excellence in the execution of that strategy, excellence in the
environment, the environment for Digital employees, the environment for
Digital's customers, and the environment for Digital's suppliers and
partners. And excellence in the results that have been collectively
achieved based on the value delivered to those customers.

What does this mean for you? It means we need your involvement, we need
your participation as we go for data through surveys or through the
recapture of historical experience, we need the cooperation and the
extra effort to help make the team informed. We need facts. We also need
creativity. We need to be pointed to the best of your prior experiences
of what represents practice excellence. We need receptivity. We need a
willingness to embrace the concept of change and to take advantage both
of what you have done the best in the past and what your competitors
have done best, part of the role of Booz-Allen to be to bring that
competitive knowledge to you. We need speed. There is an urgent need to
drive this effort -- both its development and its implementation -- to
meet the challenging goals of 1994.

If we can do this -- and Booz-Allen is dedicated to this and the content
and resources that we are using with Digital have demonstrated their
dedication to this -- then we will meet the goals that Bill Strecker has
outlined for this effort. Thank you very much.

---------------------------------------------
Bill Strecker, Vice President of Engineering:
=============================================

Thanks, Paul.

What I can't stress strongly enough is that your participation is needed
in the Engineering Excellence process. Consultants can help but they can
only help. You have to provide the data; you have to provide the
participation; you have to provide the design and implementation of the
relevant engineering processes.

If we come back to our original goal of fun in Engineering -- and
security in our jobs -- fun and security can only be achieved with
satisfied customers, world-class technology, and world-class Engineering
processes. These are the objectives of the Engineering Excellence
Program.

I'd now like to summarize what we talked about today. First we talked
about Corporate changes -- changes and similarities in our management
values; our corporate organization, with particular focus on Business
Units. We talked about some Engineering changes -- organizational
changes and the successful completion of phase one. We talked about
product strategy. And finally, we talked about our Engineering
Excellence Program.

I'd like to obtain feedback from this presentation. This presentation is
part of our overall communication process, our effort to try to better
involve all of our employees in what is going on in Digital Equipment
Corporation. If you have specific feedback on product strategy, contact
Bob Supnik through  electronic mail. If you have particular questions
about our Engineering Excellence Program, contact Bill James by
electronic mail. And if you have questions on these or any other issues,
feel free to contact me by electronic mail.

Thanks for joining us.