Conference 7.286::digital

    I think the whole point of the CBUs is that if they are not
    profitable they can be let go with one cut, and if they are
    we could sell them...
    
    Here in Michigan one of the best technical salespersons and
    the only Network sales person just lost his job. Fortunately
    he got picked up but he is now leaving the state. Our loss
    another districts gain. Who is going to sell network consulting? Our 
    salespeople are good at giving quotes and many other functions but do 
    you/they want them quoting a multi-county wan? Its a sure loss leader.
    I keep hearing we are serious about UNIX. How many UNIX partners
    got hit this last time around? The numbers are outrageous. So
    perhaps we should quit the workstation market too. That leaves
    VMS, NT, network hardware and PCs. Oh yes NT runs on everyone's paltform. 
    Our margins on PCs are not that great, notice the telemarketing campaigns? 
    I believe that salespeople no longer get credit for PC sales. Last
    but not least remember when we were a networking company? Well
    today we sell everyones products but our own, Cisco, Wellfleet,
    Cabletron etc etc. and to make matters worse our channels partners
    sell these products for less then we do.  
    
    

    Patrick,
           I enter another category-your optimistic view but split-call it
    the SPLIT digital.I agree with the optimism scenario but it won't be
    October-we will pass through another Digital short term and we won't
    reach the optimism scenario until the CBUs realise that just being
    tough mouthed is not enough.You can be as tough as you like but with no
    value added,customers won't buy and right now the lack of investment in
    Digital owned intellectual property which can be specifically applied
    to a vertical(ie CBU)market means that a)we don't know better than our
    partners and that b)we are a number of dollars and months from changing
    the situation.
         So,this means that the CBUs have three choices:-
          a)Return to profitable growth but reduce direct sales and
    essentially become partner managers in a smaller company
          b)Don't return to profitable growth and wait for the next
    reorganisation
          c)Accept a holding period of less than acceptable profitability
    and rebuild the industry profiles such that we have the real inside
    track on certain industries and not others.
    
    I favor scenario c) but would not be surprised if b) was the outcome.
    There again,I am guilty of listening to customers....

    Those do look like the options. I'm not sure which is the most likely
    one to come to pass. I'd have to wait and see what FY94 brings. I don't
    see the optimist(1) or the acquisition(4) scenario being very likely
    though. Acquisition is unlikely because by the time Digital gets to
    that size all that's left would be maintaining existing customers.
    That's a losing deal and few would see that as attractive. It's easier
    in many ways to start a new computer company than fix an old one.

    I'm not optimistic about (1) for the simple reason that I believe
    Digital has too many poor senior and middle managers to make that
    happen. Now it's been my pleasure to work with some really great
    managers at Digital but there are too many who are really bad for
    good balance. Also our infrastructure is in sad shape. It's still way
    too hard to take an order from the customer handing a PO to customer
    paying the bill. I don't see any indication that there is either the
    will to commit the resources to fix that or a real understanding of
    how bad things are. 

    For these systemic reasons I believe that the "right size = small
    size"(2) is more likely than the optimistic scenario. We can build 
    product, though quality is not yet what I'd like it's improved. We do
    not seem to do labor and talent intensive work as well as we need to
    to make money in systems integration. We have had some successes but 
    I fear that we don't have what it takes to make those successes often
    enough and with good enough margins.

    For "Boutique"(3) to happen we'd have to become more modest and stop
    thinking of ourselves as a serious computer company. This plan could
    work but I don't really believe anyone is seriously interested in
    planning for this to happen. So it will not.

    Extinction is a real possibility. Our installed base means that this is
    unlikely in the short term (5-10) years but 20 years from now it could
    happen. If it does it will be because we fail to innovate in new
    technology, fail to really try to learn how to satisfy customers and 
    that we collapse under the weight of our own bureaucracy.

    		Alfred

    IF (such a big word, for only two letters).., Digital is to survive,
    Digital MUST get started on advertising on national networks.
    
    Digital has been doing NETsupport and outsourcing support longer than
    most competitors. However, I have seen IBMs' advertising for
    outsourcing on the networks. It is a classy advert, very tasteful. They
    weren't the first to start outsourcing, BUT the public is going to
    think so, because IBM is the only/first one to advertise the
    product/service.... There are wouldbe customers out there. There are
    company executives drinking coffee, watching these commurcials and
    thinking about outsourcing.....
    
    
    BUT.... are they thinking of Digital when it comes to this service.
    
    NO..... they only think of IBM....!!
    
    So, if Digital wants to survive, Digital MUST get some advertising out
    there NOW!!!!!!!!  As it is, Digital will be thought of as a copy cat
    to IBM for any outsourcing/NETsupport type adverts.... BUT Digital MUST
    get some advertising... 
    
    My Sinario for Digitals' future....! I truly beleave Digital has NO
    future... SORRY folks, BUT this company isn't moving quick enough. This
    company spends to much time thinking about what they want and not
    enought time doing it....
    
    If we have a product people/companys want then get something out there
    where people can see what it is Digital does.... Why we exist and why
    they can not do without Digital Equipment Corporation..
    
    My opinion!!
    
    Bob G.
    

    I didn't coin the phrase but it captures some of the sense of .0 and
    .1, there's a "dino-DEC" or, "dino-Digital" if you prefer.
    
    The holdover from the 1980's that represents the idea that a "full
    line" computer company of which IBM and Digital are really the only
    examples were a good model for a these companies to use and furthermore
    a good model for customers to adopt as a "business partner".
    
    The early 90's reflected two forces:  
    
    (1) The realization that commoditization made things inexpensive and a
    "business partner" wasn't needed if the technologies got simpler. 
    Complexity, proprietary technology, and high margins had been Digital's
    friend for a long time.
    
    (2) Digital's and IBM's own reluctance to change with the times and
    hope the old model of doing business could sustain profit a bit longer.
    
    The uncomfortable truth with "value Digital" looking at the rest of
    Digital as their customers would is that they don't like what they see
    and would prefer dealing with third parties that are more focused,
    responsive, etc.

    
    Digital will become much smaller I fear and the reason is that we are
    looking to installed base to get us out of our quandry.  I was in a
    meeting recently where we were discussing how long we should let
    percall item remain in the services database.  They want them to be
    left in for about 1 year to 1 1/2 years otherwise how are the service
    sales folks going to get their leads........
    
    
    
    
    Mike

    May I venture that you have looked at the wrong dimension? I believe
    that any of the scenarios you have sketched out  can happen and that
    "success" is not down to which way we go.
    
    The clue comes in a previous reply - we are a company of good people
    and bad people and, until we weed out the bad instead of weeding out
    whole groups I doubt we can make a success of anything.
    
    The process which converts us from what we are  into what we need to
    be is more about QUALITY than STRATEGY.  When I see real passion for
    quality then I will keep my  ESPP  stock instead of selling it every
    6 months. This passion has to come from the top.  Eat your heart out
    Tom Peters, Martin has spoken !!!!

    Possibly 6:
    
    Digital spins off all commodity businesses.  Uses proceeds from equity
    sales to create a super-value Consulting practice and chip facilities. 
    Although not convinced about Alpha, many major vendors use Digital
    facilities to produce super fast versions of their chip designs.
    
    Isn't this the longer term view from the top?  Let us see what has
    value by letting it prove profitable by itself.  Then, let us figure
    out what the market will pay for it.  We are far from being a growth
    company.  We should consider what pieces are growth businesses and
    spin them off.
    
    Jack Boyle

	Hardware is looking quite good with Alpha hitting the streets in
	quantity. But even that is not enough: it looks good from a
	distance but ask for details...

	- OpenVMS is on a long slow decline. Basically, OpenVMS is past
	  its peak. Few new customers will adopt it. It is a cash cow.

	- OSF/1 is a great Unix technically, but it will take a big
	  marketing effort to get on a par with Sun or HP. How many
	  customers will go with Sun, HP, or else specify System V,
	  and will COSE grow to dominate the Unix world?

	- Windows NT is neat, it was developed by Cutler (whom we used
	  to hate when he was here), it is VMS + 1, etc.  Fact is
	  however NT is never likely to be more than a stopgap for
	  Microsoft. They will drive DOS and Windows to become Chicago
	  for the mass market, and long before NT reaches a similar
	  volume, Cairo will land on top of it. Also, of course,
	  now there is NeXTStep, which looks rather like Cairo already.

	Also, operating systems are EXPENSIVE to maintain. David Stone
	told us about a year ago that he foresaw that very soon there
	would only be 3 or 4 companies developing their own Unix.

	Software is being strongly de-emphasized from all I can see. What
	software we have is reverting to the old function of leveraging
	hardware - in common parlance, forcing customers to buy our computers
	in order to enjoy the unique advantages of our software. Put that way,
	of course, it immediately sounds laughable.

	And Services. Ah yes. At least three quarters of the service revenue
	is annuity revenue stemming from product sales. As the OpenVMS
	business gradually shrinks, together with most of our layered
	software, this annuity revenue will also shrink. It will shrink
	more slowly than annual product revenue, causing the managers whose
	idea of "long term" is two quarters to go into raptures about how
	Services will save the company. The other quarter includes all sorts
	of stuff, among others our much boasted "Systems Integration",
	"Business Consultancy", etc. But since we are best at integrating
	"other" systems such as Unix and PCs with our own beloved OpenVMS,
	there will be fewer and fewer opportunities.

	Verdict: I plump for scenario (2), but with 25,000 employees
	instead of 60,000. Move over, Intel and Motorola.

	/Tom

    
    6) Pessimism
    
    Digital has grown up...and still does not know what it wants to be.
    That fact virtually guarantees mediocrity.
    
    

    Everything is a function of time, and the big question is how much time
    does Digital have?  How long will the company's existing resources be
    able to sustain the current organization?  Will the organization be
    able to sustain itself, while finding new areas of growth to exploit?
    
    In order to find new areas of growth, the company has to do a number of
    things, all of which have been discussed numerous times:
    
    - truly become customer focused
    - re-engineer the way we do business, making it easy for other 
      organizations to do business with Digital
    - streamline our product lines, and focus on producing leading edge
      products and technologies in our "core competencies"
    - improve our time to market for products so that we are either first
      or second to introduce a new product (as opposed to 4 years behind
      the competition on some things)
    - improve our time to profitability by adopting leading edge process
      and mfr'ing technologies.
    - streamline the field organization to give local managers more
      decision making authority and flexibility, especially in the area
      of consulting services.
    
    The question, again, is how much time does Digital have to adopt these
    changes - what is the window of opportunity?
    
    It seems to me that Palmer and his CBU managers understand this. 
    Unfortunately, there is an entire layer between them and the people at
    the bottom that just don't get it.  They are trying to preserve a
    management model and, more importantly, a culture that is completely
    unrealistic in today's market.
    
    There is evidence to support this:
    
    - a number of products that customers are interested in and would give
      us some advantage have been delayed due to engineering budget cut-
      backs.  Instead of getting rid of organizational inefficiencies, they
      cut product development budgets!
    - instead of reducing inefficiencies in the field organization, they 
      reduce headcount in the field, disabling our ability to sell and
      deliver products and services
    - I see no evidence whatsoever of us becoming customer focused; Palmer
      talks to a lot of customers, but where is that being translated into
      real product and services development?
    - I don't see any evidence of improved ways of doing business with
      Digital.  Product and pricing catalogs are still bloated and
      confusing, for example.
    - Advertising; the one subject people in Digital seem to love to hate.
      It is discussed more frequently in more quarters, yet we do precious
      little.  Ed Lucente is supposed to have a strong sales and marketing
      background, I hope he changes this.
    
    So, how much time do we have?  How long, given the ingrained culture,
    will it realistically take to fix these problems?  How many of these
    problems we solve, before that window closes, will determine what Digital
    will look like afterwards.

    Yup.  There's a scenario missing.  It's called partition - sort of like
    spinoff only bigtime.  The commodities and the value-added pieces have
    to be separated and made independently accountable, to succeed.
    
    You could apply the other five scenarios to each independently.
    
    Actually, this fixes a bunch of problems dicussed in other threads of
    this notes file.
    
    Let's call the commodities company DEC (equipment you know)
    and call the value-added company Digital Solutions (people can't make a
    nasty three-letter acronym).   This would seem to me to retain any 
    brand identity we already have and free the middle-management quagmire 
    to start creating perceived value in the new brand.
    
    I suspect that our difficulty with perceived "openness" in the
    marketplace has to do with trying to be all things to all people. 
    Would Microsoft be perceived as open if they acquired Intel???
    If we separate applications software from hardware it would help.
    
    I doubt if this one company can ever get focused on TWO business models
    that are completely different - commodity and value.  The legacy of the
    70's and 80's full-service company, with all the internal
    cross-subsidies and leveraging is just too great.  I work in a solution
    integration group in the field, where we constantly have to fight off
    management who is delerious about Alpha technology.  Our success
    depends on delivering "solutions" on whatever hardware, but management
    wants to slip-stream on the success of Alpha (we hope).
    
    The messages I'm getting from above (Palmer) indicate that we have a
    reasonable chance to get focus on the commodities business.  As for the
    CBU's and Systems Integration in general, in spite of assurances that
    this is important to Digital, the messages are content free, to date.  
    If we cut this business loose, it will have the focus to sink or swim
    on its own. 
    
    	Let's SECEDE in 93.
    
    al

    Right on the mark Al.
    A simple but brilliant analysis-I hope they promote you.
    Cheers

    I was talking with someone with an unusual perspective on Digital, the
    ex-wife of an ex-employee.

    She said Digital became such a mean and petty place that even the
    people who are left don't like working there.  I'm wondering if this
    attitude flows over to being apparent to our customers.

    I know for a fact that the customers' I deal with are aware of the
    attitude.... They ask me at least once per week... "how'ya hold'in up"
    "things goin' ok for ya'".... 
    
    Putting on the good face for the customer, nothing but positive
    feedback, back to them... (of course)... 
    
    They know..., boy do they know..!!!
    
    Bob G.
    

re Note 2558.14 by SDSVAX::SWEENEY:

>     She said Digital became such a mean and petty place that even the
>     people who are left don't like working there.  I'm wondering if this
>     attitude flows over to being apparent to our customers.
  
        Well, Digital did attempt to fire me (TFSO) last month!

        It's hard to completely forget.

        Bob

Note 2558.14 by SDSVAX::SWEENEY 
    
    >She said Digital became such a mean and petty place that even the
    >people who are left don't like working there.  I'm wondering if this
    >attitude flows over to being apparent to our customers.
    
    really pat? perhaps i should forward you (maybe BP might be more
    appropriate - that's given me an idea) the email and voice mail i've
    been fed as a regular dose for a long time now. many customers are
    plainly worried about us. an increasing number are flat pissed at us.
    
    we've got to get the internal turmoil under control. and damn quick.

    I'd expect customers who have a stake in us to be worried.  Their
    success as an enterprise and personally as well depends on Digital's
    ability to return to profitable growth.

    Potential customers without a stake on the other hand, are going to sit
    on the sidelines and demand proof that Alpha is "real" which accepting
    every vaporous statement made about Viking, PowerPC's, and other future
    processor technologies.  And they keep demanding more "proof".

    Digital's credibility is one thing.  My acquaintance was talking about
    a lack of interest, a lack of courtesy, etc. by employees towards
    customers.  Not the product stuff but purely human behaviors that make
    one want to do business with any other company than Digital.

    
    Re: .18
    
    > Digital's credibility is one thing.  My acquaintance was talking about
    > a lack of interest, a lack of courtesy, etc. by employees towards
    > customers.  Not the product stuff but purely human behaviors that make
    > one want to do business with any other company than Digital.

    People will *NOT* do business with a company when they feel unvalued
    or unappreciated.  It doesn't take a Harvard MBA to figure this out. 
    
    There used to be a poster from 10 years ago or more that showed the
    results of a Digital study about customers.  The most frequently 
    mentioned reason, by nearly 2 to 1 over all others, for changing
    vendors is when people feel mistreated in one way or another.
    
    Think about it, folks.  Do you go back to a place where you feel
    they've been rude to you?  Do you spend your money in places where
    you're left feeling that they're doing you a favor by taking your
    money?  I sure don't.  I go out of my way not to do business in places
    that don't treat me well and most studies show that I'm the norm.
    
    If we are not respecting and valuing our customers as people then we
    may as well shut the doors now and end the charade.
    
    Steve