Conference 7.286::digital

    I heard the feces was gonna hit the rotating ventilator in June...this
    kinds validates that rumour.  Hope they've got enough bucks left to
    provide us with at least one decent cardboard box for packing.

    
>  The company has reduced employment by about 8,000 persons during the last 
> year, excluding the effect of acquisitions, Ryan said.  That process will 
> continue, he said, but Digital is focusing on reducing unprofitable work 
> within the company rather than setting a numerical goal for staff reduction. 
    
    Like Finance, which produces no profit whatsoever. I hope for the good
    of the company Mr Ryan sees this problem and moves to rectify it. 8^)
    
    Sorry, I know I'm shooting the messenger, but I couldnt resist.
    

re:         <<< Note 1478.2 by AUSSIE::BAKER "first jellyfish in space" >>>
                              -< Contradiction? >-

    
>  The company has reduced employment by about 8,000 persons during the last 
> year, excluding the effect of acquisitions, Ryan said.  That process will 
> continue, he said, but Digital is focusing on reducing unprofitable work 
> within the company rather than setting a numerical goal for staff reduction. 
    
    When I asked our personnel rep (not the psa) how many TOTAL reduction
    in force, she stated that the number she'd read was 4,129, as of the
    week before.  That was only 4 weeks ago. 
    
    Wonder which number is right?
    t.

    
    
      Don't forget that Acquiring "Digital Kienzelxxx" (Sp?)  added
    a few thousand employees to the total headcount number.
    
    
    							-al

re: .3 and .4
    
    
>>      Don't forget that Acquiring "Digital Kienzelxxx" (Sp?)  added
>>    a few thousand employees to the total headcount number.
    
I've heard we gained 600 the last quarter due to the above (probably not the
only reason), and Digital needs to layoff 10,000 more in the next 2 years.

Steve

I sure hope that cost savings has not become our prime directive. 

If we don't risk well funded development and marketing of quality
strategic products and services, all the cost savings in the world
won't help. 

If we do take the risk and succeed most of the time, the cost
savings will have been relatively unimportant. 

	~Mike

A recent Business Week had an artical on the Woes of IBM.  Seems they've 
got simular internal problems to us.  We are not alone.

    
    i sure hope that the "bean counters" are not making all the strategic
    
    decisions lest we end up creating that which we are trying to avoid.
    
    saving money till we go out of business seems to be the current trend
    
    these days...

A:
>  CLEVELAND -DJ- Digital Equipment Corp. hasn't seen any improvement in its 
>business, either in the U.S. or in Europe,

B:
>  Thus, the company plans further reductions in employment, more plant 
>consolidations and continued reduction in office space, employee travel and 
>other costs, Ryan said. 

    	I'm a little confused at how B is arrived at given A.  After all,
    if over a year of "reductions in employment, more plant consolidations
    and continued reduction in office space, employee travel and other costs,"
    has resulted in "no improvement", then why continue along this path?

    				    -davo

    	Revenue/employee is a key business metric.  Employee numbers 
    drive costs in office space, travel, etc.  Our performance on this
    metric is not good.
    
    	If you haven't increased TOTAL revenue (improvement in business),
    then you HAVE to reduce costs--which may be associated with plants
    and people.  I don't like any of the unpleasant decisions, but I'm
    convinced we have to do this...

    Some times i wonder - Is anyone looking at the other side of
    the equation - WAYS TO INCREASE REVENUE.  
    We have about a "zillion dollars" worth of slightly used
    equipment sitting around here in Westfield for over a year.
    If it sits around much longer it will be out of rev or
    obsolete.  Maybe we could DISCOUNT it and SELL it.
    This might also lead to software sales and service contracts.
    But what do I know, my last day is June 7.
    
    

    re: .10
    
        Lay off (sorry, I don't use euphemisms like "transition")
    everybody except for 1 employee.  The revenue/employee will
    be great.  Of course, the company will soon cease to exist.
    
    Claude
    

	Attached is a copy of a memo that I received about 7th hand.
	This might have some bearing on why we are in deep doggie-doo..



                  I N T E R O F F I C E   M E M O R A N D U M

                                        Date:     20-May-1991 12:00pm PDT
                                        From:     CURTIS SMITH
                                                  SMITH.CURTIS
                                        Dept:     WESTERN FINANCE
                                        Tel No:   

TO: See Below

Subject: BEST-IN-CLASS Comparison - Revenue/Profit per Employee

The following, recently published, industry comparison of (7) companies 
Revenue/Profit per employee has some very distinct messages within it.

It is interesting that Apple has just announced plans to proactively 
protect its current operating performance by putting a plan in place to lay 
off 10 % of the Apple workforce.


	      COMPANY:          SALES/EMPL.   PROFITS/EMPL.

	      Apple		  $440,000     $37,400
	      Compaq		   379,000	47,900
	      IBM		   185,000	16,100
	      AST		   234,000	15,400
	      SUN		   217,600	 9,650
	      H-P		   139,000	 7,780
	      Digital		   104,000	   600


Regards,
Curt


Distribution Lists <deleted>

If I figure correctly, and if DEC has ~ 120,000 employees,
then 120,000 * $600 = $72,000,000... so the first question is:
"was $72,000,000 really our profit during the period in question"
(whenever that was).

Second, according to these numbers we'd have to divide that
same profit ($72,000,000) among only 9000 employees (instead
of ~120,000 employees) to  barely beat H-P. That would mean
laying off over 90% of the company. We'd need to have around
only 2000 employees to get near Apple.

    I suspect there's a decimal point missing somewhere...

	Dan.

    To some extent this particular metric is going to be subject to aspects
    of diminishing returns, which will skew any conclusions that might be
    drawn.  Basically, it can be illustrated simply.  Assume you are a company
    with one employee and have $2000 profit every year.  You have an
    opportunity to increase profits to $3000 every year, but it will require 
    adding another employee.  You do it because you want the increased
    profits.  But, note that you are now only earning $1500 every year.
    Do you lay off the other employee?  Of course not, because your profits
    would drop.  You make less per employee by growing in number of
    employees, but you do it so that you can make more profit.
    
    That's basically how companies grow to become big companies that make
    lots of profit.  If people do not add value to profits, then you've got
    a situation where there may need to be firings ... no, I mean layoffs
    ... no, I mean transitioning ... well, whatever the term is du jour.
    IMHO, this is indicative of poor management of growth.  That may be
    what Apple is discovering now.  But, the idea of laying off to become
    "best in class" as far as this metric goes may be foolish because the
    metric when optimized can result in a company making a minimal amount
    of profit.  In other words, there will come a point when you lay off
    enough people that you lose money even as the amount of money earned
    per employee increases.
    
    Steve

    We have been bottom dog in the industry in rev-per-employee for several
    years....and it never seemed to bother anyone.  If we had a "real"
    Board of Directors, there would have been some major changes at the
    highest levels of the Corporation many quarters ago.  As it is, the
    rubber-stamping continues.
    
    When I saw the recent notes from the last KO Woods saying that people
    who submitting FY92 plans which sacrificed short-term profits for long
    term investments would be sent back to re-work them.....well, I knew
    then that we were in very deep doo-doo.  A management meeting I was in
    yesterday described the situation at "corporate" as panic, pure and
    simple.  We have apparently officially decided to eat the seed-corn,
    and we will pay a terrible price.  Meanwhile PCU managers are
    scrambling to make their favorite products appear profitable under the
    New Management System criteria....and the dance goes on.

    when looking at the ernings per employee it is also important to
    remember that DEC doesn't count employees the same way other companies
    do.  DEC counts each part time employee a headcount of 1.  IBM counts
    part time employees by the hours they work.  If there were 4 employees
    working 10 hours each DEC would count them as 1 headcount each for a 
    total of 4 people, IBM counts them at .25 headcount each for a total of
    1.  That is quite a difference.  DEC also reports all long term
    disability people in it's headcount.  I wonder what we would look like 
    if we reported our headcount the same as the rest of the industry??
    
    I have heard that DEC is supposed to change the way it reports total
    headcount to align its self closer to the way the rest of the industry
    does it.  I don't know if or when this will happen, but it would sure
    make these kind of metrics more accurate.

    re: -.1
    
    Anybody care to bet about what would happen to Digital stock once such
    metrics were adjusted?  My guess is it would go up, even though there
    would be no real difference in how things are run.  Then, there would
    be someone somwhere that would figure we were "finally" starting to do
    things right.  Sigh ...
    
    Steve

    
    
      FWIW,  I think DEC changed the headcuonting scheme a year
    or so ago.  People working "fractional weeks"  are now
    fractional headcounts.  I think there was even a (late) announcement
    in livewire about it.
    
    

	... for most, if not all this FY in figuring their head-
counts.  That may also account for the "8000" number Ryan put
forward as staff reduction.

>It is interesting that Apple has just announced plans to proactively 
>protect its current operating performance by putting a plan in place to lay 
>off 10 % of the Apple workforce.
>
r.e
>	      COMPANY:          SALES/EMPL.   PROFITS/EMPL.
>
>	      Apple		  $440,000     $37,400
>	      Compaq		   379,000	47,900
>	      IBM		   185,000	16,100
>	      AST		   234,000	15,400
>	      SUN		   217,600	 9,650
>	      H-P		   139,000	 7,780
>	      Digital		   104,000	   600
    
    Revenue/per employee is a bogus indicator used by ANALysts (the first
    half of the word sums it all up) when comparing two like companies.
    Unfortunately the above companies are very much different. Yes, they
    make computers, that is about all the similarity can that can be drawn.
    
    I do not doubt that the figure may indicate that there is a problem,
    but by reducing the number of employees to fix revenue/employee is
    fixing the indicator to keep Wall Street in glee rather than focusing
    on trying to find the problems.
    
      Firstly, we DO have a problem with revenue/employee. Reducing the
    number of employees will fix the statistic, but thats NOT the problem.
    
    Just look at the companies in the above list. ALL of them have major
    reseller networks and outlets for their wares. These resellers do the
    selling for them. How many Apples are purchased off Apple directly? How
    many through their resellers? When I go to a computer shop to buy a
    computer, is that shop owned by Apple? Who's staff list does that
    employee that sells you the machine come under? Where does he appear on 
    the balance sheet of Apple? When an Apple salesman sells, where does he
    sell? Yes, there are direct sales but much of his selling is to the
    reseller. This is not the only problem we have that will affect
    revenue/employee, but you dont hit the statistic without trying to hit
    the problem.
    
    We could also go onto the fact that we try to leverage high margin
    in low volumes instead of producing low margin on high. The products we
    have are typically well-serviced BY US. Have a look at who is actually
    servicing the SUNS that people are buying. Who actually fixes the
    Apples? These companies know that they would have a creaking hulking
    goliath and that they could not hope to grow their servicing at the
    rate that they were growing without passing this work onto someone
    else, but then where do these service people appear on the
    revenue/employee figures? We continue to try to do it all and the
    result shows up on this figure. If Wall Street dances to this number
    then we end up in the doo-doo, and what used to be looked at as a
    strength (solid service mechanism, good inhouse development
    capabilities) suddenly is the kiss of death. I've heard Digital people
    smirk that several of our competitors will be out of business soon
    because their growth will outstrip their service ability (Novell, SUN,
    PC Software...). They just sign agreements with other small companies.
    Sometimes the difficulty of this shows, but it hangs together, and it
    doesnt show on those precious indicators. We do make money on service,
    the question is whether doing it ourselves is favourable to the
    indicator. I suspect it is unfavourable to the indicator but favourable
    to the company, but go ahead, just chop it in half without shifting the
    activities to a third party and watch the revenue side slide downwards,
    while the statistic holds.
    
    We have major structural and philosophical problems to overcome. We
    also should try and factor in the totality of third parties into how we
    look at the above so we are not reacting to misleading indicators. We
    should know our business and how its composition determines the
    relative value or information we can deduce from indicators. To do less
    is shooting with a blindfold on.
    

    re .21:
    
    Good points.  For many of those companies that have amazing revenue per
    employee, there are a bunch of companies handling sales and service
    that get by on grocery store type margins.  Digital definitely needs to
    improve returns, but something needs to be done to differentiate
    returns by class of operation to avoid destroying low return but vital
    functions by attempting to set impossible goals.
    
    /Dave

    re: Wallstreet fuzz etc...
    I've never seen so much concern in this company about our wallstreet
    performance than I can imagine since ages.
    Is it because due to NOTES, E-mail etc we get the "news from top"
    very quickly and in raw form (unfiltered thru the management chain).
    This implies that everyone has to sort out her/himself what to do
    with the news ?
    I might be called old-fashioned, but I really do not feel overly
    concerned by such information as a DIGITAL employee. I work for
    a salaray and my hobbies exclude stock market games. 
    I do the best I can within my job's scope to justify my salary.
    Usually a job plan plus common sense (I won't comment on the
    relative value of the former versus the latter) tells you
    what "the best" consists of. 
    Beeing down in trenches, jacking up DIGITAL's stock value is
    neither in my job-plan nor would common sense tell me that 
    it can be influenced a lot by how I do my work.
    
    So as long as the stock purchase plan gives me a little extra
    every six months, I couldn't care less on how wall street
    feels about DEC, which metric's they use to measure etc etc.
    .
    .
    It would be different if Ken wanted to sell the company to his
    employees! Can anyone figure out how much it would cost per head ?
    Has this happened in other companies ? What were the results ? 
    I know that there are companies in France owned by the employees
    but I do not remeber a lot about them.
    /fred

    
    re .2
    > Is it because due to NOTES, E-mail etc we get "news from top"
    > very quickly and in raw form...
    
    My recent personal experience is exactly the opposite. Much of my
    info comes from the rumor mill, the Globe, or colleagues from other
    companies. This, in turn, is exactly the opposite from my earliest
    experiences at DEC, where I could count on my managers to keep me
    informed. But I don't blame my current manager for this..he does an
    excellent job on disseminating the info down to the troops when he
    gets it. I think that this is a reflection of the entire company today.
    I don't see communication from the top down working well.
    
    > Beeing down in the trenches, jacking up DIGITAL'S stock is
    > neither in  my job-plan nor would common sense tell me that
    > it can be influenced a lot by how I do my work.
    
    Once again, I have to disagree with you. I am an instructor..I train
    our Digital Services people how to maintain certain products, which,
    means if *I* do a good job (and I -DO- take pride in my work) and if
    *they* do a good job, then it will ultimately reflect on the bottom
    line, as well as enhance the reputation of the company as a provider
    of good service. But my job plan does not specifically include a
    clause to "jack up" the company's stock. And I am definitely "down
    in the trenches" also.
    
    My point is that it is every employee's responsibility to do their
    job as if it contributes directly to the bottom line...because it
    does. This is only my opinion, of course. Maybe old-fashioned, but
    that's me.
    
    > So as long as the stock purchase plan gives me a little extra
    > every six months, I couldn't care less on how wall street
    > feels about DEC, which metric's they use to measure etc etc.
    
    Hmmm...I'd be interested on how you think the price of a companys'
    stock is set and maintained...what determines how much extra you
    get every six months?

    
    Re .21 (discussing Apple's use of external sales and service groups)
    
       This is interesting.
    
       If we were to ignore revenues/expenses/headcount from the field
    sales and service organizations, leaving only corporate/engineering/etc.,
    what would our revenue per employee look like?
    
       Essentially, we would then be looking at similar organizational
    structures between, say, Apple and Digital. Only revenues from hardware
    and operating systems/layered software would be in the comparison.
    
       Does anybody have the separate figures needed to do this?
    
       Taking this a step further, what if Digital were to organize itself
    such that the field offices were considered independent, "external"
    corporations? That is, imagine if field sales had to "buy" hardware and
    layered software from corporate, mark it up, then sell it to customers.
    
       Likewise, Field Service would buy boards and spare parts from
    corporate and determine their own pricing for customers. Software
    services would "buy" the same support offerings that are available to
    customers, but they would act as any other consulting agency.
    
    (Recent changes in our way of doing business may actually be approaching
    this, no?)
    
    
    Food for thought,
    Frank
    

    What's a Job Plan?  I'm pushing twenty years with DEC and have never
    had one.  Where do I get one?  What's the order number?
    
    Fred, I agree with you on the stock.  The biggies are panic stricken
    because their Executive Options which used to buy boats, homes on the
    Cape and Junior's tuition have all turn to poopoo-caca.  Tough.  I
    have a couple left-over options myself, but I don't really care all
    that much.
    
    But seriously......are there really still organizations that operate
    on job plans?  Unbelieveable!

>   Digital must manage this assiduously so that each Unit doesn't invest
>   too much in Sales and Marketing (i.e., political) expenses.

	This is self-limiting.  A beautifully marketed machine will
	either sell like crazy, or not.  If it's only mediocre,
	but makes $ millions the first year, then, great.

	If it makes no money despite marketing, then someone's
	product will be scrutinized.

	We've got plenty of "management" of marketing now.  Let's
	see what a little entrepreneurship will do.

	Steve H

    Unfortunately,  'giving everybody P&L responsibility' translates into
    a ' What's in it for me ' mentality - like it or not, I've run into it
    already ( I hear that SUN is hiring.... just kidding...)

    re: .21:
    
    Those were EXCELLENT points...but is anyone else out there concerned
    about Demers using those numbers to justify another "round" ??  Does
    HE understand what those numbers REALLY represent ?

    There shoudld be no limits at all on what an Account Team can put
    together in the field to meet the customer's needs.  Even if it is
    100% third-party.....and all we do is the front-end work for them.
    
    There shouldn't be any such thing as an unprofitable PCU in this
    company by the end of FY92.  Unfortunately, from my limited outlook,
    the shuckin' and jivin' to make FY92 numbers "look" good is already
    picking up momentum.
    
    Does anyone really expect the bad actors that created this mess to
    
    

In general I strongly agree that there should be no restrictions
on Sales in putting together a Solution for a customer, even if
that means using 100% third parties in the delivery of service and
hardware.

So I have found this deal, where the customer wants to buy IBM
gear and connect it via a Novell LAN to his HP stuff.  He needs
the hardware, he needs network software, he needs somebody to
install and maintain the stuff, and he needs application software
which runs on the final configuration and an operations staff to
run it for him once it is all put together.

As a DEC Sales Representaive, where do I get cost information,
configuration information, etc... to put this together (not exactly
in out price book!)  Then there is the negotiation between me and all
the providers as to terms they will do business under and pricing
they want to charge (No Standard T&Cs) to guide this baby.  But
if I somehow get all this stuff together, get all the i's dotted
and t's crossed and presnet the proposal to the customer, what do
I charge him for my added value?  If I get him to issue a PO to
Digital what should be on it?

If you begin to see the picture, you begin to understand that every
attempt to get service or products from other than an existing Digital
PCU adds complexity and costs to the Solution for a customer.  Attempts
to involve third parties increase the time and cost of service delivery
(and potentially increases Digital Liability & Risks).  The administra-
tive systems make it nearly impossible to accept the revenue the custo-
mer might be willing to pay for the solution and/or report the costs of
obtaining the products and services for re-sale to the customer. 

So just how free is Sales to go outside to purchase the product and services,
Sales needs for a solution.  They are only as free as the adminstrative sys-
tems which control what they can buy and re-sell.  They are dependant on
the IBUs and PCUs to create the menu of what they can sell.  They are con-
strained by the adminstrative systems' ability to accept revenue for pass
thru to external parties and the legal department's ruling on appropriate
ways of doing business.  The Account Teams have not been relieved of their
duty to use as much DEC content as possible, rather they have been told to
make sure each sale makes money for this company.  The New Management Sys-
tem does not empower Sales to do the right thing for the customer, but it
might force Sales to complain more about the costs of certain products and
services.  It might re-direct some money internally as Sales asks for justi-
fication of the costs for particular products and services in competitive
situations.  It might force some groups to document the value added they
think they provide in terms that Sales can use to justify the price and
product selection or the group may go out of business.  The New Manage-
ment System may force Sales to better document what products and services
they need from the IBUs and PCUs.  We might begin to focus money on where
we can make a profit, rather than on where we can make a budget by selling
lots of stuff even if it is at a loss.

Don't expect that giving P&L responsibility will change behavior, after all
some people will continue to try to make their numbers by getting someone 
else to absorb the costs, will blame other people for not making their un-
realistic revenue estimates, etc...  If we fire people for losing money,
we will discourage risk taking and creativity.  If we don't punish people
for losing money, what difference will it make if they have P&L or revenue
goals?  How to we encourage people to take the risks to grow business, but
also teach them not to give away profits which Digital needs to support the
business model we operate under?   We need to discourage greed, especially
at the costs of one of our business partners, while generating the highest
profits possible within the context of competition.  The stock holders ex-
pect our best efforts and value the company based on their perception of
how we are doing at delivering best efforts.  Althought metrics like
profits/employee and revenue/employee are meaningless when comparing com-
panies with very different business models, it is a data point that people
use to decide on which companies to invest in and how high to value stock
which does not pay a dividend.  And Digital's trend toward lower revenues,
and lower profits per employee over the past several years has not done
much to convince investors to increase their estimation of the value of the
company.

Taking the view that the Digital stock price is none of your concern, and
that you can do nothing about it, is not productive.  Assuming that anything
is someone else's responsibility, whether it be finding ways to save money,
or increase revenues, is not useful behaviour.  I can contribute my thoughts,
my opinions, and my efforts to making things happen more smoothly and less
expensively.  If every employee saved the company $0.10 /day, we would have
a higher profit per employee of $26.00 per year that's a 4% increase if the
$600/emp/yr is correct.  Those kinds of saving can be achieved by turning
off unneeded lights, reuse of scrap paper, etc....  Just think what you
could save if you focused you energies on doing the most with the least,
and on taking responsibility for the costs you incur for this company.  I
can't solve all the problems, my objective is to avoid creating new problems
which require others to expend additional energy and to contribute to
solving the problems which prevent me from doing the most with what I have
available.  This may not result in any change of the stock price, but I
will have done whatever I could to contribute to improving the metrics used
by others to set the stock price.  I have enjoyed working for Digital for
more than 10 years. I want to continue to enjoy working for Digital for
many years to come.  I am extremely concerned about Digital's ability to
continue to be there for me and others to provide a place where we can
enjoy the work we do to contribute to the success of the company.  As atti-
tudes harden, and metrics change so does the environment around me.  The
behaviour necessary to make people feel like a success and act like winners
has been severe eroded by mishandling of most opportunities to effect 
positive change.  As an optimist, I hope the New Management System changes
will not suffer the same result.

    That was a very detailed note full of questions I don't have the
    answers to.  But here in Europe there are Solutions providers
    organised under the name of 'Enterprise Integration Centres'.
    As a PM in one of these I have access to processes and people
    who could take your imaginary scenario of third party providers
    and deliver the solution to the customer.  The EIC can price the
    effort required (according to customer perceived value!) compute
    the margin and deliver a quote plus project P & L back to the
    Account manager.  You are correct that customers are beginning to
    view Digital as more than a supplier of products, I am currently
    working on a project which is around 95% third party software
    and the customer really wants Digital to be in the frame as Prime
    contractor because 1) he knows us well having worked together for
    years and 2) he doesn't want the hassle of organising the software
    house and Digital in respect of contracts, invoices etc.
    
    There are many other examples I could relate but my advice is to
    contact the Solutions group in what used to be 'CSS'.  They should
    be able to help.  The idea of using the EIC's is to free up the
    accounts to do what they are good at, bringing in the business.  The
    EIC then works out how to deliver it at a profitable margin and
    quotes back to the account.
    
    Calvin 

    In case nobody figured out that my .33 was a hypothetical case,
    let me state for the record I am not a Sales Rep and it was an
    example to prove a point.
    
    The use of third parties with which we have establish a relationship
    is very doable, because someone has worked out the terms and condi-
    tions, knows the third party pricing and Digital's markup.  The grey
    area begins when we can't figure out why Digital is even in the pic-
    ture on a particular deal!  If as .34 states the solution is 95%
    3rd parties and the customer wants DEC to prime the deal so they
    have someone to go after when the deal falls apart (just how much
    to we charge for insuring success these days???)  In the Southwest
    District my former District Manager started asking what is DEC's
    value added on these kinds of deals.  If we have no experience with
    the third party, no terms and conditions agreed to between DEC and
    the third party, no understanding of the third parties solution to
    the customers problem, and our only added value is to deliver a
    fixed price contract to a customer who is nervous about the third
    parties ability to deliver, do you want to bet your margin on that
    senerio!  Several of our customer want what they call system's
    integration assitance...  unfortunately they do not want to follow
    the DPM methodology (they percieve it costs too much), and their
    definition of system's integration seems to be DEC insures success
    by bidding a solution fixed price before the problem is completely
    understood.
    
    In my example in .33 there was no DEC hardware, no DEC software,
    and the customer had told us what he wanted to buy, whether or
    not he told us the problem he was trying to solve is left for
    the reader to imagine...  I asked how does this get quoted and
    am told to call an EIC into the deal (okay which EIC is selling
    IBM hardware these days??? (Enter appropriate smiley faces)
    
    My example and my reaction to NMS is designed to show those
    who think there is a magic bullet that it has not been invented
    yet....  An extremely creative person talked to me about a
    solution DEC was bidding.  The existing software was written
    on IBM equipment (the cost to port the solution is unknown
    because we have been unable to obtain rights to view the soft-
    ware from our joint venture partner).  Digital has no experience
    in this arena, but someone is willing to pay 1.5 million to see
    it implemented in their local government jurisdiction.  The DEC
    PM figures it will cost DEC 6 million to deliver plus the cost
    of the porting activity.  Looks like a perfect opportunity to
    lose 4.5 million dollars but wait.  If we deliver this one, we
    can bid the solution in other jurisdiction and recoup our losses.
    
    I ask a stupid question, like if the one client is only willing
    to pay 1.5 million for 6 million dollars of consulting plus the
    cost of porting the software, how can we be sure we will ever
    get the cost of doing this below the price the client is willing
    to pay, afterall we acknowledge we don't know anything about this
    area.  Our joint venture partner won't share the applications
    code until we agree to include him in all future deals that
    involve the ported code (but DEC will absorb the entire porting
    costs!!!).  We can't even be certain that getting the expertise
    will assists us in getting future business, because it seems that
    the only reason the current customer wants DEC is because it is
    already an all DEC shop.
    
    How many of these deals can we pursue before we go broke trying
    to penetrate new areas for our hardware and software sales?  It
    is increasingly difficult to compete, and we have to invest in
    areas with a probability for immense success, we can not judge
    each deal solely on its effects on P&L but we can't make many
    mistakes or give away the farm before the crops come in.  If the
    New Management Systems forces Sales to develop appropriate infor-
    mation about customer requirements, causes Sales to demand support
    focused on things that will help them expand sales, etc...  It
    just might turn the company around.  If behaviour does not change
    and groups continue to pursue their own objectives, then we will
    continue to drift and focus on cost cutting rather than revenue
    generation.