Finding itself adrift in what chief executive Bob Palmer called a Darwinian market Digital Equipment Corp last week finally started to unburden its plans to right itself before it sinks. It says it will eliminate 20,000 jobs, plus its famous matrix management structure – the one Palmer found so difficult to master and blames for most of DEC’s problems – and replace it with something simpler that is supposed to increase accountability and return the company to profitability. In the company’s second major reorganisation since Palmer got his job 21 months ago, it has set up nine business units, three of which report to vice-president Enrico Pesatori as the Computer Systems Division and another three to vice-president Charles Christ as the Components Division. Palmer described the remaining three as free-standing profit and loss centres which have been given new balance sheet responsibilities for the first time. They include Multivendor Customer Services under vice-president John Rando, Digital Consulting under vice-president Gresham Brebach and Semiconductor Operations under vice-president Ed Caldwell. The company has given long-time veteran and chief technology officer Bill Strecker the Advanced Technology Group responsible for future products like multimedia, mobile and wireless and Internet. Strecker, Pesatori and Christ report to Palmer. Palmer promises the reorganisation will dramatically change the face of DEC by giving each business unit engineering, manufacturing, marketing and sales responsibilities, finally breaking the stranglehold central engineering has had on the company since Ken Olsen founded it. DEC also met Wall Street demands and promised to eliminate 20,000, or 23.5% of all positions worldwide in the next 12 months, not including folks that would be sold off with any of the units, such as disk drives, that it dumps. It estimates it will have a total workforce of 65,000 in a year from now, making the cuts from the infrastructure, the mid-level staff and from jobs that simply become redundant with the reorganisation.

By William Fellows

Observers believe it is more likely to be around 60,000, maybe even 50,000. Former Zenith Data Systems chief Enrico Pesatori, who has taken over as number two at DEC since the ousting of Ed Lucente at the end of the third quarter and whose hand, observers believe, can be seen in the way the reorganisation is shaping up now runs the Computer Systems Division which comprises a Personsal Computer Business Unit, a Systems Business Unit – which will handle Unix and NT – and an Accounts Business Unit. Little was revealed last week of how exactly the Systems Business Unit would be structured and executives inside the unit said they knew little more than the outside world about the form it would take and whether it would be substantially different from what they have now. The plans, however, have been drawn and are not up for debate, according to one of the company’s senior spokesmen. There have been no indications that ex-IBMer Willy Shih, the vice-president who runs both Unix and NT and who was travelling last Thursday when DEC announced the restructuring, would be dislodged. No major product line changes are expected either. The company will keep its operating system triumvirate and essentially all major system lines. Palmer, however, reiterated that the company has far too many accounts, 8,000, called on by its direct sales force and it is implementing a plan to turn all but the top thousand over to third parties, the keepers being those spending the most money with DEC and those with promise. DEC’s own sales force can expect a better commission scheme. Palmer also underscored DEC’s position as top-flight personal computer supplier and promised that DEC would increasingly become a high-volume house, the meaning of which remains to be seen. In personal computers, DEC is apparently benchmarking itself against Compaq Computer Corp and in Unix against Hewlett-Packard Co. According to the new way of doing things at DEC, the free-floating Advanced Technology Group is intended to

transform innovation into new products, services and businesses. The new Components Division will include the Components & Peripherals Business Unit, the Network Products Business Unit and the Storage Business Unit. Analysts are suspending judgement.