THE WINNING COMBINATION

[Music] in the early 1930s Glenn Miller was a high-priced studio musician like all musicians he was seeking his own star in night sky filled with Achievers he was looking for a signature that would make the Miller Sound unique after years and years of hard work Glenn Miller found the right combination it was a combination of the right notes instruments and musicians he found the winning combination and now here's our division president Charlie bigger it took Glenn Miller many years but he never stopped looking his determination paid off and he found the winning combination of course we're all familiar with other winning combinations Fred estere and Ginger Rogers Simon and Garfunkle and of course IBM and quality history is filled with famous combinations like these people working together combining their talents achieving goals despite difficult challenges people who distinguish themselves through the Dead dedication hard work and enthusiasm they bring to bear each and every day and once again in our own company we've unveiled yet another winning combination the combining of the customer service and the field engineering divisions I'd like to welcome you to our new division the national service division a division I'm extremely proud to be part of because we brought together the talents the dedication the enthusiasm of the finest service people in our industry the information processing industry is not only the most dynamic and the fastest growing industry in the world but it's also the most strategically and economically important industry in our country it's Transforming Our Nation from a producer of goods to a provider of services as that transition takes place computers and Communications become increasingly crucial and our company has positioned itself to play an even greater role in its Dynamic industry to help us understand how IBM is doing I want to share with you a recent conversation I had with our chairman of the board John Opel how do you feel about the state of our business today our business inside is really very strong and continues to be quite strong so I'm very optimistic I can't recall a time when I haven't been optimistic over the last 36 years that's good so that's a very it's a great business you know that and continues to get stronger yeah how do you think we've done against the goals that you established for the 80s well we're doing pretty well uh to date you know we're growing uh with our industry uh we're actually growing a little better than our industry in terms of product and and system leadership I think that underpins our ability to grow and while we have a few always have spots in our product line that uh in our systems line that that I'm not satisfied with and I know many are not satisfied as well in general you have to say that we've got a very strong and successful uh product leadership uh in our present portfolio and with the uh commitments we've made to R&D uh I would I would expect that to continue in terms of U our ability to to be the most efficient in the world to do things right we're just talking about quality which underpins efficiency I think the productivity in our business has been improving at Great rates and I expect that to continue as well so if you look at the detailed content of what people plan to do in in each of the operating divisions those kind of productivity achievements doubling where we from where we are now are well within our grasp so we're achieving it and we expect we're achieving the goal of being the most efficient and effective in everything we do um and I think the place where we have not achieved it as much as we would like which is what we were talking about a moment ago business processes uh as we put that at the top of our list on the focus items that we're going to fix that will begin to show results as well finally our profitability to finance this growth continues to be uh as you know quite good every Financial measurement classical Financial measurement from profit uh just absolute terms profit margins return on Equity return on assets all those classical measurements of of our business were the best in the world last year with that solid backdrop let's focus our attention on NSD who we are where we're going and how we're going to get there but before we explore those areas let's examine why we're in business we're in business to provide a level of service in the marketplace that enhances the sale of IBM products to accomplish that there are over 25,000 people in NSD in addition to our headquarters here in Franklin Lakes New Jersey we're located in 290 Branch offices 12 regions and 29 Ras centers we have three Education Centers two system centers and three software support centers we are the largest service organization in the country The largest division in IBM and we support 11 major IBM business areas last year our install base contained over 6 million boxes and by 1990 we expect that number to grow to over 9 million with another 11 million boxes in the service repair centers we serve a customer base that goes from a oneperson business on Main Street America to large corporations that make up the Fortune 500 and everything in between over 33% of you work on typewriters copiers and workstations over 30% on storage devices and printers almost 8% on software and about 23% on small intermediate and large systems that's a quick statistical analysis of the division now let me take you on a tour we're going to meet some NSD people at work here for some customers and get a perspective on some challenges from division [Music] Executives customer service rep by Leen Conlin heads into an NSD territory that includes hundreds of IBM typewriters in New York's Westchester County the territories around here are uh very rural lot of space between calls you have a lot of very small businesses generally an office with one machine or two a typewriter and a copier it's usually very picturesque the people are very friendly and you don't have some of the big business all right come fix a typewriter and leave type of attitude they're interested in what you're doing how you got to do where you're doing find all kinds of interesting types of businesses that you won't find in your standard City well the that's not doesn't mean it's the East German equivalent it just means it's West do you want me to show demonstrate what I mean sure we are Consulting metallurgical engineers and our stock and trade are reports we issue detailed reports that answer the question why did it break why did it corrode they have pictures they have tables and each one is customade so if that typewriter goes down we can't put out our report the typewriter is the key to our work and the service that we've had from you people is excellent in New York the NSD Eastern region is headed by vice president and region manager Jerry Riley the customer is going to be looking for a single service Focus that they can go to somebody in IBM and get a service problem resolved 15 minutes on his calendar next week sometime we will be shipping to our customers uh products into hundreds of thousands and millions the so-called H VLC the high volume lowc cost products uh will be you know just uh very very numerous and some will be Standalone but many will be connected and once connected to a network it's uh uh imperative that we are able to provide the customer single uh focal point if you will for this service needs having a separate division name and a separate division number uh puts a a barrier that is a fairly substantial barrier uh because you have two essentially different uh systems of operation with that barrier gone uh you have a situation where branches will be able to cooperate a lot more for the good of the division as a whole one of the things I emphasized when I came into this job shortly after we had a a meeting with all of the branch managers and I asked them that what they ought to do is have a buddy system that they ought to put aside a couple of hours a week go sit down with their neighbor from either Fe or Cs and review how they do business one day you're two divisions and the next day you're one division but at the field level where the people are taking service calls and handling the administrative duties in a branch office the change is more evolutionary I think the uh uh the typical approach of a CE or a CSR as well as a first first line manager or branch manager in service is that uh the deed is done let's get on with it sure they'll be churned and they'll be chained but we thrive on it and my view is is that uh uh if I had to trade places with anybody I'd like to trade places with a CE or CSR in Muskegan Michigan an ambulance races to save the life of an accident victim its destination the emergency room at pacley hospital this currently 28-year-old male physan patient involved in 1050 motorcycle landing on his head onal patient blood pressure there is no time to lose hackley's trauma team notified by the ambulance driver is ready to rush into action Dr H Dr please call the administrative offic La did we get blood gases units typ and cross CC of crucial importance are emergency procedures ordered by the doctor and relayed to a display terminal to other departments in the hospital the terminal is just one of 165 IBM devices connected to a system 38 hackley's director of Information Systems Jack mclusky the IBM service was a contributing factor to our selection of the system 38 into the IBM product line that we rely heavily on the system we run 24 hours a day 7 days a week when we do encounter a problem we want to know that it will be fixed as soon as possible and our experience has been that the IBM is generally here within 30 to 45 minutes once we initiate the phone call to maintenance as our dependence of the computer increases so does the dependence on on the availability of of Maintenance and uh repair facilities to be close at hand to get us back up and running when the need Rises what type of equipment are you calling about typewriter and your name please this is the NSD region Administration support center in Jericho Long Island Joe Black director of administration with responsibility for the overall efficiency and effectiveness of NSD Administration is here getting a firsthand View of this operation how many calls do you handle a day would you say on average an average of 170 170 Administration is a very exciting place to be and as a result of the reorganization Joe and EST St have a lot of work to do their first priority is the consolidation of the RAS cergy which has already started they've got a lot of emphasis in the area of business controls and audit Readiness programs with a goal of having the best controls and audit posture in the corporation and I know I can count on your support in this important area please next Joe and his team are planning a lot more education job related as well as development programs you'll see some hiring this year in certain areas and we'll be adding Administration managers in some locations as you can see Administration is filled with lots of Challenge and opportunity and you can be very excited about the future Rockwell International designer and manufacturer of the world's only reusable spaceship the space shuttle here in a hanger in the California desert a new shuttle is being [Music] built all work is monitored by a complex IBM computer network key to the shuttle's durability are these tiles each made to computer specifications like everything else on the shuttle underneath the craft technicians are applying 24,000 tiles to the shuttle skin keeping the shuttles design and Manufacturing on schedule and on budget is a responsibility shared by Rockwell and [Music] IBM Rockwell's manager of Information Systems Operations dick ker maintenance is the is the key uh the systems must be reliable and they must be up uh if we have problems response has to be uh almost instantaneous our experience with IBM in their ability to deliver the kind of maintenance service we need uh has been excellent the impact of a of a major outage would be widespread and and it would be catastrophic the U systems must perform uh we uh measure those things in terms of minutes and uh and hours uh in fact uh it is our calculation that an outage of an hour will cost Rockwell well over $100,000 in in Lost computer production to the corporation uh there's probably no way to to calculate the the loss we have extremely high quality standards uh we couldn't put a shuttle uh in in the air uh without uh just uh perfect precision and uh every use of high technology that we can manage we expect that IBM as our partner in that effort has to achieve those same standards of quality and uh where we used to talk in terms of 98% reliability and uptime we're now looking at almost 100% up time to it I gu they could use [Music] I think the tour pointed out the diversity of needs our customers had whether they're large small or in between availability is the key and it's our responsibility to develop service levels to meet their needs our challenge is to be the quality vendor to be the serer of choice and that's a challenge we'll face forever because like quality we're on a never-ending Journey along a constantly changing road but to me change equates to opportunity the opportunity to explore new avenues to Charter new courses to continue to grow and develop as an individual and as an organization as we embark on this journey there are numerous questions that I'm sure come to mind in the past few months I've addressed a lot of those questions in round tables with some of your managers questions that I'm sure many of you have communication will be a key component in our success equation we all have a lot to learn in NSD like you I know a lot about half of our business and I've got a lot to learn about the other half now that we have a very confident feeling about the future of our company and we've had a tour of our new division let's look at our key Focus items for 1985 one priority is customer satisfaction we cannot allow this internal change to affect the level of service we provide so let's set a goal to maintain customer satisfaction at an all time High next employee morale I assure you that as we make the necessary changes the people aspect of the change will play a key role in the final decision and finally since our mission includes running a profitable business we must keep headcount and expense in line however let me be perfectly clear on one key point and that is we will not sacrifice customer satisfaction or employee morale to save dollars or headcount those are three key priorities now let's look at some of the other projects that we'll be working on this year we're going to beep up technical education for both management and non-management you'll see a lot of cross training this year we've got a lot of work to do in information systems and that's well on its way I put a special group in place and they're reporting to me weekly on their progress we've got a lot of work to do in the area of business controls and I'll be paying particular attention to this area Security will be another one of my key Focus items security is everybody's business and finally quality we've made tremendous progress but let's not become complacent this is not just the program it's got to be ingrained in each and every action that we take each and every day so let's continue to keep quality first and strive to meet our goal of error free service to every customer every time those are our key Focus items and projects for the year of course that list is not complete it doesn't include everything but it encompasses most of the major items let's not be overwhelmed by the work to be done we've got a lot of time but more important we've got the best people in the industry and the most creative Talent available which makes me very confident that we'll accomplish our mission in a planned orderly and thoughtful fashion we've all lived through reorganizations and change and the end result has always been a better more efficient and effective end product and I'm convinced that this reorganization will position service to take an even greater role in support of our corporate goals during my conversation with John Opel he was also very confident about our ability to deliver the quality service we're known for I must say the people in your division in in NSD have uh have superbly have behaved superbly in their in their uh relationships with our customers and the evidence of that is overwhelming uh it's something that I think they all deserve great credit for you deserve credit for it all your managers do is do all your all the people in your position they do an extraordinary job we've got great people oh that's what makes it that's that we had had experienced uh over at least uh 10 or 15 years as long as we could measure it a productivity in a rate a compound rate in the in the neighborhood of 9% is that about right n n and half N9 to n and a half% and u and uh that is one of those propositions that people say always say but you know you can't continue that and uh actually we've exceeded that for the last s years 12 and 13 productivity in in your Vision uh has been uh really extraordinary and uh I expect it to continue to be that way because the technology permits it and the people are smart enough and creative and ingenious enough to exploit it to the hill and with this new uh amalgamation of all the resources that are that all of our service resources in one single place gives you the flexibility to exploit it with with ease without any organization boundaries or elimate those boundaries things are going to happen you know if you're able to Define in any specific terms what you want done uh to a group of wonderful people that like there are in your division you you tell them what you want and uh I I promise you they'll do it they'll do it yes they will they'll do it very well and uh so really if if uh it comes down to this Charlie if your division doesn't do a really good job because my ball you haven't told them what you want done the success of our division rests on your shoulders in every branch in every Center in every NSD location you carry IBM's tradition of quality service and we're on our way to establishing a legacy of quality service that will be unequal anywhere in the world you are the future of IBM the future of the national service division in closing I want you to keep this thought in mind nothing Splendid has ever been achieved except by those who dared believe that something inside them was Superior to circumstance you have that characteristic you are the key to NSD success we have the winning combination so let's make it a great 1985 one and one together make more than two stronger and wiser much better than each could do feel the power the celebrate this new equation with a winning Comin what it was it's a when it all up to us we're the best you and me because we are [Music] and e