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OFFICE SYSTEM PLANNING Daniel Hosage Datapoint Corporation The fact of the matter is that the systems approach to the office is the name of the game. This is the kind of thing Datapoint has been doing and the kind of thing that we are going to be talking about here. Before I get into planning, there really are a couple of things I have to cover. I think we must understand the nature of the ottice, at least what I believe to be some of the driving forces in this whole electronic office approach, some of the general trends, some of the converging technologies. These are the things that are really going on right now. I think we all agree on what the most important elements of the electronic office are. In my discussion I think I will have something surprising to say in that area that most people are just fluffing off at this point in time. I'll provide some examples of integration and how you can do some things today in a systems integration fashion, and then talk about the planning, how to prepare and what you can expect to get in terms of the results. Addressing a question that was asked in the previous discussion, one of the difficulties you have in this whole area in terms of standardization — and there is a lot of work being done that wasn't mentioned, but I will refer to it later — is that what's happening is typical of classic, emerging market or emerging industry. In this kind of an emerging situation, diversity is the name of the game. If you don't have diversity and you don't approach this whole new industry this way, instead of fighting for standardization, we are not going to achieve the kind of creative approaches and the kind of progress that are going to make the whole office a heck of a lot more productive in the future. An amazing thing was said earlier today. A responsible member of a large corporation made the comment that his company is a source of the information that it costs approximately eight dollars to type a letter. That is an amazing fact in and of itself. But the really amazing fact is that a commercial enterprise, in a free enterprise system, where understanding what your product costs are, understanding where your money is going, understanding what kind of a 33

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profit you can get out of a product and proper pricing techniques and strategies are so important, we don't even know what a piece of paper costs us to produce in an office. It is considered real news when we find out, when Exxon runs a study or IBM runs a study. That is one of the most amazing missing links in our whole operation. The problem is that too much of our business as well stated earlier, is now coming from the office itself. There is so much time and effort being put into that infrastructure, that overhead, that over 5O percent of the people in the American free enterprise system today are in office support capacities. This just is absolutely unacceptable from the standpoint of productivity. What has happened as we see it, is that there nave been significant advances made in productivity and capital investment in the factory areas the last ten years: something in the range of $24,OOO per employee. In the oftice, it has been only $3,OOO and what has resulted is simply that factory productivity has increased over the last ten years — it has taken a few lumps lately, but it has increased over the last ten years — whereas in the office it just simply hasn't. People have been added, more and more people have been added. One of the things that also has happened, as we put all of these people in the office, is simply the whole game of information flow. If you will remember wnen you were young, at least I did it when I was a young IBM salesman and I used to go home to meet my future wife, I used to float checks between Baltimore ana Philadelphia, Pennsylvania, because a float existed. You could cash a check and it took five days for your money to get out of the bank. There is a similar situation, an information float that exists in our society and in the office. What happens is illustrated in this example. At one major company in the United States, it took an average of two-and-a-half days to transmit one piece of mail to another memner within the same department. It took almost four days for interdepartment mail maybe even on the same floor in this 4O story building in New York City. Once you went into another location it took five days to get that information to that site. That meant decisions were being made without the proper information. That meant decisions could have been made earlier and faster. I will give you an example of what that can mean, at least, in a corporation that has concerned itself with high interest rates, its use of money, its use of inventory, the cost of carrying inventory, et cetera. Mike Hammer also addressed that problem of trying to address all of the aspects of the office. In an office matrix that covers all of tne aspects of an office, there are functional groupings, and there are office tasks and personnel descriptions that are on at least a three-dimensional level. There are kinds of things in a functional grouping that all of these operations, all these functions have to serve in any kind of an office system and have to be done to 34

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try to handle all of those two dimensional items along with a third level on specifically oriented, custom oriented systems. It is a seemingly impossible task, so we absolutely are going to have to have a kind of generic approach to equipment. As to the demographics that are occurring in this country, 5O percent of the work force is in the office. That is where they are. They are not producing products. That is the trend that just isn't going to be able to be withstood over the coming years. For example, if we keep increasing clerical help, we aren't going to be able to find enough secretaries to man the phones and the typewriter. One other thing which impacts us tremendously is that a significant part of the work force today has some college education. In the future an even higher percentage of the work force will have college educations. It is not the fact that they have got a college education that is important, but what is contained in that college education. I spoke at the University of Texas Graduate School of Business about three months ago and learned, to my very pleasant surprise, that there was not one person out of the couple thousand people in that business school that did not have hands-on, in-depth training and understanding of a computer system; a computer system built by IBM, Datapoint or Sperry Rand. They had the whole bit. They understand what they are and they know what tools they need to succeed. When these students are executives 2O years from now they won't mind an executive terminal on their desk. I do. I mean, I build and I sell the equipment, but I hate to use the damn things. But, I am an old foggy. When I graduated from college in l954 and started selling for IBM, I was selling punchcard accounting systems to coal miners in Pennsylvania. I was just reminiscing with a gentleman here about the Social Security Administration in Baltimore. It was the most highly automated system in the world back in l953 and l954. In reality, it was so minimal in terms of automation that nobody quite understood what was really happening. So, there is going to be a lot of changing in terms of the demographics and the ability of people to absorb what we are talking about in this integrated office area. The key is integration. It really is integration: from a functional standpoint, from an application standpoint, and from an equipment standpoint. The cost of investment in the equipment that is needed to do all this work is significant and we have got to develop clever approaches, multi-functional approaches, to using the same equipment. I will talk a lot about that. 35

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What has happened today is that any operation in an office is terribly difficult to change. You change one part of an office system anu it screws up another part. You endure a much higher cost because separate systems are not integrated. The communications breaKdowns are tremendous. The difficulties in getting information from one department to another; even though it is the same companyf or if it is just cross a department line or if it is on another floor, are absolutely amazing. The millions of dollars that a business spends on trying to get the right information to where it is needed is really hampered by the fact that the whole communications function is really not efficient at all. There really isn't any control of the office. There is aosolutely no control of an office. A good executive today can tell you what his product costs. But, as I said, earlier, it is news if he knows what his documents cost or how much the typing pool costs or how much it costs to dictate anything. One of the key approaches and methodologies that addresses itself to this area and solves the problems of non-integration is Mike's (Hammer) systems approach. Without any question, basing tasks on the computer and the good old programming systems capability, you have the ability to provide all of the things that Lick (Licklider) indicated: ease of use and change, the flexibility to handle variety or complexity, the ability to do some generic programming while allowing specialized function through work stations. The other thing that is happening are some significant advances in technology. The application of the computer to office tasks is really one of the major things. People talk about word processing as one of the major aspects of the automation in the office, but now if you will notice carefully, people are beginning to say computer-oased word processing. There is more to it than just word processing. This is the kind of thing that is going to become more and more pervasive. Someone used the word "digital" earlier. One of the saviors of the world in terms of current and future office automation area is simply the fact that everything, after a long hard battle, is being reduced to digital representation; wherever it is, whatever is going on. In spite of lO3 years of AT&T and all the analog equipment, the digital form of transmission, the digital form of storage whether it is voice, FAX, data or whatever, is becoming the common denominator. Whether it is a PBX or a computer it is all digital. This is the kind of dynamic thing that is happening. Electronics. The LSI chips, with their reduction in costs and improvements in efficiency are having tremendous effects on this industry. Again, lO or l5 years ago you had computers that consumed a room maybe a half or a quarter this size and cost several million dollars. Today equally powerful computers may be only as big as this 36

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console anu sell for $lO,OOO or $2O,OOO while doing things a heck of a lot faster. All of these things are happening. Tne results that we are going to achieve are going to help get business done better, not just improve the office for the sake of doing something new to offices. Automation will help get business accomplished, the actual business of the business. It will help to get products to market, perform services a heck of a lot more effectively. This technology is an absolute driving force. That is why there are gimmicks around. There is so much technology that is being developed, that technology is becoming the wrong end of the game. The tail is kind of wagging the dog. There are so many new techniques and so many capabilities, improvements in applications and increased speeds coming out that people tend to be mesmerized. They frankly can't be all used effectively. People have a computer in a dispersed data processing work station today and that computer is idling. It is using probably lO percent of its power if it is just doing one particular application. The key is to integrate other applications, to systematize it and put other functions on it. This will be the kind of a thing that is occurring and making systems more efficient. The velocity of change is tremendous. There is absolutely no question about it. Good old Alvin Toffleer talked about that and told us what was going to happen ten years ago. He also said something in his last book The Third Wave, that has recently been published. He talks about the concept of demassifying. That is what really is going to happen. I like to think to my days with the IBM Corporation and the days of the main frame as being back in the age of the dinosaur. All of the main frames, although they obviously will continue to be there, to control massive files and all those things, have diminished in importance over the decade. The capability to provide the power of a system in a small minicomputer, microcomputer based product on the other hand has grown within a processor the size of a typewriter a quarter-of-a-million, a million bits of semi-conductor storage, megabites of mass storage can exist. The same machine can provide all kinds of printing capability and the logic and the systems and the screens and all the functionality necessary to provide you with a multiplicity of functions. These powerful small processors really are coming. It is absolutely an historical imperative. This is what is happening. The fact of the matter is that function and performance are increasing tremendously while the price and space required are coming down. That is, by the way, just as important. You cannot do a thing in an office if it is going to take up, you know, 4O square feet of space. The equipment has got to be about the size of a typewriter. There are no scientific equations 37

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involved in it. That just happens to be the way things have evolved. It is kind of like the size of a baseball. I don't know what it is, but if you want to play baseball you have got to use a National League or an American League standard sized baseball. It's just the rule of the game. You have seen examples of some of these things in the '70s. There are going to be a lot more in the '80s. The examples in the '70s were: data communication terminals that talk to each other in spite of the fact that there are not compatible standards in many areas. They talk to different computers. They are digital and they have RS-232C kinds of interfaces. There have been some protocols. At least there are a dozen or so protocols that everybody does. So, there are numerous communicating data processing terminals. Digital telephones. A digital telephone was a dirty word ten years ago. You couldn't say that in an AT&T dominated communications environment. But, today it is happening, they are available and they will become increasingly available. They will be treated just like a data terminal. They are one and will be the same as we go on. Communication word processors. Ninety percent of the word processors that exist in the world, the 35O,OOO of them, aren't communicating. But, that is, and has been gradually coming. The electronic PBX, the ones that are worth anything, are all digital. They are processing analog voice from telephones on a digital basis and have the capability of doing the store and forward voice, store and forward data, and store and forward facs as the future evolves. Computerized telephone management systems. The kinds of products that we have offered at Datapoint have addressed themselves to an area of the business, an area of the office, that too many of us just pass by because it has been old and plain and black and sitting in the corner and doing nothing but ringing every once in a while. That is called the telephone. It is called voice communications. There are too many people in this whole office automation enterprise that have either come from the data processing side — where most of the automation has occurred — or from the word processing office administration side where some of the automation is occurring. Very few people have concerned themselves with the most common means of communicating and exchanging information, the whole telecommunications area and voice communication. That is something that we have tried to consistently do for over five years in our company. One of the things I want to do is give you an example of how we have integrated our product line. It will take me a few minutes to do it. 38

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We started as a corporation eleven years ago and we produced a dumb terminal. It was a CRT replacement for a Western Union terminal, a teletype. We developed about seven years ago what we called distributed or dispersed data processing. Datapoint, along with Four Phase, and a couple of other companies, were the early people who got into the concept of putting the power of the computer out where the action was. We developed our own minicomputer, our own software languages and our own operating systems. Today, our Corporation and quite a number of other corporations offer truly powerful distributed data processing systems that have a quarter-of-a-million, half-a-million bites of semi-conductor storage and millions of bites of mass storage. They are supported by a good operating system, a disk oriented operating system. They are supported by COBOL and FORTRAN, and proprietary languages. These are the products that have been the leading edge in applying the computer to office tasks which are data processing application oriented. As Mike (Hammer) indicated earlier, that is the first area to address, the natural flow of .computer power to a given office application. This is what has been happening. These systems have been applied to accounts payable, small payrolls, personnel jobs, general ledger, the wide gamut of office tasks; but each system is located in the office where the task is performed. The next thing we did, about five years ago, was to develop a line of equipment that controlled voice communications. Now, it is interesting to see that people are considering voice as part of the office environment. They are beginning to see that it needs to be controlled and it needs to be integrated with data, particularly in a storage and a transmission mode. And, voice needs to be used as an annotation device for documents or forms. We started meeting that need with a whole line of equipment called communications management products. We have about 9OO or 95O of these systems installed in American industry today. The voice management systems do the job of helping people manage this whole voice communication area, as one of the basic functions in the office. The next thing we did was develop a systems architecture three years ago. We called it ARC, Attached Resource Computing. It is a systems architecture that employs a high speed coaxial cable and software which allows all processors in a system to be attached to one another. The speed at which information flows is 2.5 million bites per second. It is, as you can tell, high speed. It operates in an architectural structure such that common files are shared by different application processors. All application processors, or multi-function work stations — call them what you will - can be addressing other functions and other files and other application processors. It is a coaxial cable approach to this local communications problem in an integrated office. It is the basic method of integrating all of these features and functions. In the 39

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last year or so Xerox announced something called Ethernet and in the last few months a consortium of companies, Xerox, Intel and DEC (a pretty powerful combination), have formed an agreement. They are going to create an interprocessor standard, in the Ethernet fashion, and provide the world with a common interoffice, local network communications capability. Maybe this is the kind of thing that some of the earlier questions were addressed to. I hope that the three companies can do it, because when they do it and they decide what all those protocols are, we will make our ARC system compatible with it and we will have the powerful ability to communicate with one another inter-system. Once we established the ARC network, the local architectural approach to an interprocessor, office-oriented, multi-function work station capability, we integrated not only the data processing capability, but also voice communications, word processing and electronic messaging. Those capabilities are integrated from a functional standpoint and most of them reside in the smart computer-based processor. So, it.is a beginning. I certainly don't make the claim that it is nearly as sophisticated as what we will see over the coming years. But, it is the beginning of truly integrated, multi-function work stations where the system not only does data processing, but also does word processing; and the word processing and the data processing are integrated. You can access the files and have combined operations. The word processing serves, if you will, as a mailbox for an electronic message system. Through the interprocessor bus you can communiate with all the other processors on the line and obviously outside of our office building over the common carrier networks. Our approach is a global approach, a strategic approach towards the intergrated electronic office. What is going to be happening is more and more functions are going to be addressed into a loosely woven, in my judgement, minicomputer-based series of processors. These processor or controllers taken together will form, in the aggregate an office supercontroller. The beauty is that the supercontroller will be able to be built step by step, application by application starting where the business needs to get the best bang for the buck. If the biggest problem is getting invoices out and typewritten information out, maybe the word processing approach is the first one and that is what a company should start with. If it is data processing, then maybe that is what they can start with. If it is an electronic message system and the company needs to improve their services, maybe that is the way to do it. But you have the opportunity to pick any one of those areas, start with it, know that it is compatible and know you can grow from that as your needs grow in the future. 40

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I think that this is the kind of thing you have got to look for in thinking about your planning for constructing the electronic office. You need the kind of expandable modular systems that will permit you to be able to grow and be flexible. The systems must be compatible without any question. Believe it or not, there are single, major corporations in this country who are offering several different versions of the electronic office, depending on which division you buy it from. I would never mention the name of that company. There has got to be some sound strategy on the basis of the vendor that really has to be well thought through. It has got to be articulated. It has to be open. You should know where the vendor is going and by his actions and experience in the past, you should know what he has done in the past. Look at it and examine it. There are a lot of things that are said today. There are a lot of good intentions that are being stated today, but the question of whether or not they are all going to occur,is another matter. The elements of the intergrated electronic office. I am not going to go through these in any great detail. We all know what they are: word or text processing, the whole idea of electronic typing; electronic message systems, as such, switching if you want to call it, but the ability to get information to another location much faster electronically than we have in the past through taking it and transcribing it onto paper and then mailing it, et cetera; data processing, we all know what that is. Most of us come from that kind of an environment, however, I will make the qualification that the data processing I am talking about is distributive data processing, dispersed data processing. That is going to be key. That is the most automated part of the office and that is going to form the most effective base for expansion and extension under economic and viable kinds of restraints. \toice communications. The long forgotten part of the business because for l03 years it was a monopoly and it has only been opened up to young, new, creative approaches in the last seven or eight years effectively, although the FCC rules have been out for about eleven years. The fact of the matter is you are going to see significant kinds of things being done in this area and companies like ourselves and others have already made some equipment and addressed these areas to make it a great deal more efficient. Facsimile. We talk about electronic mail and we talk about the typed and printed word. Actually, I know a lot of companies that think of electronic mail as FAX and as pictures and, by golly, that is the way it is. That is the way their business runs and that is their version of electronic mail. So, our whole integrated electronic office must admit the existence of that and play it as a part of the system. 4l

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Video image, video conferencing, the game of teleconferenc- ing. IBM Satellite Business Systems studies say that 2O percent of meetings that are held in American industry today are well- structured, include people who know one another, involve knowledge which is quite common, and they could be replaced by video con- ferencing techniques as opposed to getting on airplanes and flying around. I believe that. I find that true in our business. I think you might also find that to be true. The whole data communications area. The standard volume data communications will always be there. Here's an example of how these things might be integrated in a given application area. One of the favorite subjects of a company like mine is the whole invoicing, cash collection end of our business. Typically in this kind of an environment a bill is prepared and an accounts receivable file is established at that time. At that time also a file is set up, the entry is made into the data processing file and we have .accomplished the first step in our process. But, as things happen, there has been a problem and you receive a partial payment from the customer. In this case, if you did have that data processing terminal, did have a word processing capability; you could use it to type a letter to the customer, make a correction in the file, get their correct bill out while only entering the changes that are necessary. To do this, interaction to the data processing files is key. We tie in the word processing in that fashion. But, the fact of the matter is that the people who really collect the money are out in the branch office. This is not atypical. The guy who knows his customer, is located close to the customer and collection is done in the branch office. He needs to have a copy of the invoice in the branch because the customer's handwriting is on it. So, he sends it. The notes are needed. We therefore facsimile a copy of both along with the file. In the branch office they call the customer for the collection. The phone call is controlled by a computerized telephone system to make sure that it is least-cost routed, to make sure it may be merged with all that other traffic that is going back and forth; that, if you will, it is at least interleaved. If it isn't packet switched it is at least interleaved between data and facsimile. We get that done on a least-cost basis and all of that communications cost is tracked and accounted for. So, at this point we have controlled the voice and we have brought that in as an element. Now the branch office collects the money. They format another message that says, "We have it all resolved," by word processing. Using the electronic message capability of the system, they mail electronically, the same day, all of this information back 42

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to the home office. All the files are updated. The customer is in the meantime sending in the money that is necessary. We therefore may have reduced the time involved in that transaction from a couple of weeks to a day or so. Therein lies the value of the system. A transaction is done a great deal more efficiently. There have not been a lot of retransmissions and repetitious clerical efforts. That is fine, but the key is the business is run better. The customer is served better. His difficulties are resolved. The cash is acquired much more quickly and this is the major result of business. On a weekly basis all of this information can be transmitted out to the data communications terminals on a volume basis. Perhaps on a monthly basis, instead of everyone flying to meet each other we could have a video conference. If you try to take away the piece of equipment they have today the clerks will damn near kill you. They love it so much and the people have done such a good job in using it. There are other people who fight new systems and .don't like them in general. They are terrible. They have been imposed from above. They don't understand automating for the greater good of the department. Their reactions are understandable. They have to understand why it is going to help them do their job better, eliminate the drudgery, whatever it might be. Those kinds of systems that help workers are available today. The systems can be made to be friendly, easy and perform in English language. It doesn't have to be a nasty system that is going to harp on the operator. What can you do? As I said earlier, you have got to understand what it is we are talking about. These kinds of conferences help everyone to learn about what is available in the industry, to learn the concepts, the basics. Please be aware of some of the new things that are involved, like voice. Work to establish a commitment in yourself and your company that system integration is really beneficial and can be done. Show the willingness to invest, frankly in a policy effort. It has got to be done that way. That is the only way you can really get the bugs out of any aspect of a system where there is going to be any kind of a major element that is going to be involved. Obviously planning at the top for the financial and the managements leads, hiring and developing the people is important. You have got to look at something that is practical something that you can get done now, but the reality is you have to look over the long-haul. Sooner or later you are going to get it all done. Thank you very much. 43

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