8 The Computer in Business and Industry
The government, of course, is not the only user of the electronic computer. Business is faced with the same problems as government, plus others perhaps, and can use the same techniques in planning, producing, merchandising, and keeping track of its products. To General Electric goes the distinction of first installing the large-scale electronic computer for its business-data processing. This was done quite recently, in 1954. Commenting on the milestone, the Harvard Business Review said in part:
The revolution starts this summer at General Electric Company’s new Appliance Park near Louisville, Kentucky. The management planning behind the acquisition of the first UNIVAC to be used in business may eventually be recorded by historians as the foundation of the second industrial revolution; just as Jacquard’s automatic loom in 1801 or Frederick W. Taylor’s studies of the principles of scientific management a hundred years later marked turning points in business history.
It is early yet for comment from historians, but the growth of the business computers from the pioneer UNIVAC bears out the theme of the Harvard Business Review suggestion. In 1961 there were 6,000 large electronic computers in use; General Electric alone has more than 100. One big reason for this is the fact that government is not alone in its output of paperwork. It has been estimated that one-sixth of our Gross National Product, or about $85 billion, is devoted to paper-handling. In the time it takes to read this chapter, for example, Americans are writing 4 million checks, and this is only a small part of the paperwork involved in the banking business.
Wholesale banks have been called fiscal intelligence agencies, doing business by the truckload, and measuring the morning mail by the ton. Yet this information is dealt with not only in volume, but in precise and accurate detail. If a client asks about the rating of a customer who has just ordered several million dollars worth of goods, the bank may be called on to furnish this information in a very short time, even though the customer resides halfway around the world.
Since they deal in figures, it is logical that banks were among the first businesses to be computerized. Many of us are aware of those stylized numbers now on the bottom of most of our checks, and vaguely conscious that through some mysterious juggling by computers called ERMA and other such names banks balance our accounts at electronic speed.
Insurance companies were next in line as computer candidates. Like banking, insurance is believed to have been available to Babylonian merchants thousands of years ago. In those days there were fewer people, and probably claims were fewer; the abacus was the only computer needed to keep pace. But since insurance was introduced on the North American continent, coincidentally in the same state, Pennsylvania, as banking, it has been threatened with drowning in a sea of its own policies.
The computer is ideally suited for doing the work of the insurance business. There is no question today that the computer has taken over from the insurance clerk. One firm installed computers in 1953 and since then has doubled its accounts and tripled dollar volume, without hiring the 250 additional people who normally would have been required for such an increase. Eight outlying offices have been closed, yet service is better and faster, agents’ commissions are paid twice a month instead of only once, and actuarial computations that once took six months are now done in a week.
A computerized world is of course not without its problems. The computer system is so efficient, in fact, that the same outcry is going up from labor as was heard in the days of the first industrial revolution. It has been said with some truth that automation upgrades jobs, and not the workers themselves. The change-over from quill pen to pushbutton console will take some time and cause some pain, but in the end our gain will be as great a stride as we have made since the days of the introduction of the first factories with their more efficient production methods. Surely the business worker already has been freed from the tedium of adding columns of figures and much filing, and given pleasanter work in exchange.