It Won't Help Everybody

Last fall Pennsylvania became one of the first states to install a computer to issue state payroll checks automatically. The computer, put into operation too quickly, issued checks that were wildly off, left employees payless just before Christmas. The department turned the payroll job back to clerks, called in automation experts to see what had gone wrong.

Many a U.S. corporation has met with equal disaster. A Midwestern auto supplier planned a highly automated plant to make auto frames. But he did not allow sufficient lead time to get out all the bugs. The automated equipment was out of line, would not pass the parts along, and the company had to return to manual equipment to meet production schedules. A Los Angeles wholesale drug company automated the ordering and billing for its warehouse. But hardly had the warehouse started to operate when it had to shut down for nearly two months to straighten out its affairs after the computer had reduced the paper work to chaos.

Many companies, dazzled by the glamour of automation, have leaped into it before looking at costs or determining whether they really need to automate. "Some managements," says Automation Expert John Diebold, president of John Diebold & Associates, "are so eager to buy the hardware that they will unconsciously overlook some of their cost figures to prove they need one." They do not realize that preparing for and converting to automation can cost as much as the computer itself. Before leasing a brain at $16,000 a month, Republic National Bank of Dallas had to send ten employees to school at a cost of $6,500, raise its floor at a cost of $10,444, spend $60,000 to install extra equipment. The cost of preparing the program for the machine to handle, and installing self-checks in the system, is even greater. Companies which counted on replacing clerks with computers have found that it frequently costs more to hire nursemaids, who are highly paid technicians, for the computers than to keep the lower-paid clerks. Finally, poor programing for the computer can leave an expensive machine idle. Automation experts estimate that there is time available to rent on at least half the computers in the U.S. Says Gulf Oil Engineer Warren Davis: "It's just like hiring a floor full of morons. You've got to keep them busy. They can't do a thing unless you tell them exactly what to do in the most minute detail."

Too many managements consider the computer an overgrown adding machine, thus often assign it to the wrong people, who frequently have no knowledge of the complexities of business to which a computer could be applied. "Almost all computers," says Albert Sperry, president of Panellit, Inc., whose business is making automation controls, "are run by the accountants," simply because the most obvious applications are for statistical jobs. Computers are usually put to work first on payroll jobs, which already use highly mechanized punch-card systems. While the computer can often do the work more quickly, it does not pay to put it on a task that is being done efficiently. -

When computer programs are carefully planned in advance, the savings can be immense. Among the strongest supporters of automation are insurance companies, because they must make arithmetical changes on a recurring basis, and clerical data frequently piles up faster than it can be handled manually. New England Mutual Life Insurance Co. has just ordered its first computer after a two-year study. It expects to save not only time but 10,000 sq. ft. of floor space now occupied by manual records. Many a manufacturer has found that he can carry lower inventories because the computers supply him with up-to-date information on supply and demand. San Francisco's Factory Motor Parts Inc., which uses a computer to keep track of its 26,000 auto parts, has cut its inventory 25% because its inventory control reports come in three times as fast. The company expects its computer to pay for itself within 16 months of installation.

Actually, the most important use for computers is not merely to do things faster or with fewer employees; it is to do things that management could not do at all without the brains. Perhaps the most successful use may well be to achieve more accurate management decisions. By testing all the reasonable alternative answers to a problem, the computer can, in effect, come up with the best one, eliminate solutions previously reached by guess and by hunch. A major U.S. airline put its maintenance scheduling on a computer, tested to see how many planes it would have to keep on the ground as standbys in case of breakdowns. As a result, the company was able to cut the number of stand-by planes, saved $1,000,000 a year that it would otherwise have lost on each plane, will save even more on its jets.

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