Group Discussions
123
Group Discussion on Commercial and Industrial
Applications of Computers
w. F. FRESEt, Moderator
HE DISCUSSION at this session, attended by
about 100 people, related almost entirely to the
application of electronic techniques to government and commercial accounting systems. The chairman first summarized the implications of the government's joint accounting improvement program. In the
past five years, the emphasis has shifted from uniformity of practice in the various agencies to greater decentralization, with details handled and responsibility
located at or near the point of origin of information.
The amount and type of mechanization has been put up
to individual agencies; central authorities co-operate
with all agencies, and are constantly looking for methods
that reduce duplication of effort. The concept of what
accounting should accomplish has broadened, and there
is now less interest in historical record-keeping, and
much more on provision and integration of the phases
required (financial, cost, inventory, etc.) to provide information needed for current action of management.
There was considerable discussion of the procedures
and operations involved in the payment and reconciliation of Government punched-card checks (of which
nearly 300,000,000 are issued per year) and the intensive studies being made to consolidate and integrate
payment and reconciliation operations through application of electronic computers and related techniques.
This example elicited questions as to difficulties with
multilation of punched-card checks. Initially multilation
ran as high as 10 per cent, but continuing educational
programs keep it below 2 per cent, which is entirely acceptable. Similar experience was cited for the punchedcard money orders now used by the Post Office. Reference was also made to the work of the First National
Bank of Chicago in this area; card presses developed for
them, which reshape creased or folded cards, have
pushed below 1 per cent the fraction of cards unacceptable to machines. Development of magnetic inks, as a
substitute for punching, was also mentioned.
The discussion then turned to difficulties in obtaining
management acceptance of full electronic accounting
systems. It was emphasized that their application requires breaking through present organization lines to
achieve an economical integrated system by consolidation of related operations. Some speakers felt the necessary functional reorganization would be hard to sell management, but demonstrable economy would ultimately
win out; others felt top management easily sold, though
admitting it would be hard at lower levels.
The next question related to machine accuracy actually necessary for accounting applications. Accountants
present indicated willingness to evaluate this by realis-
T
t U. S. General Accounting Office, Washington, D. C.
tically comparing over-all costs of the calculated risk
approach with that of complete accuracy, wherever the
comparison can be done with reasonable realibility.
Inquiry was made as to the acceptability of magnetic
tape as a primary accounting record, and its status as
legal evidence. The discussion indicated that the specific
question could not yet be answered; no instance of use
of tape as primary record was brought to light. However, many situations were cited, where tape could serve
as a convenient and economical means of locating a
needed primary record or information derived from it,
with the record itself preserved in another form of unquestioned legal status. Several of these involved frequent searching of files of millions of items. The use by
the Army, of decks of punched cards as substitutes for
written reports on the status of supply inventories, was
also noted; in this connection, the desirability of radio
and land-line communication links designed to tie together the parts of geographically distributed dataprocessing systems was brought out.
A number of questions related to the availability of
smaller, less expensive electronic units suitable for small
business, and of information on them and on their
proper utilization. These brought forth a number of
answers. One was that many companies are building or
developing computers in the $50,000 to $100,000 class.
A second was that it does not take as much to justify
the cost of a large computer for accounting operations
as is often thought; specifically, that a large computer
operating as much as ! shift per day will frequently
prove economical. Third was that a computer of any size
is essentially a time-sharing device, and thus admirably
adapted to serving a number of small companies who
jointly support it. In this respect, several small users
would be in much the same position as a number of departments of a large organization; the additional advantage that nondisclosure of data to subsequent users
is much easier to ensure than with (say) punched-card
equipment was also pointed out. The listing of companies and their developments in "Computers and Automation" and the ONR Digital News Letter, henceforth
to be published in the ACM magazine, and the existence
of consulting engineering firms equipped to serve prospective accounting users, was also mentioned.
The need for more effective communication between
accountants and computer engineers was mentioned repeatedly during the session; while there was some difference of opinion as to means of improving the mutual
understanding between the users and the manufacturers, there was general agreement that professional societies could make a great contribution to the effective
application of electronic computer techniques in business by clearing the channels of communication.
From the collection of the Computer History Museum (www.computerhistory.org)