FOIA on Martin Luther King

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# Cooperative Facilities to Obtain the Advantages of Computers

Michael J. Cerullo

Asst. Professor of Accounting

State Univ. of New York at Albany

1400 Washington Ave.

Albany, N.Y. 12222

"Because of general dissatisfaction, 30% of the surveyed service bureau clients planned to discontinue using service bureaus."

## Computer Use

A recent study of 2,500 companies conducted by the Research Institute of America, revealed that 55% of the firms regularly use computers in conducting their business. Further breakdown of the study shows that an average of 32% own or lease their own computers, and 23% use an outside service bureau for processing data.1

While a majority of the companies surveyed do use computers in some form, a significant 45% of the respondents do not use any type of computerized data processing service. Those companies cited the following reasons for not using computers:2

	Per Cent
Operation too small	50
Too costly	35
Looked into and tabled for the present	31
Present methods satisfactory	21
Plan to install a computer within a year	8
Plan to begin using a service bureau within a year	8
Other	13
Total (multiple answers)	166%

Total (multiple answers)

## Service Bureau Use

In addition to the non-users, another recent study revealed that most service bureau clients are not effectively using their service bureau and, as a result, are receiving few, if any, of the advantages of electronic data processing (EDP). Most of the surveyed service bureau clients were:3

1. Receiving routine services which do not save them money.

2. Not planning to expand into more sophisticated higher-payoff applications.

3. Not receiving indirect benefits and savings, such as improved information for decision making.

4. Not satisfied with current services.

The study also disclosed that because of the general dissatisfaction, 30% of the surveyed service bureau clients planned to discontinue using service bureaus and purchase in-house computers.4

## Cooperative Service Bureaus

Both non-users and dissatisfied service bureau clients, therefore, offer a ready market for a newer approach to obtaining the advantages of EDP the formation of a cooperative service bureau. A cooperative service bureau consists of several sponsoring firms who jointly own a computer and share in its operating costs at a much lower expense than individual ownership of a computer. If carefully planned before operations begin, a cooperative service bureau will provide its sponsors with all the advantages of EDP plus many other advantages unique to jointly-shared facilities and personnel.

Among these additional advantages are:

1. The sponsors would purchase a computer tailored to their specific needs.

2. They would have exclusive use of the computer.

3. Their computer would be available for use at any time.

4. They could share the costs of any computer programs developed.

5. They could share the costs of any package or canned computer programs purchased.

6. They would have available for their exclusive use a staff of data processing experts and a computer - at a fraction of the cost of individual ownership.

## Factors Insuring the Success of the Cooperative

The first step in forming a successful cooperative service bureau is to enroll an appropriate number of comapnies. Ideally the cooperative should be limited to five or six sponsoring firms. A larger number may create unmanageable problems involving operations, communications, control, scheduling of computer time, and so forth. A smaller number may make the venture economically unfeasible.