A snap-shot in time

BCS Multi-media editor, Justin Richards, dives into the BCS Computer Bulletin archives and reports on a growth forecast he found there for the computer service industry, circa the 1970s.

It might be a strange thing to comprehend nowadays, what with information technology being such a massive part of all our lives, but back in early 1970 things didn’t look quite so rosy for the burgeoning computer industry. The development of new computers had slowed down and, because of this widespread stagnation, the industry had become somewhat inward-looking.

At a one day conference, Datadecade, organised by Business Intelligence Services Ltd and sponsored by the National Computing Centre, speaker Dick Brandon of Brandon Applied Systems Inc, reviewed the situation in the USA. He said that the fact that there was no new generation of computers in the 70s (it was only 1970 after all) had made people somewhat introspective and it was becoming increasingly obvious that the computer services industry was in deep trouble. He hoped that the UK could learn something from America. He went on to say that most people who went into the computer services industry were poor businessmen with unending optimism, and so ended up investing in unviable concerns.

Meanwhile, BCS, at that time, were predicting that there would be 100,000 people employed in the computer industry between 1975 and 1980, whereas Mr Brandon was happier to talk about the ‘bottom line’. He predicted that, by 1980, there would be some five or 10 companies with a turnover of more than $250 million. However, he felt that ‘smaller companies would be unable to survive and would be forced to sell, declare bankruptcy, or go public.’

He went on to define the nature of the computer services industry by dividing it into three main categories: people-, machine-, and product-based. The first embraced consultancy, programming, and systems engineering; the second focussed on service bureaux, time-sharing and facilities management; while he considered education & training, publishing and proprietary software to be product-based.

Even though there was a sense of stagnation, Brandon still forecast the growth rate for the next decade would be by a factor of 10. He felt that: ‘any growth would be mitigated by the entry of international auditing and management firms, and non-computer organisations into the computer service industry as competitors.’

Manpower

A Mr John Hoskyns, the chairman of Hoskyns Group Ltd, provided a more UK focused overview and forecast a decade of sustained growth for the industry. He said that ‘it was still a manpower intensive business, but with a short supply of men.’ (How the emphasis on ‘men’ seems to jar these days!). Apparently, in the USA there was a similar shortage of trained people too. (Nothing changes then!)

Mr Hoskyns went on to forecast that: ‘in the next 10 years (basically, the 70s) there would be a considerable move from people-based to machine-based services, but a full range of services would have to develop.’ He also predicted that there would be a trend towards remote batch use with a central processor. Of the UK industry, he thought the service industry could only grow ‘by providing full services, through rebundling.’ He also touched on the government’s reputation of being reluctant to sub-contract, which had resulted in the ‘fragmentation of small services’.

Mr Kenneth Barnes, managing director of Systems Programming Ltd, compared the scenes in the UK and the USA. He claimed that in Britain 2.5 per cent of gross national product was being spent on computing, but only half of that applied to software and applications programming. He believed that most software companies were formed by technicians with no financial backing. However, in the USA they could go to the public for support, but he didn’t see any similar options available here. He also believed that UK software companies needed to acquire environmental capabilities if they hoped to compete with rival American firms.

It's not all doom and gloom

However, Peter Clarke, speaking on behalf of IBM, was more optimistic and forecast compound growth in the services industry of 30 to 40 per cent, and a 20 to 30 per cent growth in the computer industry, as a whole. He saw systems engineering and service bureaux as being the two main areas of development. He went on to say that he thought ‘leadership was the key to innovation’ and that ‘there was a lack of a body of men (there were obviously no women in the 70s!) capable of leading the computer service industry in this country.’

On the other hand, Peter Hall, executive director of ICL, said that: ‘management had had to be rethought since the advent of computers’ and the pattern for the services industry ‘had been set by unbundling, which gave the user an opportunity to shop around.’

Another speaker at the event, Saul Steinberg, founder of Leasco, spoke on the future of the software industry. He felt that ‘one of the shortcomings of today’s systems is that they are designed without reference to human beings.’ He believed that one of the growth areas would be in educating managers to use computers to run day-to-day operations.

Lawrence Zyman, from IRC, finished off the more formal talks by saying that he believed ‘there would always be room for the small specialist company, for the systems architects, and for the “broader-based” companies.’ IRC were interested in the software industry because ‘it would represent a substantial percentage of the computer industry; it was a field of high technology; and because of the impact of the range of computer applications on management.’

After-fact

It’s worth noting in this coda that according to the Bank of England’s own research through the Centre for Economic Performance, they determined that, by using growth accounting, ICT capital accounted for 13 per cent of productivity growth in the market sector during the period 1970-79 (i.e. 0.47 percentage points out of 3.62% per annum growth of GDP per hour).

References

Other decades