Industrial Revolution resulted in more complex business operating requirements

 

 

In the early nineteenth century, in Europe and North America, there was a large movement toward manufacturing--not simply trade in agricultural and craft items. This movement involved more use of metals as raw materials and as production tools, more labor input, greater use of varied sources of energy, and more complexity overall. Mass production became the byword--especially in the United States, where labor was scarce and many sources of raw materials and energy were found in nature. As transportation improved--particularly by means of rail--the economics of manufacturing favored consolidated operations where complex procedures could be controlled, raw materials and finished products could be shipped long distances at low cost.

 

 

The Industrial Revolution was stimulated by the work of individual inventors and entrepreneurs. These individuals invented new items by combining scientific and practical acumen that proved appealing to consumers and industrial customers. In this, consumers benefited from telephones, telegraph, radio, lighting, household equipment, bicycles, automobiles, and airplanes--among many other developments. Industrialists benefited from numerous inventions. These included loading coils for long-distance telegraphy and telephony, high-speed tool steel, airplane mechanics, synthetic resins, the Audion tube, automatic bottling machinery, tungsten filament lights, alternating current motors, the loom, and inventions in the United States of Thomas Edison, George Westinghouse, Elihu Thompson, Charles Steinmetz, and many others.

 

 

Each new invention brought added complexity to the business of doing business. Such inventions not only required increasingly sophisticated manufacturing and production processes, they brought with them higher infrastructure requirements from producers and users (both consumer and industrial) and more technical usage requirements for end users (both consumer and industrial). These requirements were made available in print and by means of the learned capabilities of employees, agents, trainers, etc.

 

An eventual outgrowth of the Industrial Revolution was that of mass markets and mass production. As expounded by Henry Ford in the United States,

 

Mass production is the focussing upon a manufacturing product of the principles of power, accuracy, economy, system, continuity and speed . . . and the normal result is a productive organization that delivers in quantities a useful commodity of standard material, workmanship and design at minimum cost.  

   

Of course, such mass production techniques were dependent on large mass markets in which end users were eager enough to receive goods that they were not too particular about many of their characteristics and details. Standard products were created by standard procedures--which could only be managed through in-person training and oversight. By the beginning of the twentieth century, management of standard procedures also enjoyed the benefits of technology--largely due to the efforts of Frederick W. Taylor.

 

By the early 1990's technology had reached a stage where standardization and technology could join hands. The situation was based on the development of the machine-tool industry, which in turn was largely the result of the research of Frederick Winslow Taylor and J. Maunsel White in developing a new high-speed carbon steel. The new steel doubled the productivity of machine tools and the whole machine-tool industry rapidly improved. At the same time Taylor agitated for the improvement of management and a more scientific and efficient use of the worker's time. With better machine tools and "scientific management," industry was prepared for mass production.

   

 

Standard products, procedures, and materials resulted in the gradual introduction of international standards--spurred on by the International Electrotechnical Commission--founded in and around the turn of the twentieth century. Though there were efforts in the 1930s to establish additional international standards groups--this movement did not take hold until 1947 with the International Organization for Standardization (ISO). The standards development movement has grown to the point that hundreds of thousands of standards are defined and managed in each country and internationally by a myriad of organizations. In the U.S. alone, just under 100,000 organizations actively participate in the standards-setting process. Standards continue to be document-based means of describing features and behaviors. By 1995, approximately half of all standards were international in scope.

 

Along with establishment of mass production techniques and standards, the Industrial Revolution resulted in a high degree of business consolidation. Consolidation resulted from competition and acquisition. The net effect of consolidation was the existence of increasingly larger firms that required organization and management. The accounting model of the fifteenth century was augmented to allow for many new business types, including "(1) pools, (2) trusts, (3) holding companies, (4) amalgamations and mergers, and (5) 'community of interest'"

 

Each of these organizational types--and the sheer magnitude of growth in size of these new entities--put significant pressures on their management and administrative capabilities. The result was a significant increase in the need for accountants, clerks, bookkeepers, and other individuals involved in the process of classifying, computing, and otherwise manipulating information--mostly numbers--necessary to track institutional performance and assign risks and rewards. There was a similar growth pattern in governments--particularly national governments--in this period. Such growth also required large staffs to organize and manage data.

 

 

In fact, up until the period of World War II, the Oxford English Dictionary defined computer as "one who computes; a calculator, reckoner; specifically a person employed to make calculations in an observatory, in surveying, etc." That dictionary also provides a period description of a human clerk as "one employed in a subordinate position in a public or private office, shop, warehouse, etc., to make written entries, keep accounts, make fair copies of documents, do the mechanical work of correspondence and similar 'clerkly' work."

 

Such large groups of human calculators and clerks grew from banking organizations, telegraphic offices, thrifts, and insurance companies as those industries grew in number and size in the nineteenth century. Prudential Insurance in London was supporting over a million policies a year by the 1870s supported by a staff of 300 clerks. Such clerks--to be effective--needed to understand standardized policies, procedures, and structures in order to function effectively.

 

In fact, the U.S. was a relative late comer to industrialization compared with Europe. Only after the Civil War did large-scale data processing come into existence--while there were similar developments in Britain, Germany, and France in the 1830s. Large-scale data processing in the U.S. prior to the Civil War was limited to the federal government's Bureau of the Census--which had grown to 438 clerks by 1870. By 1880, population growth forced the system up to 1,495 clerks--who counted and tabulated data on over 21,000 pages using a unique 'tally system'. The whole process required seven years to complete.

 

In part due to the lateness with which industrialization took place in the New World, office mechanization first took hold in the United States. The birth of the twentieth century computer industry was really in the period of the Industrial Revolution in the nineteenth century.

 

Powered by the fad for office rationalization, America was the first country in the world to adopt office machinery on a large scale. This early start enabled the United States to become the leading producer of information technology goods, a position it has sustained to the present day. In turn, the United States has dominated the typewriter, record-keeping, and adding machine industries for most of their histories; it dominated the accounting machine industry between the two world wars; it established the computer industry after World War II; and it dominates the personal computer industry today. There is an unbroken line of descent from the giant office-machine firms of the 1890s to the computer makers of today.  

 

 

Most of the mechanized business machines of the late nineteenth century were typewriters, adding machines, and cash registers. Thus they were one-person-one-machine technologies that increased individual productivity, but did not have a direct effect on organizational processes. A fourth product of the era--punched-card accounting machines--had enterprise-wide implications that required more integration and coordination.

 

Punched-card technology was developed by Herman Hollerith first to support the U.S. census in the years after the Civil War and then to solve business problems of recording, calculating, and sorting. Hollerith had painstakingly built up his business from before the turn of the century--at which time he was fully dependent on Census Bureau business--until 1911, when he sold the company--which eventually became IBM. The cardpunch process was an ingenious combination of machines that were used together to accomplish a number of data processing tasks.

     

There were three punched-card machines in the commercial setup: a keypunch to perforate the cards, a tabulator to add up the numbers punched on the cards, and a sorter to arrange the cards in sequence.  

 

 

This system not only became a standard from the turn of the century until under Thomas Watson, Sr. IBM expanded on the concept to create a full accounting machine based on punched cards. In the early 1930s, IBM introduced its 400-series accounting machines--a product line that was to last until the early 1960s and then serve as an entrée into the mainframe computer marketplace. The major product of the line--the 405--contained 55,000 parts (2,400 of them different) and 75 miles of wire. This machine--in its complexity and capacity--was unmatched by IBM's competition at the time.

 

IBM's growing monopoly in cardpunch systems--particularly the accounting models--was overwhelmingly profitable, especially the cards themselves. The firm was bravely expansionist during the Great Depression of the 1930s--positioning IBM to capitalize on the extensive data processing requirements of the New Deal. By mid-century, mechanized data processing systems and IBM were firmly established as primary supporters of critical business and government processes. IBM had monopoly power over the computer industry even before that industry came to exist.