Time-sharing is almost as old as the computer itself. But new offerings and continued efficiency make it a still-useful option for small companies.
Kenneth Swarth, president of Nathan Road International Inc., learned about the garment industry when everything not written down was stored in the memories of experienced employees. But as annual sales for the Los Angeles-based manufacturer of women's apparel edged toward $4.5 million, Swarth began to think about computerizing.
"Doing everything manually required a lot of man-hours and made us too dependent on too many people whose knowledge wasn't being shared," he says. Rather than leaping directly into owning a computer, however, he decided to ease into the unfamiliar technology by contracting for "on-line" time-sharing.
Nathan Road linked up with a central computer at R&S Financial Services Inc., a data processing service bureau in nearby Woodland Hills, Calif., for a monthly fee (most companies are charged for each transaction) of about 0.5% of its annual gross revenues, plus rental for the keyboards, terminals, and dedicated telephone lines installed in the company offices. Swarth uses the software R&S customized for his company to track inventory levels, orders, shipments, purchases, and production. The arrangement is a very good way to step into the poolat the shallow end," he says.
Time-sharing emerged about 20 years ago when computers were expensive and software distinctly unfriendly. The concept is simple: Instead of installing its own system, a company shares time with other users on a computer owned and maintained by a data processing service bureau. There are two types of service bureaus: "batch" and "on-line," or remote. With batch, a company sends to the bureau the information it wants processed. The bureau puts the data through its computer in a batch, then sends the result back to the client in some form of hard copy, such as printout reports, labels, payroll, or checks.
With an on-line arrangement, a company rents or buys terminals and other equipment, plus one or more data lines to link it with the bureau's central computer. In the past the company would use its own software, drawing on the bureau's computer for extra power and storage capacity. Today most companies rely on software owned by the bureau.
Batch is cheaper by far, since users don't need to obtain equipment or pay for telephone-line usage. But because it involves physically transporting data between bureau and client, it is also much slower and not very useful if a company wants to update information frequently or have quick access to its data. Batch is most frequently used for routine financial tasks, such as preparing payroll. There are, however, some inventive exceptions, such as a one-man service bureau in upstate New York that, using an Apple computer, provides reports on milk production per cow as well as trend analyses for a group of local dairy farmers.
Eventually more service bureaus may follow the example of Automatic Data Processing Inc. of Clifton, N.J., one of the largest suppliers of payroll processing. According to Charles C. Varga, publisher of The Cerberus Report, a journal for users and vendors in the information industry, ADP is considering installing in client companies small dedicated computers preprogrammed to "spew out everything that is needed for 52 weeks of payroll." Not unlike a postage meter, the machine would print out checks and payroll records at the touch of a button. ADP would maintain and update the software and collect a service fee.
With more people buying computers and with telephone-line charges escalating, on-line bureaus are scrambling to hold on to their market by developing and licensing specialized databases and software offerings and by stocking their staffs with industry experts. "The successful firms are going after specific applications and selling themselves on the basis of some specialized expertise," says Walter Ulrich, president of Walter E. Ulrich Consulting Inc., in Houston.
Not all service companies are anxious to accommodate individual preferences, however, since doing so cuts down on their ability to realize economies of scale. "Sometimes," says Sanford "Sandy" Schram, one of the principals of R&S Financial Services, "there is a tug-of-war between a client's unique needs and the service company's need to standardize the product and maximize the profit."
On the other hand, many time-sharing vendors do regard customization as a staple of their menu of value-added services. According to Charles Varga, special requests that would have been difficult to satisfy five years ago pose little or no problem today. Swarth's choice of R&S Financial Services, for example, was based in large part on that company's familiarity with the particular needs of the garment industry, which handles its receivables very differently from most businesses.
While it may be easy to find a time-sharing company to mold a program to your needs you should find out, before the first change whether you'll have to leave the software behind if you decide to move the operation in-house. "One of the strategies of time-sharing companies is to get their customers locked in with custom software, so they can't go somewhere else," says Walter Ulrich. "You may get what sounds like a good deal only to realize that the software is written for a machine you would never buy."
Swarth never intended to use time-sharing as a permanent alternative to owning a computer. "Our initial plan," he says, "was to time-share for a season and find out all the problems of converting from manual systems. We also saw it as a good opportunity for a small, growing company to get into many good software programs on a rental basis and see how they might need to be tailored."
