According to popular mythology (and a few over-zealous salespeople), acquiring a computer is like hiring a decisive, far-seeing manager who will cheerfully untangle every knotty problem your business can offer.

Reality is far less exciting. All too often, you pose what sounds like a perfectly reasonable question to a computer -- and get back an electronic blank stare. Dennis Anderson, who teaches small business owners about computers at Bentley College in Waltham, Mass., says computers disappoint their owners all the time. "Yet in the majority of cases, the system is doing exactly what it's supposed to," Anderson says. "The purchaser didn't understand what he was getting. He'll say, 'Yeah, the computer is handling my accounting very well. But I thought it would be doing all these additional things as well."

In fact, there are a lot of things computers don't do well at all, or at least not as well as their human counterparts. For computer owners who expect answers to all kinds of important questions, here's a list of things a computer can't do:

1. A computer won't solve broad, poorly defined problems. Dennis Anderson recalls the somewhat extreme case of a textile manufacturer who saw his sales declining. Noticing that many of his competitors had computerized their operations, he followed suit. And sales continued to slide.

Anderson insists that you have to understand exactly what problem you want the computer to solve. The textile manufacturer hadn't pinpointed his problem -- whether it was inventory control or invoicing -- so the computer couldn't be of much help.

Anderson adds that computer buyers often spend too much time comparing hardware, and don't do enough thinking and planning about the types of jobs their new toy will do.

2. A computer won't save money by eliminating workers. Instead, it will create new ways of doing things. Consider the stationary distributor who billed customers four times a year. After automating, he found he could send out invoices five times faster -- and consequently began billing on a monthly basis. "The cost of automation is rarely offset by reduced payroll expenses," says Thomas K. Christo, a New Hampshire attorney who specializes in computer litigation. "Many purchasers are disappointed to find out this is so."

The switch to automation doesn't pay off in every case, stresses John L. King, a researcher at the University of California at Irvine, who spent five years studying computer use in organizations. Word processors often fail to raise the net productivity of clerical departments. The machines are invaluable to firms that do mass mailings of form letters, or rely on long legal documents that require slight modifications. But for companies that mainly need one-of-a-kind memos and letters, their value is less clear. "Typing," King observes, "is the fastest part of writing. When reporters are given word processors, they don't write more stories -- they just do more revisions."

Savings produced by automation are generally found in areas other than personnel. More frequent billing may reduce cash flow problems, thereby reducing the need to borrow money. More prudent management of inventory may diminish the cost of financing excess stock. Computers can pay bills more efficiently -- systematically taking advantage of discounts, for example. They can eliminate your accounting service. And they may be able to stabilize the growth of your present clerical staff.

3. A computer won't clean up the errors in your manual procedures. A small cosmetics firm realized it was not keeping its books properly, and after several attempts to locate and correct the errors proved unsuccessful, one of the owners suggested automating. A computer, he thought, would bring accuracy and a better record-keeping system. Three weeks after installation, however, the computer was generating the same bad numbers the bookkeeper produced -- only much faster.

"Garbage in, garbage out," goes the phrase familiar to computer people. Richard Raysman, a New York attorney who specializes in computer litigation, points out that automation begins with a direct transfer of data from the manual to the computerized system. "If the original numbers are questionable, someone has to go in there, roll up his sleeves, and analyze the whole operation." Eventually, someone also has to take responsibility for making fundamental changes in the way things are done. "Computers are fast and accurate," says Raysman. "But if you give them bad information, they'll get you into trouble much faster than a manual system will."

4. A computer won't do forecasting or trend analysis until a few years down the road. A retailer of home furnishings bought a desk-top computer and two months later was eager to do some sophisticated trend analysis. What items were selling this year, compared to last? What volume of sales should he expect in the next twelve months? The computer said, in effect, "Beats me."

"In the beginning, you're working like crazy just to get an accounting process down," says Anderson. "Before you can even think about trend analysis, you have to key in an enormous amount of historical data. At first, it's difficult enough just getting the present information transferred over." Forecasting and trend analysis also require a very costly mass storage device.

"Small business owners who buy computers have a lot of over-optimism about what can be done and how quickly it can be done," says Patrick Dodds, manager of marketing planning for small businesses at Data General. "To make their investments pay off, they try to do everything at once. That's when they run into problems."

The applications small businesses are most likely to have success with are those pertaining to accounts receivable, order entry and inventory control, accounts payable, and general ledger. The areas should be tackled one at a time, according to Dodds.

5. A computer won't solve problems that call for subjective evaluations. In recent years, programs have emerged claiming to answer such sensitive and subjective business questions as who to hire. "True, you can take a computer and plug in 100 candidates' skills, taken from a big stack of resumes," says King. The computer will fish out those applicants who meet your criteria. "But the final decision is arrived at by considering much larger personnel policies and issues." For example, do you like the applicant?

"Any question with a qualitative edge is not susceptible to computerization," says Christo. "If it were that easy to find a good manager, you could ask someone else to do the hiring for you."

6. A computer won't solve all your scheduling problems in production. A telescope manufacturer who needed various gizmos from suppliers around the world had to fine-tune the arrival of all his parts. Late shipments threw his production schedule off. Yet early arrivals were also expensive -- he had to pay for them quickly, though they simply occupied space in his warehouse for months. In an effort to end his hair-splitting scheduling decisions, he bought a computer.

"Automation can assist you with the execution of a production plan if it's already well developed," says King. "It can notify you if something goes off schedule or tell you that supplies are running low. It may automatically generate a new order when stock falls below critical level. But it can't create logic."

"You have to come up with the details," agrees Byrne W. Mayer, educational director of Think Tanks, a Cambridge, Mass., computer dealer. "You have to tell it, for example, what your slippage is. How long will the shipment take to arrive? How long can you warehouse it?"

But after you do so, the computer can provide data to help you make a better judgment. "You may think of four or five alternatives. The computer can perform all the calculations quickly, telling you which is the least expensive answer."

7. A computer's software won't accept changes made by amateurs. An insurance firm owner who'd once taught BASIC to college classes set out to tailor a packaged program to suit his own procedures. "He flat out couldn't do it and his $7,000 computer never worked for him," says Anderson.

Because the cost of modifying packaged software can run as high as $100 an hour, many a small business owner has asked a friend with computer savvy to alter his packaged program. But the usual result is failure: All programs involve complex, idiosyncratic methods of coding. "There's always a reaction to changes and you never know what it's going to be," says Dodds. "Modifications are fine if you're playing," adds attorney Christo. "But if you want your business to rely on the program, forget it." In addition, manufacturers refuse to service programs that have been tampered with.

Computer dealers assert that many package programs are perfectly adequate and sometimes quite flexible. But researchers and independent consultants disagree. "Businesses often have to do quite a bit of changing to be able to use the program's format," says Nicholas Vitalari, assistant professor of management information systems at the University of California at Irvine. "Let's say you bill your customers on a revolving credit basis. You're going to have a hard time finding software to satisfy your particular billing procedure -- you may have to make changes in your billing methods. And your customers may not like that." The cost of altering your procedures can be just as costly as modifying the program.

8. A computer won't always be right. "The concept of infallibility is a real misapprehension," says Christo. "Systems can and do produce errors, when hardware circuitry is faulty, for example, or when programs are not sufficiently debugged."

The impact of a malfunctioning computer system can be great -- especially if the errors aren't detected quickly -- since computers work so fast, and since they assume a key role in the companies that use them. A leather cleaner watched its growth drop from 20% to zero while its computer generated billing errors and other mistakes. A brewery became legally prohibited from selling beer to a substantial number of its customers, since its computer mistakenly reported that certain liquor stores and distributors had exceeded statutory credit limits. Companies can go out of business before anyone even detects an error: Since the machines normally function so flawlessly, you tend to stop checking up on them.

Dramatic failures are rare, of course. But John King advises business owners who are considering automating to figure the cost of repairs and adjustments into their costs, since problems are not uncommon. "And before you get dependent on the system, you better make sure it works."

Published on: Mar 1, 1982