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Computerised payroll's Golden anniversary

25th Dec 2005
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Philip Whiteley celebrates the pioneers who built a payroll computer application from scratch, 50 years ago. It was a British first.

(This article first appeared in Payroll World)

Programmers with grey hairs often quip that their younger contemporaries are spoilt with excessive computer power. One told me: 'When I started, I built my own computers from a BBC kit with a limited amount of memory on magnetic tape. You get very disciplined about how much you use. That has stayed with me even to today.'

Imagine the task of the designers of the first ever computerized payroll. It was a little earlier than you might have thought. In February 1954, Lyons' Bakeries went live with its LEO I system that ran flawlessly for a decade. The machine had a tiny main store, no backing store, no software of any kind and a low mean time between faults, noted the Computer Conservation Society, which recently held a seminar to mark this unsung golden jubilee.

It is worth recalling the contemporary observation of the Economist magazine, which asked whether computers might have 'a valuable contribution to make in improving business efficiency'.

At first sight, this observation looks rather quaint, but in some ways it remains relevant. At the recent Softworld HR exhibition in London, organizers ran a survey that indicated that just 18 per cent of employers have fully integrated, intranet based payroll and HR systems. For all our technological advances since 1954, the 'valuable contribution to efficiency' remains theoretical for many organizations.

We now have the capacity for all payroll and personnel data to be held on a single database, updated in real time, accessible anywhere in the organization and even remotely. Yet fewer than one in five have done this!

The Inland Revenue still does not have a single database of all employers, though it is moving towards establishing one.

More individuals ought to display the ingenuity of the designers of the LEO I computer. It was a remarkable achievement; the first payroll and the first major business application on a stored-program computer anywhere in the world, according to the insourced.com website.

It is a mark of our popular bias against science and technology that it received not a fraction of the publicity given to the four-minute mile, with which it shares an anniversary. An unglamorous caf© business had beaten the likes of IBM and the Ford Motor Company in a major modernization of business processes.

It was an astonishing achievement. David Caminer, who led the Lyons systems operation, told the insourced.com website: 'Nowadays many people do it every year, but when it was done first 50 years ago it was a huge achievement.

There was nothing to go on, no well understood good practice, so we had to work out what to do from scratch.'

The job was weekly and all-cash in those pounds, shillings and pence days, and included both gross pay calculation and gross-to-net. It was also very time critical. At the outset, LEO handled the payroll for 1670 people, which rose gradually thereafter to the limit of 10,000 that was set until a second machine should be available.

It was this application that proved for the first time that computers were on course to change dramatically the world of business. Against all odds, J. Lyons & Company, a catering business best remembered for its 'nippies', the waitresses; and cornerhouse tea shops, had beaten the later giants of what was to become a massive industry, like IBM and Univac, in kick-starting a root-and-branch revolution in business management.

The process set a high standard in terms of good practice and procedure. A specification was written and agreed with the customer. The team made presentations to all customer staff.

'All code was checked before being allowed on machine; test data for program testing was carefully thought through; there was explanatory annotation in detail on all programs; all incoming data was checked for feasibility; reconciliation accounts were kept throughout the system; re-start points were provided in case of interruptions in operation; operating instructions and user manuals were written; and there was small-scale pilot and then large-scale parallel running on real data in cooperation with the customer before the system went live,' reported the Computer Conservation Society.

The history of the computerized payroll reveals much about the decline and revival of British companies. The early lead in computer technology, based on the Bletchley Park pioneers of the war years, should have led to British dominance in the development and manufacture of computers. But while the UK excelled in research, the US, Japan and Germany had far better product development and company management systems.

Recently, however, there has been a revival. Excellence in financial reporting and services means that British companies such as Sage are well placed to make payroll-related software products; and British payroll bureaux are competitive in world terms.

We don't make the microprocessors, but in the other aspects of payroll technology and related services, the spirit of the LEO I pioneers lives on.

Payroll pioneers
  • The early Lyons/LEO payrolls. 1954-1959. Designed by David Caminer, who also led the programming team, and John Lewis, who led many subsequent implementations. The Cadby Hall Bakeries' payroll was followed quickly by similar, but custom-built systems for the Ford Motor Company, Kodak, Glyn Mills Bank and others, using LEO as a bureau (the first outsourcing!).
  • Payroll at De Havillands (1958) - Peter Barnes, the computer manager, and Henry Goodman, who wrote the program. De Havilland Aircraft successfully implemented a brave payroll scheme for 3000 weekly paid staff in 1958 on a totally unsuitable machine, a Pegasus intended for aerodynamic calculations.
  • Army pay and records (1960) - Colonel Donald Moore, the project leader. A very large application to undertake at that time involving some 400,000 soldiers in the UK and overseas.
  • Payroll and management information at the Royal Navy Dockyards (1964) - Reg Cann, the project leader. This application closely integrated payroll with job costing and management information and made innovative large-scale use of mark-sensing. It was also a Government system that kept perfectly to time and to budget!
  • Payroll as a bureau and package application - Bryan Mills, a former executive chairman of CMG, now merged into LogicaCMG, will bring the story up to date. Mills, the "M" in CMG, cut his payroll teeth on a bureau application for Pinewood Studios in 1958 and is still actively involved, currently overseeing a project to put a payroll system into ServiceTec, the company he now chairs.

Philip Whiteley
Payroll World

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