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pattern for the entire modern history of business computing.
The Census Bureau put Hollerith s machine to work in the 1890 census, with great
success. The tally proceeded much more quickly than it had in the 1880 round, even though the
country s population had grown by about a quarter in the interim. The cost of the census was cut
by $5 million a savings almost ten times greater than the Bureau had expected. Having proved
its value in speeding up calculations, the punch-card tabulator attracted the attention of the
owners of large businesses like railroads, insurance agencies, banks, and mass-market
manufacturers and retailers. As these companies had expanded their operations in the wake of
the Industrial Revolution, they d found it necessary to collect, store, and analyze ever larger
amounts of data on their customers, their finances, their employees, their inventories, and so
on. Electrification allowed the companies to grow larger still, further expanding the information
they had to process. This intellectual work became as important, and often as arduous, as the
physical labor of manufacturing products and delivering services. Hollerith s tabulator allowed
big businesses to process information far more quickly, with fewer people and greater accuracy,
than was possible before.
Seeing the commercial potential of his invention, Hollerith established the Tabulating
Machine Company to sell tabulators to businesses. The company grew rapidly, introducing a
series of related products such as alphabetic tabulators, card sorters, card duplicators, and
printers and selling them to an ever broader clientele. In 1911, Hollerith s firm merged with the
Computer Tabulating Recording Company, an even larger supplier of business machines. A
talented young manager named Thomas J. Watson was brought in to run the business. Thirteen
years later, the ambitious Watson changed the company s name to the more impressive sounding
International Business Machines Corporation. Other companies, like Burroughs and Remington
Rand in the United States and Bull in Europe, also rushed into the burgeoning punch-card
market, competing with Watson s IBM.
The information technology industry had been born.
The spread of punch-card technology accelerated as standards were established for the
design of the cards and the operation of the equipment and as technical advances and
competition pushed down prices. Within a couple of decades, most large companies had set up
punch-card rooms for the various machines they used to sort, tabulate, and store financial and
other business information. They invested a great deal of capital in the machinery, and they hired
clerks and technical specialists to operate and maintain it. They also developed close ties with the
suppliers of the systems.  Processing information gathered into a deck of cards was entrenched
into business practices by the mid-1930s, computer historian Paul Ceruzzi writes,  and
reinforced by the deep penetration of the punched-card equipment salesmen into the accounting
offices of their customers.
Even as companies were dismantling their power-generation departments, in other words,
they were establishing new departments dedicated to the fledgling technology of automated data
processing. During the second half of the century, these departments would grow dramatically as
electronic digital computers replaced punch-card machines. Most big companies would find
themselves building ever more elaborate installations of computing hardware and software,
spending tens or even hundreds of millions of dollars a year on their in-house computing
operations, and relying ever more heavily on IT vendors and consultants to keep their systems
running. As the manipulation of symbols words, numbers, images supplanted the
manipulation of materials as the focus of business in the developed world, the private
power-generating plant of the nineteenth century found its echo in the private data-processing
plant of the twentieth. And just as before, companies came to assume that there was no
alternative that running a complex computing operation was an intrinsic part of doing business.
ALTHOUGH IT NOW seems inevitable that the computer would become the mainstay
of modern business, there was originally much skepticism about the machine s usefulness. When
the first true commercial computer, the UNIVAC, was being built in the 1940s, few people
believed it had much of a future in the corporate world. At the time, it was hard to imagine that
many companies would have a need for the kind of intensive mathematical calculations that an
electronic computer could churn out. The old punch-card tabulators seemed more than sufficient
for handling transactions and keeping accounts. Howard Aiken, a distinguished Harvard
mathematician and a member of the US government s National Research Council, dismissed as
 foolishness the idea that there would be a big market for computers. He believed that the
country would need no more than a half dozen of them, mainly for military and scientific
research. Even Thomas Watson is reputed to have said, in 1943,  I think there is a world market
for about five computers.
But the designers of the UNIVAC, two University of Pennsylvania professors named J.
Presper Eckert and John Mauchly, saw things differently. They realized that because an
electronic computer would be able to store its operating instructions in its own memory, it could
be programmed to perform many functions. It wouldn t just be a glorified calculator, limited to
preset mathematical routines. It would become a general purpose technology, a
machine-of-all-trades, that companies could apply not just to everyday accounting chores but to
innumerable managerial and analytical tasks. In a 1948 memo, Mauchly listed nearly two dozen
companies, government agencies, and universities that he believed would be able to put the
UNIVAC to good use. As it turned out, the market proved a good deal larger than even he
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