February, 1958.
The attached schedules are designed to give an indication of both the capital outlay and operating costs of an automatic office.
Schedule 1 Capital Outlay shows the approximate costs of two variations of the LEO II computer and of standard items of ancillary, data-preparation, stabilizing and maintenance equipment. It should be emphasised, however, that it is not possible to prepare a quotation until the customer's work has been examined and the precise arrangement of components required has been determined.
Schedule 2 Operating Costs include a depreciation charge of £10,000 per annum, being 10% of an initial capital outlay of £100,000, This schedule also takes into account salaries of management and wages of operators and maintenance personnel together with costs of power and component replacements.
Shown below are the comparative hourly charges, calculated on the same basis as shown in schedule 2, covering four different types of agreement.
Outright purchase on a single-shift basis
Depreciation £6. 0. 0. per hour
Operating cost £6. 5. 0. per hour
Total £12. 5. 0. per hour
Outright purchase on a two-shift basis
Depreciation £3. 0. 0. per hour
Operating cost £5. 0. 0. per hour
Total £8. 0. 0. per hour
5-year higher on a single-shift basis
Depreciation £15. 5. 0. per hour
Operating cost £6. 5. 0. per hour
Total £21. 10. 0. per hour
5-year higher on a two-shift basis
Depreciation £7. 12. 0. per hour
Operating cost £4. 8. 0. per hour
Total £12. 0. 0. per hour
It will be realised that in the first two cases after 10 years, the hourly charge is confined to the figure for operating cost alone. In the last two cases the hire charge is negligible at the expiration of 5 years.
The costs of programming and data preparation are excluded since these have to be assessed separately for each job. However, it is suggested that a figure of 2/8½d per 1,000 characters would be an equitable figure for the latter.
JUNE, 1957
(1st variation)
1024 compartment rapid access store
14 immediate access registers
8192 compartment drum storage system
3 input channels:
1 card (alpha, binary or decimal)
1 card (binary or decimal)
1 paper tape (binary/decimal)
3 output channels:
2 card-punches (alpha, binary or decimal)
1 Powers printer
£75,000 (approximately)
Including costs of linkage and control circuits for Powers printer and magnetic drum system.
(2nd variation)
2048 compartment rapid access store
14 immediate access registers
3 input channels:
1 card (binary or decimal)
1 card (binary or decimal)
1 combined card (binary/decimal)
or tape (binary/decimal)
2 output channels:
1 card-punch (binary or decimal)
1 Bull or Hollerith printer
£60,000 (approximately)
Printers Powers £5,000
Bull £4,000
Hollerith £6,200
Card Reader Hollerith £1,400
Card Punch Hollerith £2,350
Tape Peader Ferranti £ 350
Tape perforator (Creed) £ 113 Tape comparator, incorprating teleprinter and reader (LEO) £1,065 Power pack for comparators £ 106
Power stabilising equipment (Variation 1) £2,760 Power stabilising equipment (Variation 2) £2,300 Maintenance equipment £1,216
NOTE
1. The prices shown are those currently quoted and are given for information only.
2. The ancillary equipment included above, when supplied to a LEO specification, is suitable for coupling to LEO II without further modification or cost.
3. It should be realised that the 2 variations of the LEG II computer given are only specimens. Other variations are available giving facilities for up to 4 separate input and 3 separate output channels.
Equipment cost Computer and auxiliary equipment approximately £100,000 Depreciation at 10% per annum £ 10,000 Cost per hour for a single shift of 32 productive hours per week £6. 0. 0.
Single shift week p.a p.a
Operators' wages
1 senior operator £1,040
2 operators £1,500
1 assistant £ 460
1 job assembly assistant £ 460 £3,460
Maintenance wages
1 senior electronic engineer £1,040
1 junior electronic engineer £ 830
1 mechanical engineer £ 670
1 valve tester £ 390 £2,930
Management
Computer manager £1,500 £1,500
Expenses
Component replacements £2,000
Power £ 450 £2,450
£10,340
Cost per hour for a single shift of 32 productive hours per week £6. 5. 0.
Total cost per hour £12. 5. 0.
Equipment cost Computer and auxiliary equipment approximately £100,000 Depreciation at 10% per annum £ 10,000 Cost per hour for a single shift of 64 productive hours per week £3. 0. 0.
Single shift week p.a p.a
Operators' wages
1 senior operator £1,040
4 operators £3,000
2 assistants £ 920
1 job assembly assistant £ 460 £5,420
Maintenance wages
2 senior electronic engineer £2,080
2 junior electronic engineer £1,660
1 mechanical engineer £ 670
1 valve tester £ 390 £4,800
Management
Computer manager £1,500 £1,500
Expenses
Component replacements £4,000
Power £ 900 £4,900
£16,620
Cost per hour for a double shift of 64 productive hours per week £5. 0. 0.
Total cost per hour £8. 0. 0.
The following are comparative figures for four regular clerical jobs. They indicate the saving which can be obtained by transferring an orthodox routine to an Automatic Office:-
On a Payroll of 10,500 employees (showing the saving per employee)
Previous system - 59 clerks LEO System - 29 clerks A saving of - 30 clerks Previous System Clerks - £540 Machine depreciation - £ 16 £556 Per employee per week 12.71 pence LEO System Clerks - £268 Computer cost - £ 52 * Data perforating - £ 20 Punch card - £ 15 £353 Per employee per week 8.07 pence * 6.5 hours at £8 per hour for two shift working -----------------------------------------------------------------
For up to 40,000 items per day (showing the saving of clerical staff alone.)
Previous system - 50 clerks LEO system - 22½ clerks A saving of - 27½ clerks ----------------------------------------------------------------
Provisional costs for 10,000 orders per week, which represents part only of the whole. (Showing the calculated saving per order).
Previous system Invoicing (B.S.O.) - £396 Sales Statistics (B.S.O.) - £ 58 Reconciliation (A/cs.) - £ 38 £492 Per Order 11.8 pence LEO system Clerks (B.S.O.) £165 Clerks (A/cs.) - £ 15 Computer cost - £ 74 Data Perforating £ 90 Cards - £ 6 £350 Per Order 8.4 pence Time on job Part 1 - 2.0 Part 2 - .7 Part 3 - .18 Part 4 - .12 -----------------------------------------------------------------
Provisional costs based on a trial job, which will ultimately be extended to cover tens of thousands of dealers.
Previous system - £187 LEO system Clerks - £ 64 Computer cost - £ 46* Data perforating - £ 33 £ 143 * 6.5 hours in summer and 4.5 hours in winter at £8 an hour for two shift working. Average cost is shown.
Working from pay hours LEO calculates gross wages and, from brought forward data automatically produced by the computer, calculates net pay and prints a payslip giving details of the make up of wages for each person on the payroll. The calculation includes computation of income tax and all other deductions, the preparation of a coin analysis for use in the physical make up of pay envelopes, and the provision of all other information required for maintaining company accounts, cost accounts and other statutory and statistical returns relating to the payroll. In this week the application covered 10,723 employees and is to be extended to cover the remainder of Lyons' staff as soon as the second computer becomes available.
This covers the supply of up to 250 items of goods each day to 150 Lyons' branches. LEO holds approximately 40,000 daily standing orders and every day approximately 8,000 revisions to these are received by telephone. Within an hour of receiving the last revisions, these are collated by LEO to produce the total production orders, the subtotals required for the movement of goods in bulk for dispatch and the details required for packing goods for each branch. In addition deliveries to each branch are valued and cash totals accumulated. Stock control totals are provided and statistics are produced for management.
LEO is supplied with details of stock purchased and issued. Each week LEO calculates a new average price for each of 750 categories of tea and produces a statement showing the quantity, price and number of weeks' stock in hand, the quantity to be purchased to bring stock up to minimum level, exhausted and slow-moving stock, the trend of current prices and a comparison of actual with standard costs for each production batch. In addition LSO produces each quarter a stock valuation sheet at actual and average price. The weekly statement showing the position at the close of business on Friday is available to management on Monday morning, and the entire job involves the making of 30,000 separate calculations each week.
This sales accounting application is carried out in four parts:
L5A: A daily job carrying out the routine clerical tasks relating to valuing orders, compiling packing instructions.-ana producing day book and. stock record figures.
L5B: Here collection lists are produced for each salesman, showing the value of orders dispatched to customers and previously uncollected amounts.
L5C: The cash collected by salesmen is checked, and under or overbanking reported.
L5D: A weekly task of compiling sales statistics and salesmen's commissions.
The overall time for dealing with all these jobs amounts to three seconds an invoice. During this period, pending the completion of a second computer, the application covered only a limited number of areas.
The customers are grouped into classes and LEO is required to compare their purchases with standards which vary according to weather and other conditions. LEO then reports those agents whose purchases deviate significantly from standards, and the information produced enables sales management to plan calls upon customers economically. In addition, LEO produces sales statistics for individual customers or groups of customers. For a similar reason to that given in L5, this job covered only a limited number of areas.
A payroll, similar to that referred to above, is carried out on a service basis for a large engineering concern. In this week the job was limited to 7,000 employees. In this case, the computer starts with hours worked as shown on the clock cards. It embraces a very wide range of labour and personnel statistics.
These are all service jobs and mostly not regular in their incidence. They include market survey, statistical and actuarial tables and a wide variety of scientific applications. Following are some examples:
This includes, in addition to routine maintenance, programming trials, testing new equipment, and stoppages to deal with spurious data and machine faults.
Total 168 hours
