Louisiana State University LSU Digital Commons LSU Historical Dissertations and Theses Graduate School 1971 An Evaluation of Services and Satisfaction of Edp (Electronic Data Processing) Service Bureau Clients and the Implications to the Accountingprofession. Michael Joseph Cerullo Louisiana State University and Agricultural & Mechanical College Follow this and additional works at: https://digitalcommons.lsu.edu/gradschool_disstheses Recommended Citation Cerullo, Michael Joseph, "An Evaluation of Services and Satisfaction of Edp (Electronic Data Processing) Service Bureau Clients and the Implications to the Accountingprofession." (1971). LSU Historical Dissertations and Theses. 2037. https://digitalcommons.lsu.edu/gradschool_disstheses/2037 This Dissertation is brought to you for free and open access by the Graduate School at LSU Digital Commons. It has been accepted for inclusion in LSU Historical Dissertations and Theses by an authorized administrator of LSU Digital Commons. For more information, please contact [email protected]. 72-3473 CERULLO, Michael.Joseph, 1940- AN EVALUATION OF SERVICES AND SATISFACTION OF EDP SERVICE BUREAU CLIENTS AND THE IMPLICATIONS TO THE ACCOUNTING PROFESSION. The Louisiana State University and Agricultural and Mechanical College, Ph.D., 1971 Accounting University Microfilms, A XEROX Company , Ann Arbor, Michigan THIS DISSERTATION HAS BEEN MICROFILMED EXACTLY AS RECEIVED AN EVALUATION OP SERVICES AND SATISPACTION OP EDP SERVICE BUREAU CLIENTS AND THE IMPLICATIONS TO THE ACCOUNTING PROFESSION A Dissertation Submitted to the Graduate Faculty of the Louisiana State University and Agricultural and Mechanical College in partial fulfillment of the requirements for the degree of Doctor of Philosophy in The Department of Accounting by Michael Joseph Cerullo B.S., Northeastern University, 1963 M.S., Louisiana State University, 1966 August, 1971 ACKNOWLEDGMENT The writer wishes to express grateful appre­ ciation to Dr. C. W. Elliott whose suggestions and criticisms have been of great value in the completion of this work. Acknowledgment is also extended to Drs. F. A. Me.Cameron, W. E. Swyers, E. R. Gray, and D. L. Woodland for their helpful comments. Finally, the writer wishes to express great­ ful appreciation to his wife Virginia. Her suggestions, criticisms, and advice have greatly contributed to the completion of this work. TABLE OF CONTENTS PAGE ACKNOWLEDGMENT ..................................... ii LIST. OF TA B L E S .................... vii LIST OF FIGURES ................................... xiii ABSTRACT .......... XXV CHAPTER I. INTRODUCTION ................................ 1 Statement of the Problem ................. 1 Purposes of the Study ........... 2 Method of Approach .................. 3 Limitations of the Study .,............... 9 A Survey of the S t u d y ................... 13 Definitions of Frequently Used Terms . 15 II. DEVELOPMENT OF ELECTRONIC DATA PROCESSING (EDP) SERVICE BUREAUS '................... 18 Introduction.............................. 18 Early Development of Service Bureaus . 18 Third Generation of Service Bureau Development ............................ 22 Summary . .............. 32 III. A DESCRIPTION OF SERVICES OFFERED BY SERVICE BUREAUS ................... 34 CHAPTER PAGE Introduction.......... 34 Categories of Services Offered By Service Bureaus ........................ 35 Specific Services Offered By Service B u r e a u s ................................ 48 Services That Service Bureaus Most Often Provide .......................... 54 Areas of Planned Service Bureau E x p a n s i o n ................ .............. 61 S u m m a r y ................. 63 IV. AN EVALUATION OF SERVICES AND SATISFACTION RECEIVED BY SERVICE BUREAU CLIENTS ..... 65 Introduction .............................. 65 The Types of Companies That Use Service Bureaus ........................ 66 The Reasons Why Companies Use Service Bureaus ........................ 67 An Evaluation of Services That Clients Receive From Service Bureaus ........... 70 An Evaluation of Satisfaction of Responding Clients With Service Bureaus 92 S u m m a r y .....................................100 V. METHODS OF IMPROVING SATISFACTION OF SERVICE BUREAU CLIENTS ................... 103' V CHAPTER PAGE Introduction ............................... 103 Pre-Selection Planning ..................... 105 Improve Techniques of Selecting A Service Bureau ........................... 122 Factors to Consider After A Service Bureau Has Been Selected ........ 163 S u m m a r y ..............................172 VI. THE IMPACT OF SERVICE BUREAUS ON PUBLIC ACCOUNTING FIRMS ........................... 175 Introduction ............................... 175 The Favorable Impact of Service Bureaus On Public Accounting Firms....... 176 The Unfavorable Impact of Service Bureaus On Public Accounting Firms ........... 181 Methods for Meeting The Increasing Competition from Service Bureaus .... 188 The Problems of Auditing Clients Who Use Service Bureaus ........................ 208 S u m m a r y ..............................219 VII. SUMMARY AND CONCLUSIONS ......................225 Development of Electronic Data Processing Service Bureaus ........................ 225 Services Offered By Responding Service Bureaus ........................ 226 CHAPTER PAGE Services Received By Responding Service Bureau Clients ................. 227 How To Improve Satisfaction of Service Bureau Clients ................. 2 30 Service Bureaus and Public Accounting F i r m s ..................................... 236 SELECTED BIBLIOGRAPHY ........................ 241 APPENDICES APPENDIX A. Metropolitan Areas Surveyed . 255 APPENDIX B. Questionnaire Sent To Public Accounting Firms ........................ 259 . APPENDIX C. Questionnaire Sent To Service Bureau Clients ................. 265 APPENDIX D. Questionnaire Sent To Service B u r e a u s ............. 274 VITA .................................................. 282 LIST OF TABLES Table Page I. Summary of Questionnaire Analysis, South Central and New England .... 6 II. Questionnaire Analysis, South Central .............................. 7 III. Questionnaire Analysis, New England . 8 IV. Determination of the Number of Estimated Service Bureau Clients, South Central and New England .... 10 V. Growth in Number of U.S. Service B u r e a u s .............................. 24 VI. Per Cent of Responding Batch-Processing Service Bureaus Offering or Planning to Offer Time-Sharing Services . 29 VII. Gross Revenues of the Electronic Data Processing Service Bureau I n d u s t r y ............................ 20 VIII. Size of Responding Service Bureaus . 21 IX. Number of Categories of Services Offered by Responding Service B u r e a u s .............................. 26 X. Categories of Services Offered by Responding Service Bureaus, South Central and New England ............. 28 XI. Categories of Services Offered by Responding Service Bureaus, South C e n t r a l .............................. 29 XII. Categories of Services Offered by Responding Service Bureaus, New E n g l a n d .............................. 40 XIII. Routine Services Offered by Responding Service Bureaus, South Central and New England ..... 49 vii viii Table Page XIV. Routine Services Offered by Responding Service Bureaus, South C e n t r a l ........................ 50 XV. Routine Services Offered by Responding Service Bureaus, New England .... 51 XVI. Number of Routine Services Offered by Responding Service Bureaus ........ 52 XVII. Non-Routine Services Offered by Responding Service Bureaus, South Central and New England ....... 56 XVIII. Non-Routine Services Offered by Responding Service Bureaus, South C e n t r a l ........................ 57 XIX. Non-Routine Services Offered by Responding Service Bureaus, New E n g l a n d ........................ 58 XX. Number of Non-Rohtine Services Offered by Responding Service Bureaus .... 59 XXI. Services Most Often Provided by Responding Service Bureaus ......... 5 0 XXII. Areas in Which Responding Service Bureaus are Planning to Expand S e r v i c e s ............................ 52 XXIII. Service Bureau Users: By Industry and Sales Volume ........................ 58 XXIV. Routine Services Received by Responding Service Bureau Clients ............. 73 XXV, Non-Routine Services Received by Responding Service Bureau Clients . , 75 XXVI. Number of Routine and Non-Routine Services Received by Responding Service Bureau Clients ............. 76 XXVII. Areas in Which Responding Clients Plan to Expand Services Received From Service Bureaus ...................... 77 ix Table Page XXVIII. Yearly Direct Dollar Savings From 81 Using Service Bureaus ............... XXIX. Profile of an IBM 360/Model 20 Computer Installation ....................... 89 XXX.' Number of Different Service Bureaus Used by Responding C l i e n t s ........ 83 XXXI. Length of Time Responding Clients Have Used Service Bureaus ............... 84 XXXII. Per Cent of Service Bureaus that Could Not Provide Clients with Requested S e r v i c e s ........................... 89 XXXIII. Services Received by Responding Clients When Different Personnel are Responsible for Selecting Jobs to Process at a Service Bureau ........... HO XXXIV. Personnel Responsible for Selecting Service Bureaus in Responding Companies.............................. 118 XXXV. Key Items Considered When Selecting Service Bureaus, South Central . 118 XXXVI. Key Items Considered When Selecting Service Bureaus, New England .... 118 XXXVII. Personnel Responsible for Selecting Service Bureaus