Computer Applications, Inc.

Computer Applications, Inc. (CAI)

Company type	Public (after 1962 IPO)
Industry	Software, Computer services
Founded	1960 (1960) in New York City, United States
Founder	Joseph A. Delario (one of the founders)
Defunct	1970 (1970)
Fate	Bankruptcy and liquidation
Headquarters	New York City , United States
Area served	United States
Key people	John A. DeVries (CEO until 1970), Joseph A. Delario (founder and later CEO)
Products	Software contracting, contract programming, computer services, service bureaus, market research, direct mail operations, book distribution
Number of employees	2100 (1967)

Computer Applications, Inc. (CAI) was a U.S.-based software company established in 1960 in New York City. Over time, it diversified into contract programming, computer services, and various subsidiaries, eventually becoming the second-largest independent software firm in the United States by the late 1960s. The company ultimately declared bankruptcy in 1970.

Origin and growth

CAI was launched in 1960 with its main office located in New York City, emerging as part of the early wave of software contracting businesses that appeared during the late 1950s and early 1960s. It went public through an initial stock offering in 1962 and shortly thereafter expanded by opening branches in San Diego and Washington, D.C.

In 1963, CAI acquired Electronic Business Services Corporation, marking its entry into the service bureau sector. It grew to operate the largest number of service bureaus among East Coast computer companies. The firm also maintained subsidiary offices in Silver Spring, Maryland, and Fairfield, New Jersey.

The company offered programming solutions to both commercial clients and hardware manufacturers. Among its notable achievements was the development of the Indexed Sequential Access Method (ISAM) for IBM's OS/360 mainframe system. CAI managed computer centers for several federal agencies, including three facilities within NASA. Furthermore, it played a role in creating elements of the Ticketron computerized ticketing system.

Following multiple years of profitability, CAI’s stock began trading on the American Stock Exchange under the ticker symbol CPD in 1965.

Prominence

Only a handful of early software companies reached a scale comparable to Computer Applications, such as Computer Sciences Corporation (CSC), Computer Usage Company (CUC), and C-E-I-R. CAI eventually ranked among the "big five" U.S. software contractors alongside CSC, CUC, System Development Corporation, and Planning Research Corporation.

The New York branch of CAI was situated at 555 Madison Avenue, sharing premises with competitors like Advanced Computer Techniques, which attracted several programmers from CAI. Another rival in programming services was Applied Data Research prior to its pivot toward software product development.

By 1967, CAI employed roughly 2,100 individuals across its parent company and nine subsidiaries. It operated eight service bureaus and maintained offices in eleven cities, including Sacramento, California. Government contracts accounted for about one-third of its total revenue.

During this era, valuations for companies involved in software and computer services soared amid a speculative market bubble. CAI’s stock price reached a high of 47 in 1967.

As of 1968, CAI continued to be profitable and by the end of the decade had established itself as the second-largest independent software company in the U.S., trailing only CSC. Its clientele comprised federal, state, and local government entities along with private sector businesses. In addition to software services, CAI ran divisions specializing in market research, direct mail operations, and book distribution.

End

The mild recession of 1969–1970 coincided with a more severe slump within the computer industry. During this period, CAI was among several major software firms investing heavily in teleprocessing services and the "Computer Utility" model—providing remotely hosted hardware and software applications—but this market failed to materialize as anticipated.

The company’s decline centered on the Speedata initiative, which aimed to deliver inventory control solutions for grocery warehouse operations. After spending over $10 million and several years developing Speedata, CAI abandoned the project in April 1970 when it could not secure an additional $5 million needed to complete it. Subsequently, CEO John A. DeVries resigned and Joseph A. Delario, one of the company’s founders, returned as his successor.

Although other firms faced difficulties during this timeframe, CAI’s downfall occurred particularly swiftly. The company filed for bankruptcy reorganization in October 1970; by then its stock price had fallen dramatically from a peak of 47 down to just 3. The reorganization request was rejected, and with liabilities nearly twice its assets plus creditor seizures of bank accounts, CAI entered receivership for liquidation.

Despite its early significance within the industry, Computer Applications, Inc.'s legacy has largely faded over time, as observed by computer historian Martin Campbell-Kelly.