IRIS' last month of operation was as bizarre as any satirist could desire. What had begun as a search for the golden grail, then changed into a saga where periods of hope alternated with moments of despair, finally degenerated into pure soap.

In those last days, I found myself almost running to work, not only to find out what new turn of fortune had occurred overnight but also to learn what my own role might be in the day ahead. We were all taking part in a living soap opera, and although it was often hair-raising and sometimes traumatic, it was, like all good soaps, obsessive.

International Reporting Information Systems, the $15 million computer-based worldwide information system that promised to provide the world's top businessmen and government officials with high-grade political and economic analysis, had still not signed a single client. Most of the $7 million the investors had committed to the project six months earlier had gone or had not been paid in.

There is an assumption by non-businessmen that new business ventures, particularly one as ambitious as IRIS, are meticulously planned before anyone throws a dime into the hat. IRIS was the living proof that this is not always the case. Indeed, the story of IRIS could make a good business school manual of how not to go about it.

IRIS' original financial backers, a predominantly European group, had met in Washington last Dec. 6 to consider the options of their faltering enterprise.

Gustaf Douglas, the Swedish chairman of the board, told me later that he urged his colleagues to close the company. Symptomatic of the confusion that often seemed to surround the board's deliberations, however, was the report of other investors and witnesses at the meeting that he did no such thing. Paul Boeker, who ran IRIS' analysis and information operation, said Douglas was actually talking of new financing, suggested cuts in salaries and offered to sell a painting worth $100,000 to boost IRIS' flagging finances.

Boeker suggested he keep the painting--Douglas is an art lover and collector--and ante up the $500,000 he had pledged to the project but never paid because he said that the Bank of Sweden would not allow him to send his money out.

Chief executive officer Barry Kelly, Boeker, computer manager Lee Feldman and financial director John Nugent, IRIS's senior management, were not in all the sessions of the December meeting but Paul Bunge, the firm's general counsel, was present throughout.

"The investors wanted to know their liabilities," he said, "if they filed for bankruptcy. I told them they were protected by the limited liability laws of the U.S."

The liabilities of the U.S.-registered IRIS company were in the region of $2 million, including about $800,000 due in employes' severance pay, according to bankruptcy papers filed in Alexandria in February. But the predominantly European investors had no liability for these debts.

As the meeting broke for lunch, Bunge was convinced it was all over.

In the afternoon, however, the apparent resolution of the morning's discussions melted away. Sven Brise, the representative of Skandia, Sweden's largest insurance company, said he would put up $500,000 to pay salaries and facilitate an orderly closedown. But nothing was agreed upon.

"The board had a constitutional inability to make decisions," said Bunge who had been the official rapporteur at many previous meetings. "No one wanted to be the bad guy, the guy who closed IRIS down."

The management was called back in late in the afternoon and it was decided to make a last-minute effort to draw in new investment. "But it was pretty clear," Bunge concluded, "that the investors knew IRIS was doomed."

Three weeks after that meeting, Douglas sent a telex to all the other investors proposing an immediate shutdown. Some agreed, others stalled, and a few--notably Fred Olsen, the Norwegian shipping magnate, the Henry Ansbacher Bank group and the London insurance company Seascope--angrily rejected the idea.

Back in Crystal City, we were working for the mid-January meeting of the International Advisory Council, IRIS' quality control panel of former statesmen and officials. We caught the drift, if not all the substance, of what was going on by reading the investors' telex messages which, through a typically IRIS twist of fate, popped up almost daily on our newsroom machines.

What none of us really knew, even at this late stage, was if anybody wanted to buy the stuff we were producing or, if they did, how much they would be prepared to pay for it. The feedback from the marketplace was sparse, fragmentary, confusing: rather like the rumors of a distant war, and not always reassuring. Johnson & Johnson, the marketing people said, wanted us to track any published reference or legislation on ethylene oxide, a chemical used for sterilization, in western Europe. The Jordanian government was interested, we were told, in the proceedings of the Israeli Knesset.

We were already aware of the lack of clients and of problems such as overdue bills to Burroughs Corp. for the computer and of the fading prospects of new investors.

In our own operation, the editor of the Latin American region, due to go to New York for a conference for which IRIS had paid a large fee, had his airline ticket snatched away by one of the accountants as he was about to leave the office. Clearly, all was not well, but new staff was still being recruited and the Latin American director was sent off to staff his region with correspondents and open regional offices in Miami, Sao Paulo and Mexico City.

Not long after, the axe fell. On Monday, Jan. 3, 159 people came to work as usual. By noon, 65 of them had gone. "Let go" is the euphemism; "fired" was the reality. Barry Kelly, IRIS' president, called a dozen senior staff into the boardroom at 9:30 that morning and explained that some of the investors had not paid their dues and IRIS's operating budget had to be slashed from over $1 million a month to $600,000. By laying off almost 40 percent of the staff now, he said, he could give them two weeks' severance pay.

The meeting broke up and the firing began, Boeker and Kelly going from office to office to perform the grim task.

If IRIS had been limping before that Monday morning, it was now a stretcher case. The computer operation lost 40 percent of its staff. Lee Feldman, who ran it, said he had been told about the layoffs the previous Thursday as he was about to fly to Jordan on a marketing trip. He said it would put back the completion of the system from April to the fall of 1983.

A number of analysts, marketing people and administration staff also went. The Africa region remained unscathed but only because we all had severance clauses in our contracts. The Latin American bureau was completely wiped out. I managed to track down Latin American director Juan de Onis, a former New York Times reporter, in Peru, and told him the news. He jumped on a plane back to Washington. The management, it appeared, had forgotten to tell him. Lee Stiehl, the vice president for marketing and the bearer of the bad news about IRIS needing another $20 million over at least two years before it would break even, was the most senior casualty. His secretary, who had started work that morning at 9, left for good two hours later.

The managment's flagging energies in the aftermath of the firings were absorbed in trying to clinch a major contract with the Jordanian government and putting on a good show for the IAC and investors in the London meetings, still on schedule for mid-January. The Jordanian contract never appeared, though it was close, and Feldman said later that he got a letter of intent from the Jordanians just as IRIS was going under.

The London meetings in mid-January left conflicting impressions with different audiences. Edward Heath (a former British prime minister), Robert S. McNamara (a former U.S. defense secretary), Rodrigo Botero (an ex-finance minister of Colombia) and the Washington management said later they shared the conviction that there was still hope. Draft minutes of the joint meeting between the IAC and some of the investors reveal that McNamara at one point made a forceful interjection, saying that IRIS was the "softest business" he had ever been associated with. To have budget plans to spend $17.5 million for 1983 and two weeks into the year change that figure to $7.5 million was "traumatic, unbelievable," he said. The function of the corporate board, he added, made him very "uneasy." Charles Williams, the Ansbacher Bank group chairman, stressed that "closure was not being considered" but, if it ever were, it would be "approached with sense and decency prevailing."

That was on Jan. 13. The next day, the investors met alone. Nearly everyone was present, including Anthony Stout, the founder of IRIS who had been ousted from day-to-day control nine months earlier and who was attending his first board meeting since he had started his lawsuit against IRIS in September. Douglas, the chairman, was the one absentee. Since dispatching his dramatic telex, he had washed his hands of the whole business.

The IRIS management was shut out of the meeting, and spent the whole day sitting around in the Ansbacher bank offices. This was a dramatic reversal of fortunes from the managers' moment of triumph in March 1982 when they had overthrown Stout who now sat inside with the rest of the IRIS board. During the meeting Stout made his peace with his fellow investors by agreeing to withdraw the lawsuit he had filed against IRIS.

The meeting, it transpired, finally came to a very different conclusion from the one Heath and McNamara had attended the day before.

Christian Norgren, the representative of The Bank in Liechtenstein, summed it up.

"It was one of the first constructive meetings we had ever had," he said. "Everyone agreed on what was to be done."

Where did the promise of IRIS go wrong and what implications can be drawn from the story?

First, it should be said that while there were few heroes in the story, there were no real villians either. As individuals, the characters were, on the whole, decent human beings. I always found those with whom I had closest dealings with--Stout, Kelly, Boeker, John Kulp (one of the four original deputies who served under Stout and then, with the other three, ousted him) and Feldman--to be friendly and pleasant people. One of the best things about the enterprise was that it brought together a fascinating range of talented individuals.

But if ever there was a case of the blind leading the blind in search of a pot of gold at the end of an electronic rainbow, IRIS was it. And some staff members felt the investors and management were guilty of greed and pride, and of not knowing when to stop.

The main actors accused each other of wrecking the enterprise, yet they shared a common delusion. In attempting to cross a new communications frontier, they crossed the threshold of their proven areas of expertise and tried to do something, on a grand scale, that had never done before.

Stout, talented promoter, thought he could run a multimillion dollar business. The bankers and insurance men, who started as passive investors, knowing little about the information game and virtually nothing about electronic publishing, were reluctant to part with their creation even though they hated the active role they were forced to play. The managers, high fliers in their government incarnation, were under the illusion that their skills were transferrable.

And then inertia set it in and Micawberism, the notion that something good was bound to turn up, flourished. Stout couldn't--wouldn't--let go of something he had created, even though he found himself in the position of suing his own company. The investors couldn't make decisions--on new investors, on changing the management, even on closing it down. Kelly, Boeker and Feldman, likewise, went on far too long, assuming--or just hoping--the well would never run dry.

"IRIS fell apart at the end," said Feldman. "The management just wasn't up to holding it together. Barry Kelly is a decent person but he got in over his head, though I'm as much to blame as he and Paul were."

The investors blamed the management who, in turn, accused the investors of reneging on their funding commitments, neglecting their own interests and feuding among themselves. There is some truth in all these charges. Lee Stiehl, the short-lived marketing director at IRIS but someone who did have a long track record of handling new products in the high tech field, summed it up.

"Both were at fault," he said. "The investors were absentee landlords and this was compounded by a management team that had no business skills. It was a guaranteed formula for failure."

There are still, however, major questions marks over two aspects of the operation. First, why wasn't there a proper business plan drawn up and firm budgetary controls established?

The IRIS concept, though comprehensible and exciting as a whole, was difficult to break down and conceptualize in market terms. Toward the end, when there were some professional marketing people working in Crystal City, the message from corporations seemed to be that monitoring their interests closely on a daily basis had some appeal. Governments seemed to be interested in installing computer centers, as well as taking much of the IRIS service.

On financial controls, the divorce between IRIS and Stout's Government Research Corp. left a messy interregnum when there was no financial manager present. The flow of cash from the investors was often irregular, but having spent about $7 million thereafter, no one can accuse them of not putting their money where their mouth was

What the managers did not seem to realize, with their government background, was that the investors were essentially hard-headed money men. At the last fateful meeting in London, one of the investors, feeling sorry for the IRIS executives who had been shut out all day long, came over to them and said:

"You have to understand that we are puting a lot more into the project than ourselves. We are putting our money in."

The management was perhaps naive in believing the investors would continue to fund the operation. Douglas, whose own behavior was criticized by the other investors and management--for his telex recommending closure, for not spending enough time with IRIS in Washington and for failing to fulfill his investment pledge--had this to say about their attitude:

"Ah, but you see, they have lived all their lives in the world of appropriations, not earnings."

The other major question is Feldman's computer operation. Was it the magic he claimed, or was it fantasy?

Someone who has worked in the computer field for 25 years, including a spell with government contractors, and had a close look at IRIS's computer operation, commented:.

"It was a good idea and the scale was new for the private sector. Some software on the lines of Feldman's ideas has been written, but he would be unique if he actually produced software based on his syntactical algorithms. However, when I went down to the computer center in Fullerton in the fall of 1982 there was nothing to see, nothing was working." (Syntactical algorithms are the brain of the software enabling the computer to sort and make critical distinctions.)

"Lee could talk it well," continued the computer expert, "but he didn't have any experience in setting up large systems and I thought he had chosen the wrong hardware because Burroughs is not the most compatible hardware around."

Feldman and his algorithms, in his head or his briefcase, are now up a mountain in California. Burroughs drove up with a truck, the day after Kelly announced the collapse, and took the computer away. We shall never know if the system could have worked. Boeker is back in the State Department and Kelly, who had taken early retirement from the CIA to join IRIS, is the only one of the major players who said that, now it was over, he would rather not talk about it.

Stout said he lost over half a million dollars and no end of his time. But he, one senses, has elastic reflexes and is a survivor. The National Journal, under John Sullivan, and GRC, run by Stephen Caulfield, distanced themselves as much as they could from the IRIS adventure and neither seems to have suffered from the debacle.

The investors lost their money but not their shirts. For the big companies --Skandia and Olsen--their losses of $3 million each mean little. Ansbacher and Seascope, who took such a leading role in many phases, were hurt. Their stock dropped roughly 25 percent in the month following IRIS's collapse. The prince of Liechtenstein as head of The Bank in Liechtenstein was not wounded but neither was he amused. A London businessman, who observed the saga closely, put it this way:

"For most of the investors, it was punting betting money. They put a certain amount aside and went to the races. But what they didn't expect to do was to have to ride the bloody horse halfway through the race."

Will IRIS work one day?

Most people I talked to continue to have faith in the idea. "It will happen," said a businessman in New York. "It's just a question of time. But it will have to be built from the bottom up. IRIS went about it in totally the wrong way by starting with that huge infrastructure and then trying to sell its products at far too high a price."

Robert McNamara, who was embarrassed by the manner of the collapse and who called the investors' inclination to walk away from IRIS' debts through bankruptcy "absolutely disgraceful," has not lost faith either.

"It's a laudable objective," he said. "We need more information. The average American industrialist doesn't know enough about the world."

Some of IRIS's closest competitors seemed worried enough to suggest that, for all its faults, IRIS was on the right track. Business International, for example, became quite apprehensive at the thought of its own successful formula--worldwide reporting combined with customized services for corporations--being adapted and improved with the help of computer technology.

Even an organization as globally powerful as Reuters, which sold some of its services to IRIS, seemed at the Alexandria bankruptcy hearings to take an interest in knowing that IRIS was well and truly dead. The consultancy business, Washington's most lively growth industry, was particularly relieved at IRIS's demise. One political consultant admitted that his fraternity had been watching IRIS closely.

"If it had worked," he said, "it would have wiped us out."

On Jan. 28, at ll:15 a.m. Kelly summoned us all to IRIS' boardroom overlooking the Potomac and Washington. You did not have to be a prophet to know what he was going to say. Only a week earlier, Viron Vaky, a State Department veteran, had joined IRIS as Latin America director. After a welcoming address by Boeker, the newcomer laughed wryly.

"Thank you," he said. "I feel as if I've just booked a passage on the Titanic."