In the game it is alluded that the Master Control Program performed the correction algorithms, although this was probably a resource that it commandeered and incorporated into itself. After the MCP's destruction in 1982, Alan Bradley spent his life re-building the algorithms. These algorithms were supposedly so complex, that Alan needed his AI research assistant program, Ma3a, to help with the development. Ma3a also served as the receptacle for the code, and the operating logic for the digitization laser.
J.D. Thorne was a corrupt security chief at ENCOM. He tried to sell the secrets of the digitization process to the villainous corporation Future Control Industries. Thorne demonstrated the laser on himself, but without access to Ma3a and the algorithms, he was mutated into a corrupted user inside the computer world. He chose to spread his virus in his own minor a bid for power, becoming a very dangerous subplot villain.
Thorne's failure meant that fCon had to perform a hostile takeover of ENCOM to acquire the digitization process. They spent a significant portion of the storyline in pursuit of Ma3a. Although fCon agents did eventually capture her and launch their invasion, the protagonist Jet Bradley was able to thwart their plan.
The final boss fight against the fCon Monster was the second example of user-digitization without the correction algorithms, merging and mutating the three fCon villains Eva Popoff, Seth Crown, and Esmond Baza.