Optical analog computing based on a Fourier transform and a holography is considered as a candidate for the first practical optical computer. Since a basic physical phenomenon of a Fourier transform and a holography is a diffraction of light, we have developed the parallel aligned nematic liquid crystal spatical light modulator (PAL-SLM) with high diffraction efficiency for optical analog computing. Also systems utilizing a joint transform correlation (JTC), for example, a fingerprint identification and a displacement measurement, have been developed by using the PAL-SLM as a key device. These continuing efforts in device and system development will bring the current technology one step closer to realizing a practical optical computer.