On its face, it seems like a good idea: devise a system that consolidates different spellings
of names to facilitate ease of searching.
Here is the National Archives' take on it: Soundex System | National Archives
Did you know the system was patented?
Here is a circa 1954 brochure from Remington-Rand, touting its Soundex system:
The Immigration and Naturalization Service used the Soundex;
here is its catalog (also from the brochure)
from RG 64, P 169, file "Policy - Referral of Letters to INS, 1954" (in NAID 23812735)
So how do you like using the Soundex?