Contact: David Irons / 510 642 2734 / [email protected]
Year 2000 Problem May Swamp Unprepared Computers -- and Companies
When the clock strikes midnight on December 31, 1999, business computer systems all over the world are poised to turn into pumpkins. The Year 2000 Problem (or Y2K), as it has been dubbed, is conservatively estimated to cost business and government $600 billion. Failure to solve it will put an estimated 1-5 percent of organizations out of business. And yet only 35 percent of businesses have begun to address the implications for their organizations.
The Fisher Center for Information Technology and Management did its part to increase awareness of the problem by hosting an executive seminar on the topic. Keynote presenter, Peter deJager, president of deJager & Company, urged immediate action to an audience of senior information technology (IT) executives from companies including Bank of America, The Gap, Charles Schwab, Visa, Interim Technology, Unisys Corporation, and Pacific Bell.
The Year 2000 Problem is easy to understand but difficult to fix. When computer systems were being designed in the late '60s and early '70s, the practice of storing dates using just the last two numbers of the year took up 25 percent less space and saved companies billions of dollars. No one expected those systems to still be in operation at the end of the millennium. But now that the turn of the century is upon us and many old systems are still in place, companies face the prospect of spending millions to upgrade them to handle dates beyond 1999. Unless these systems are fixed or replaced many of them will either stop working altogether or, even worse, start giving erroneous results.
The number and types of applications affected defy the imagination: Billing systems, pension plans, warranties, computer key card systems are only a few of the examples. Organizations that find a way to solve their own problems still have to worry about their vendors and suppliers whose operations will be at risk if those businesses aren't on the ball with end-of-the-century solutions of their own.
Yet many CEOs and other senior managers are still unaware of the enormity of the situation. Those who know of it consider it a problem for their systems departments rather than their board rooms. It wasn't until June 1996 that The Wall Street Journal featured a story on the issue.
Few IT executives are still in the dark, but, as James Ware, executive director of the Fisher Center put it, "How do you tell your boss that the company has to spend millions of dollars to correct what at first appears to be an error made by your department?"
Turning the problem into an advantage was what the seminar, titled "Finding the Gold in the Year 2000," was all about. Representatives from companies such as Visa International, NatWest Bank, and Clorox Corporation that have already defined their solutions and embarked on implementation programs demonstrated how Year 2000 projects could be successfully "sold" to upper management. They took the assembled executives through step-by-step project management plans that can turn the situation into a unique opportunity to improve their organizations' management of technology.
But the speakers emphasized that the road toward industry-wide solutions to the Year 2000 Problem isn't going to be an easy one. Specialized software programs have been written to locate problems but, with few exceptions, programmers have to debug systems one by one. And for an industry that has an 86 percent failure rate for delivering on schedule, completing the projects by the time their data-entry staff have to punch in the first date that falls in the next century is a serious challenge.
As deJagar warned, "We have multi-million-dollar companies resting on a foundation of salt, and a tidal wave is coming. And the tidal wave will arrive on time."
To demonstrate the possible repercussions of not succeeding, deJagar reminded executives of the 10 hours in 1990 that AT&T's systems were down. The monetary cost was estimated at $20-50 million and the cost to humanity - to individuals, for instance, who dialed 911 and got no response - was inestimable.
Responding to a question about the possible effects on the economy, deJagar pointed out that the current prediction that up to 5 percent of companies will go out of business is a conservative one. Less conservative predictions are closer to 10 percent. "The economy," he asserted, "might be able to survive a 5 percent failure rate of all our businesses, but how many other people do you take out when you go down? We all have to win."
Most companies won't be able to correct all their programs in the time remaining. Difficult decisions will have to be made about which systems are the most vital to the business. Those decisions rest with CEOs and upper management. DeJagar urged the assembled CIOs to communicate the extent of the problem to their bosses immediately.
"You may say, 'I didn't sign up to be a missionary,'" he said. "True, you didn't. But you've been called."
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