Biggest Business Problem in History: Y2K

When we hear too much about any topic, we may begin to tune out or to beg for a respite (Can you say Monica Lewinsky, boys and girls?). This may well apply to your reaction to the chorus of doom bemoaning the Year 2000 problem. But, I'd like you to tune back in and stick with me on this one.

What is the Y2K Problem Anyway?

The year 2000 problem is easy to describe but hard to fix. In the early days of computing, computer programmers had very little room to maneuver. The first multimillion-dollar IBM mainframes and their early competitors had less memory and storage than even the least expensive PCs have today. Therefore the software that ran those mammoth monsters had to be very compact. Programmers used every possible trick to minimize the size of their programs. One space-saving technique was to substitute a two-digit number for the year: Jan. 1, 1964 was 1/1/64 instead of 1/1/1964. Who worried about the turn of the century?

As you can imagine, Jan. 1, 2000 would be represented by 1/1/00. Of course, that would also represent the first day of 1900 -- or 1800 for that matter. This seemingly minor glitch is creating a huge computing problem that will cost billions and billions of dollars to fix. Some estimates suggest that globally organizations of all sizes will spend well over $500 billion to reprogram the computers that drive their operations.

Listen to what a world-renowned computer veteran has to say. Edward Yourdon's computing credentials date to the era of room-size mainframe computers. He is an expert, not an alarmist. But the title of his 1998 book is Time Bomb 2000. And he's not kidding. His book is aimed at the general reader, not the computer specialist or the business executive. Why? Because the problem may affect all of us in every conceivable way.

Here's a sample of what concerns him:

We think that a very small percentage of Year 2000 problems could be sufficiently devastating that it could take a decade to recover ... Our primary concerns are the massive government agencies and systems that are in shaky condition already. Two that come to mind are the IRS and the Social Security Agency ... For those who have based their life's plans on the assumption that ... retirement funds would be available at a certain age, it could well take a decade to recover from such a shock.

Yourdon concludes his book with a somber assessment:

We are deeply concerned about the potential impact of Year 2000 software problems in every aspect of our lives. The more we've investigated the situation during the course of preparing this book, the more worried we have become ... In the final analysis, we believe that it's better to be terrified now and take appropriate actions ... The alternative being complacent now ... could turn out to be the equivalent of a fatal rattlesnake bite.

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A recent Collier Economic Development Council breakfast drew a large crowd of business executives who wanted to know more about the problem and its impact on their operations. "It is the single largest computer problem in history," stated Carol Conway, president of Computer Rescue Squad and co-sponsor of the event.

Aida Alvarez, director of the U.S. Small Business Administration, was quoted as saying, "Y2K is a problem that demands the attention of every computer-dependent small business in the country." In fact, virtually every business is computer-dependent --- either internally, externally or both.

Conway told a tale of Marks & Spencer's corned beef debacle, an amusing but telling example of the small problems that may cause widespread disruption. Having acquired an enormous amount of corned beef in cans, deemed edible until the year 2002 (or 02 in computer parlance), M&S entered the stock into its inventory system. Unfortunately, their inventory management system determined that the expiration date was 1902. The result was the trashing of thousands of tins of corned beef. Of course, that might be a good thing, unless you're British.

Avoid Complacency

Even if you are manufacturing buggy whips by hand, using candles for lighting and an abacus for calculating, you cannot escape the problem. Why? Because your vendors and your clients rely on computers and computer software that may fail if they are not Year 2000 compliant. Even worse, their vendors are also computer-dependent, and their vendors' vendors and on and on and on.

You may well be thinking that big companies will surely have addressed the problem. But according to a recent Gartner Group study cited in the Aug. 6 edition of the Wall Street Journal, that would be a false hope. Gartner's research among 15,000 businesses and government agencies worldwide indicates that 23 percent haven't even begun to work on the problem. Since the average fix requires 30 months of work, we will certainly be subject to very painful disruptions. "We're talking about an awful lot of failures that will occur," said Lou Marcoccio, Gartner's research director. He said the firm estimates that about 10 percent of these failures will cause a business to be interrupted for three days or more.

First Union: Ahead of the Game

Richard Alden, vice president of First Union, spoke of his bank's Y2K efforts at the EDC breakfast. He coordinates the efforts of 80 employees who are working full-time on the problem. First Union is the sixth largest bank in the U.S. as well a major player in SW Florida with 50,000 employees.

The bank is well on the way to eliminating catastrophic computing problems inside, but the massive internal undertaking must be matched by client side efforts. For example, First Union's commercial loan department is working closely with business clients to solve client-based Year 2000 problems before they occur. First Union doesn't want big loans to go bad when the clock strikes midnight 2000. And client concern is mounting. A special Y2K hotline that rarely rang in 1997 drew 550 phone calls in the month of June alone.

Fidelity Investments: An early start, but the work goes on

PC Week Online earlier this year gave an example of what one global company has been doing since 1996 to solve the problem. "We had to start from scratch and create the tools to solve the problem," reported Julita Lisowski, a system manager at the Fidelity Technology Center, the group within Fidelity responsible for the majority of the year 2000 central system conversions.

The job is estimated to require three years and has grown in scope as Lisowski's team delved into the problem. "The more you start to look at the problem, the more it grows," she said.

What should your business do?

** Get your computers and all software applications checked by professionals. If you are not fully Y2K compliant today, get compliant ASAP.

** Don't wait to get help, be