Tick, tick, tick…
The Year 2000 problem is like a nationwide tornado alert. We know its going to hit-the only question now is, will it hit you?
By William Hoffman
You don’t have to wait until Jan. 1, 2000, to see the impact of the Year 2000 problem. For some people it’s already here.
Federal authorities recently sanctioned a Georgia bank for leaving customer accounts vulnerable to damage from the epic computer glitch. Downtown Auckland, New Zealand, lost electricity for almost three weeks, reportedly after testing its power grid for Year 2000 compliance. And anywhere companies make projections past the looming deadline, noncompliant systems will fizzle and crash because of a decades-old economy written into their software.
You’ve been hibernating if you haven’t yet heard of the Year 2000 (often abbreviated as “Y2K”) problem-the software code written into many, especially older, date-sensitive programs, which assumes that all years begin with 19-, thus changing the year 2000 to the year 1900. But apparently even those who’ve heard of it have a hard time taking it seriously. “The situation has deteriorated,” says William M. Ulrich, author of The Year 2000 Software Crisis: The Continuing Challenge. “It is already too late is the bottom line, and the question is what can we do to insulate ourselves from the problems that are going to occur?”
The federal government has taken baby steps to protect America’s financial lifeblood. A reform passed in March requires federally insured lending institutions to instruct their staff to recognize Year 2000 problems among borrowers, and to train them in turn. “The legislation is forcing lenders to play the role of educator first, and then to pass that along to their clients,” notes Tim Carlsen, president of Systemic Solutions Inc., a Y2K consultant. The Securities and Exchange Commission has mandated that public companies disclose their Y2K exposure and how much they are spending to fix it. “But there’s nobody requiring small businesses to address the problem,” points out Frank Orfanello, a partner at the Boston CPA firm of Parent, McLaughlin & Nangle.
One reason business and government have dallied is the sheer size and scope of the problem. Fixing Y2K could cost upward of $1.6 trillion, Carlsen says: “There’s really no way to carve off a piece of it to identify that that’s my share of the problem.” Further, not only computers, but fax machines, automobiles, elevators, security systems, heating systems, airplanes-in short, anything containing a microprocessor-is potentially vulnerable to Y2K. Jill Austin, director of Norstar Marketing, a division of telecommunications giant Nortel, says her company has been working for years to ensure that its computerized telephony components-voicemail, call centers, interactive response, etc.-are ready. “This is something you need to talk with your people about right now,” she urges.
Even if your house is in order, it doesn’t mean your vendors’ and customers’ systems will be. The Boeing Co. last October experienced a non-Y2K supply-chain failure that cost it in excess of $2 billion, and from which it has yet to fully recover. That illustrates the ripple effect Y2K will likely have in the economy, according to Edward E. Bambauer, director of financial markets consulting for Arthur Andersen LLP. “Remember your contingency plan,” Bambauer advises, even after you think you’ve licked your Y2K problems.
Insurers are already stepping forward with Y2K policies (which still require that you try to fix the problem), and bankers are offering Y2K loans. Yet, “there will be litigation, and it will get more than its share of publicity,” predicts Barry D. Weiss, a partner at the Chicago law firm of Gordon & Glickson PC.
