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The Year 2000 Problem: The Good News and the Bad
>From THE FUTURIST (May 1998)
The Year 2000 Problem:
The Good News and the Bad
The Year 2000 computer glitch has proved surprisingly
troublesome.
Opportunities as well as dangers lie ahead.
By Cynthia G. Wagner
Four years ago, an author named Peter de Jager submitted to THE
FUTURIST a reprint of an article he had published in a computer magazine.
Entitled "Doomsday," the article warned of what will happen to the
world's
computers when 2000 rolls around.
We editors rejected the article because it had already been published in
another magazine and because it had already found its proper
audience_computer programmers. We also felt that the "Year 2000
Problem" was a minor technical glitch that would probably be fixed long
before the year 2000.
We were wrong: The Year 2000 Problem (or Y2K) was more serious than
we thought. Very soon, what seemed like a minor technical problem to
us_and to most other people at the time_had set off a furor and even
created a new industry for consultants and programmers.
Peter de Jager went on to co-write (with Richard Bergeon) a very useful
book called Managing 00: Surviving the Year 2000 Computing Crisis [see
box on page 19]. And as the year 2000 approaches, this book has been
joined by multitudes of books, articles, reports, and Web sites
addressing
the problem.
For our part, the editors of THE FUTURIST are doing penance by
presenting this overview of the problem and its possible consequences. We
also will summarize some ideas on how to prepare to cope with it.
The Problem and What It Will Cost to Fix
In the early days of computer programming, dates were entered as a
six-digit configuration: two digits for the month, two digits for the
day, and
two digits for the year, or MMDDYY.
Now, every date-relevant program in every computer needs to be Y2K
compliant_that is, able to recognize eight-digit dates with four-digit
years as
opposed to two. Otherwise, the computer will not understand that life
goes
forward after the year "99" rather than magically skipping back in time
to
"00."
Experts say that it's not exactly clear what problems non-compliant
computers will create over the next few years. They may make lots of
mistakes, such as paroling prisoners years early or sending Gen X'ers
pension checks many decades too soon. Humans may catch many of the
computers' mistakes, but most humans are too busy. That's why we have
computers keeping track of things and telling us what to do, like taking
expired foods and medicines off the shelf.
Most sources say it is costing businesses between 50� and $2 a line to
fix the
codes. It may not sound like much, but all told, it will add up to many
billions of dollars. Chase Manhattan Bank estimates that it will spend
$200
million to $250 million to fix its Y2K problems, and commercial banking
as
an industry may spend $9 billion or more, according to the Wall Street
Journal. The U.S. government will need to spend about $30 billion, says
the
Gartner Group, a market-research firm in Stamford, Connecticut.
Some organizations will decide to replace the millennium-unready systems
altogether, perhaps spending more at the outset but avoiding costly
problems
later. The University of Chicago Hospital System, for example, figured it
would cost $1.5 million to fix the Y2K problem on a patient-accounting
system that needed to be replaced anyhow, so it decided to buy a new
software system for $3 million to $7 million.
Bottom line: We're looking at a repair/replacement bill of up to $600
billion
worldwide by the end of 1999, according to the Gartner Group. That's more
than the gross national product of Canada.
Interconnectivity: Passing the Bug
The Year 2000 Problem affects not only computers (mainframes, minis,
and micros), but the myriad of microchips embedded in many of our
products, including airplanes, cars, microwave ovens, etc., points out
Y2K
authority John Whitehouse, president of ChangeWise, Inc., in
Jacksonville,
Florida. Furthermore, as he notes in his recent audiobook The Year 2000
Is
Coming: What Do I Do?, the year 2000 is a leap year, a circumstance that
also will have at least some consequences: Banks, for example, would fail
to
calculate one day's worth of interest (February 29), which is significant
when you are dealing with billions of dollars.
Y2K problems are sometimes deeply embedded in "legacy" programs,
which are the products of the old programming days. Some such programs
will begin automatically deleting data that is more than two years old,
warns
Whitehouse. The work you do on programs such as Excel may be at risk
unless you get upgraded software.
Even if you don't think you have a big problem with your own computers,
or if you solve your own Y2K problems, you will still have to deal with
countless other individuals, businesses, agencies, and governments who
may
not have solved the problem in their systems. Computers, businesses, and
governments are highly interconnected today: A problem anywhere has the
potential for global consequences, and there may be many, many problems
emerging as 2000 arrives.
Still, there is a potential bright side:
"For those who come to understand and accept the issues, for those who
take decisive action, this can be the opportunity of a lifetime," says
Whitehouse. "As we approach the most catastrophic event the modern
world has yet faced, proactive companies can gain a significant strategic
advantage while others fail. And knowledgeable investors can post
monumental gains while others lose."
Getting Rich from the Glitch
A disaster almost always presents profitable opportunities. The hundreds
of
billions of dollars spent on fixing the Y2K Problem will wind up in
somebody's pocket. One pocket could be yours. Expected Y2K winners
include:
Programmers and consultants. Anyone with the technical skills to
solve the problem is now in high demand. Y2K guru Peter de Jager
identifies a wide variety of consultants ready to provide services,
including planning consultants for tools assessment, testing
consultants,
contract service consultants to estimate the costs and plan and
implement the code redesign, legal consultants, and recovery
consultants.
Information providers, including publishers and Web site
developers. The Wall Street Journal, for example, recently sold
eight
pages of advertising in a special section devoted to companies
offering
"Year 2000 Solutions" (February 19, 1998). A variety of consultants
and subscription-based Y2K assistance can be found on de Jager's
Year 2000 Web site (www.year2000.com).
Investors. Wherever new businesses bloom, investors are sure to see
prospects for fast growth. Unfortunately, it's already late in the
game
to invest in Y2K companies: You'd be "buying high," and it's always
risky to chase headlines for ideas on short-term speculation. As
Wall
Street Journal writer John R. Dorfman warns about these so-called
story stocks, "That's an investment method that has often led
investors
to grief in the past."
Lawyers and litigators. Individuals and businesses stand to lose a
lot
of money and time because of the Y2K Problem; therefore, they will
want to sue anybody they consider responsible for creating the
problem. If, for example, your life insurance policy is canceled
because a computer thinks you're too old, you'll probably want to
sue
someone.
Worst-Case Scenarios: Chaos and Crashes
Pundits have warned of potential disasters IF the Year 2000 Problem is
not
fixed in time. It's not clear how seriously to take them, but these
possibilities
have been mentioned:
Food shortages may occur because stores will discard all products that
have
passed their freshness expiration dates.
Some patients may die because medicines and lifesaving devices are
unavailable. Drugs, like foods, have expiration dates and may be
discarded
upon the command of non-Y2K-compliant computers. Medical devices
such as heart defibrillators are programmed to cease functioning if the
date
for maintenance checks has passed.
Borrowers could default on loans and mortgages as computers add on a
century's worth of interest rates. Consumers may find they can't make
purchases because credit-card verification systems misinterpret
expiration
dates. Similarly, there may be a cash crisis as automatic teller machines
freeze up.
Stock markets could crash because investors fearing Y2K fiscal chaos may
take their money out of the markets_perhaps in November or December
1999_as Y2K impends. On the other hand, the crash might create a golden
opportunity for investors ready to jump into the market when others run
for
the hills.
Crime waves may occur as a general financial crisis creates economic
hardship and jailed criminals are mistakenly released. One prison has
already reportedly released criminals prematurely because parole dates
were
misinterpreted by computers.
Other problems and inconveniences could include elevators getting stuck
and airplanes being grounded, as the dates for maintenance checks appear
to
be missed and computers shut the systems down entirely. Date-sensitive
computer-controlled security systems may fail, causing factories to shut
and
bank vaults to lock up. Drivers' licenses could seem to have expired,
making
it hard for people to rent cars. Voter registration records may be
disrupted,
creating havoc for the 2000 U.S. presidential and congressional
elections.
What Should We Do?
To get started in solving your Y2K problems, John Whitehouse of
ChangeWise recommends building a "systems inventory." Analyze your
computer dependency_what do you use to get through the day, what
outside systems do you depend on? What alternative sources of goods and
services are there?
Similar procedures need to be done at home and at work; specifically,
Whitehouse suggests:
Individuals and family heads should check out personal items that contain
computer chips. Examples include heating and air conditioning systems,
home-security systems, telephone-answering machines, TVs, VCRs, cell
phones, cars. And of course, your home PC: The operating system itself
may not work.
Now test the devices. Enter 2000 in your VCR, or change the system date
on your PC (after backing up the data). Send letters to manufacturers to
see
if their systems are Y2K compliant. Record on inventories where you still
have risks, and develop a course of action, such as identifying
alternative
providers.
You should also check software such as Access 95, Excel, personal
schedulers, financial programs like Quicken or Money, communications
software, etc. And remember that you could experience problems with
outside services you use: the phone company, utilities, supermarkets,
banks,
gas stations, airports.
"Forget flying to see Grandma on January 1, 2000," warns Whitehouse.
"Two major airlines have already said they won't be flying." And the
Federal Aviation Administration has admitted it will be late in meeting
Y2K
compliance.
If you are an investor, your money is in places you can't control, so you
should inventory all your assets (equity, debt, and fixed tangible).
Check
with the companies to find out their Y2K status and record the results.
Perhaps less than half of U.S. companies have begun addressing the
problem, and movement is lagging even farther in other countries,
particularly Third World companies.
One worry is that there may be runs on banks when people fear the Y2K
impacts. Whitehouse goes so far as to suggest that investors begin
hedging
with fixed tangible assets: "Buy some gold and silver." Businesses should
set
up an organizational task force to address the issue, including managers
from each area of the enterprise. "Problem ownership" should lie with the
chief financial officer because of the many financial and legal
implications.
The task force should consider questions like cost, impacts on daily
activities, competitors' actions, opportunities, effects on stock prices,
etc.
The CFO might ask how the company will be affected, where the money
will come from to fix it, how cash flow will be impacted, and how
customers will be impacted. Sales managers might ask what new products
can be offered. Human-resources directors might ask whether new skills
will
be needed and whether the firm's best people will leave. The U.S.
government, for example, is already concerned about a "brain drain" of
technology experts leaving the Internal Revenue Service and the Pentagon.
Each division must then do a systems inventory, find alternatives to
systems
and programs that are not compliant, test those alternatives, and affirm
that
all trading partners are compliant. "This will enable you to succeed
where
your competitors will fail," reassures Whitehouse. De Jager and Bergeon,
authors of Managing 00, emphasize the need to test applications for their
ability to handle the year 2000, but recognize that time is running short
and
that workloads for the reprogrammers are already overwhelming. They
recommend giving priority to the applications that are most required for
your survival, followed by those that give you a competitive edge.
"Only you can determine whether you will allow yourself to be 'forced'
not
to test," write de Jager and Bergeon. "Forgoing testing is never
acceptable,
but in the real world, it happens."
Learning from Y2K
The lesson of the Year 2000 Problem is obvious: Most of the problems we
face in the present are the result of someone (or everyone) in the past
failing
to think about the future. Y2K is a problem basically because mainframe
computer programmers paid little attention to the long-term future. While
saving money by using two-digit codes to enter years instead of four
(computer memory was expensive in those days), either they never thought
their programs would still be in use by the year 2000 or they never
realized
that computers, unlike fuzzy-thinking humans, would literally interpret
years
as having only two digits.
We can smugly congratulate ourselves for being smarter than our
technologies, but meanwhile, technology is biting us back.
About the Author
Cynthia G. Wagner is managing editor of THE FUTURIST.
� 1998 World Future Society
<http://www.wfs.org/y2kwag.htm>