-
Management Information Systems
in the
School of Business Administration
at
UM - St. Louis
The Y2K Problem Have you addressed the Year 2000 Problem yet?
Check out our campus Y2K page for more information.
Other Resources
in the School of Business Administration at UM - St. Louis |
|
Other Resources
Related Issue: The Euro Conversion
For more information, go to the site, http://www.simnet.org/public/mktplace/wrkgrps.html, or view the SIM Year 2000 Working Group page.
SOME MAJOR FIRMS WARN COMPUTERS AREN'T Y2K-READY: Close to one in 10 large multinational companies will not achieve Y2K compliance by January 1, according to a survey by CIO Communications. The group reports that 33 percent of the firms participating in the survey answered that they were behind schedule, while another 8 percent said they would not finish their Y2K preparations by the turn of the millennium. Many top global corporations reported that although they had finished Y2K compliance efforts on their own systems, they anticipated problems due to disruptions from foreign suppliers, particularly in developing nations. The report found that while multinational corporations can exert influence on domestic trading partners, overseas partners, particularly government-owned telecommunications and electrical utilities in large countries, are largely immune to threats by the corporations. (Wall Street Journal 07/26/99)
MOST Y2K FIXES WILL ONLY LAST A GENERATION: The fix used to patch 80% of the worlds' computers to avert a Y2K crisis is actually only a short-term remedy called "windowing." Rather than using a permanent fix called "expansion," which requires transforming all two-digit year-dates found in software into four-digit year-dates, the "windowing" patch is a trick that forces software to "guess" whether dates fall in the 1900s or the 2000s; typically, lower numbers (perhaps up to 30) will belong to the new century, whereas higher numbers (such as 87) will belong to the old century. Although many experts say this is the only practical way to solve the problem, others are warning that the "windowing" approach is just pushing the problem under the rug for awhile. Keith Rhodes of the General Accounting Office says, "It's like the Fram oil filter guy: You can pay me now or you can pay me later. It's not solving your problem. It's delaying the inevitable." (San Jose Mercury News 15 Mar 99)
Y2K PROGNOSTICATORS CHEERING UP: A growing number of Y2K experts are beginning to cheer up a bit about the prospects for millennium doom, and now predict things won't be so bad after all come Jan. 1, 2000. Edward Yardeni, chief economist for Deutsche Bank Securities, has revised his estimate for the chance of a long global recession triggered by the glitch, from a 70% chance to 45%. "I've toned down the message partly because progress has been made. I would be happy to back off entirely." And some of the problems previously cited as particularly vexing -- for instance, embedded microprocessors in power plants and hospitals that would be difficult to repair -- seem to have been overstated. Giga Information Group recently released a report titled "It May Rain, but the Sky Won't Fall," that said the problems with embedded microprocessors "will not have the crippling effect originally thought." "There won't be a systemic shutdown," says a senior advisor for Giga who estimates only about 3% of the chips have been found to have minor problems. "You will have some localized inconveniences with some localized failures." (Los Angeles Times 12 Mar 99)
10K DOW PROBLEM "A NON-EVENT": The Dow Jones average of industrial stocks is expected soon to reach 10,000 for the first time, but not many people are worried that Wall Street's computers will have much trouble dealing with the change from a four-digit to a five-digit number. Economist Edward Yardeni (see above story) says, "It would be a non-event. It might just be kind of like a joke to see the Dow is at zero rather than 10,000." (USA Today 13 Mar 99)
JAPAN LAGGING ON Y2K COMPLIANCE? Western banks are eyeing their Japanese counterparts warily in the wake of U.S. Senate committee report released yesterday that ranked Japan's level of Y2K preparedness at the third of four levels -- on a par with India, Kenya, Venezuela and Turkey. The U.S., Britain, Australia and Canada were ranked in the first tier, or most prepared. Meanwhile, Japan's Ministry for International Trade insists that most large industrial and financial companies are now Y2K-compliant, and says it is now testing most trading and settlement systems. The Financial Supervisory Agency, Japan's banking watchdog organization, has warned that it will suspend operations at financial institutions that are inadequately prepared for the new millennium, but the American Chamber of Commerce in Japan warns that the real problems may lie with financial institutions' closely related subsidiaries and clients. There is also considerable concern about the situation in non-financial sectors such as the utilities. "People are going to have to start cutting credit lines and reconsidering who they do business with," says the head of the Chamber's financial committee. (Financial Times 3 Mar 99)
DOW 10K PROBLEM LOOMS LARGE: While companies are spending millions to solve their Y2K problems, another potential computer glitch is creeping ever closer -- the Dow 10,000 problem. As the Dow Jones industrial average nears 10,000 (it closed Wednesday at 9366.81), some analysts are predicting waves of computer-directed "stop-loss" selling as some older financial software is tricked into thinking the Dow has crashed to 1000. Most of the larger financial firms have fixed their software, but some smaller firms and brokerages probably haven't made all the necessary adjustments, says a Gartner Group analyst, who says the worst-case scenario would be a mistake in the index cascading through an Internet-based or automatic trading system, thus interfering with things like stock index futures. (Investor's Business Daily 4 Feb 99)
BUSINESSES PUSH FOR LIMITED Y2K LIABILITY: A group of 80 large corporations and trade associations is pushing legislation that would limit a company's liability for Y2K calamities. The proposal, among other things, would set a cap on punitive damages, prohibit plaintiffs from collecting damages for failures they knew were likely to occur, limit lawyers' fees to $1,000 an hour, and encourage plaintiffs and defendants to use mediation or arbitration to resolve disputes. "This creates a rational framework for resolution of whatever conflicts come up and ensures that this doesn't become a legal lottery," says the executive director of the U.S. Chamber of Commerce. The proposal is strongly opposed by the Association of Trial Lawyers of America: "It's the same old routine. Business causes a problem of this sort, and the first thing they do is rush to take away the power of American citizens to do anything about it," says ATLA's president. (Wall Street Journal 3 Feb 99)
RUSSIA'S Y2K FIX: The Russian government plans to spend about $500 million to prepare its aging computers for the year 2000 date conversion, $12 million of which will be contributed by the U.S. through the World Bank. Complicating Russia's problems are the fact that it has relied much more heavily on PCs and midrange computers rather than larger mainframes. Also, many of its PC-based applications are written in nontraditional programming languages. To solve this last problem, a group of computer scientists at the University of St. Petersburg has been working for seven years to develop the technology to convert Russian systems into more universally used computer languages such as C++ and Java, assisted by North Carolina-based RelativityTechnologies. (TechWeb 15 Jan 99)
CHINA'S Y2K FIX: China has given its airline CEOs an ultimatum for fixing the Y2K problem: "All the heads of the airlines have got to be in the air on Jan. 1, 2000," says Zhao Bo, who's in charge of dealing with Y2K issues at the Chinese Ministry of Information Industries. "We have to make sure there are no problems in aviation." Zhao's ministry has a particularly vexing dilemma: because 90% of the software used in China is pirated, technicians cannot consult the manufacturers on how to fix the bug. Accordingly, the Ministry of Information Industries has trained more than 5,000 freelance fixers who will fan out across the country to work on computer systems, and the government has published a list of emergency procedures for computer users. (St. Petersburg Times 15 Jan 99)
U.S.'s Y2K FIX: U.S. state governments are working overtime to indemnify themselves against lawsuits arising from computer system failures engendered by the Y2K problem. Nevada, Florida, Georgia and Virginia already have enacted
Y2K PROGRESS IS A GLASS ONE-QUARTER EMPTY: Well-known computer consultant Ed Yourdon (author of the book "Time Bomb 2000") worries that recent news that the Social Security Administration is now Y2K-compliant may give people a false sense of security. "It's good news, but certainly expected given that Social Security was out front all along. The danger is that people might generalize that things are going to be OK. Most of us in the computer field think that 75% of the government agencies and businesses will make it," so the issue becomes "a question of whether you look at the glass as half-full or half-empty. What's the effect of the 25% that's not done?" (USA Today 29 Dec 98)
EARLY SIGNS OF Y2K BUG (PART I: PAYROLL COMPUTATION): Several recent mishaps have sent the message: "Take the Y2K problem seriously." Using outdated software, the West Virginia company Lynn Electric couldn't close its 1998 payroll because all documents converted to 1944, which is the date arbitrarily chosen by a number of PC programmers to use as state date for operating system clocks. (AP 31 Dec 98)
EARLY SIGNS OF Y2K BUG (PART II: MEDICAL DEVICES): And the Food and Drug Administration (FDA) has reported that two medical devices -- an external defibrillator and a multiparameter patient monitor -- will fail to display, print or store the correct time of the products' operation (thereby creating incorrect records but not endangering patient health). An FDA administrator says, "It is a harbinger of things to come. We already have received inquiries from a number of sources about rumors on the Web that this product or that is going to fail in a certain way." When there are issues related to health outcomes, we try to track them down." Joel Ackerman of the Rx2000 Solutions Institute in Minneapolis notes that "health care as an industry is late in dealing with the year 2000. We are expecting there will be patient injuries, but we don't know how many or how severe." (Washington Post 31 Dec 98)
BUT PUBLIC SAYS: "Y WORRY?": Despite early warning signs such as described in the two previous items, the public seems to be shrugging off the Y2K problem. A USA Today/National Science Foundation poll indicates that the number of people who expect "major problems" in 2000 because of the millennium bug is down from 48% in June to only 34% now. And 30% express confidence there will be "no problems at all" that will affect them personally. (USA Today 31 Dec 98)
IRS WANTS TO DELAY RESTRUCTURING: Four months into his term, Internal Revenue Service Commissioner Charles Rossotti says that if the agency doesn't address the Year 2000 problem immediately, "there will be 90 million people 21 months from now who won't get refunds. He wants to delay a massive restructuring of his agency until after 2000. "The whole financial system of the United States will come to a halt. It's very serious," he says. Rossotti has set a Jan. 31, 1999 deadline for fixing the Y2K glitch, a project that he estimates will cost close to $1 billion. And if it doesn't work? "There's no Plan B." (USA Today 2 Apr 98)
IRS LIKELY TO FALL SHORT OF Y2K FIX: The Internal Revenue Service says its mainframe hardware and software probably will be Year 2000-compliant, but it hasn't developed a fix for its desktop PCs yet. Of the agency's 88,000 computer programs, 13,000 have been retired, and 40,000 have been fixed, leaving 35,000 scheduled to be upgraded by January 1999. A large percentage of the agency's mainframes are being replaced as part of the effort, but that still leaves about 1,000 mid-size computers and 130,000 PCs to bring into compliance. An anonymouscongressional source says the picture is still pretty bleak, noting that IRS refund checks come from the Treasury, where "none of the mission-critical systems have been fixed yet." (TechWeb 27 Feb 98)
GOT A Y2K HEADACHE? HERE COMES THE EURO CONVERSION!: Companies that do business either with Europe are starting to realize that they've got some serious programming work on their hands, and it has nothing to do with the millennium change. With the euro set to debut in 1999, "Everyone is starting to wake up to the fact that it could be a big deal for their IT infrastructure," says the head of Price Waterhouse's New York banking practice. The euro is "creeping up on CIOs' radar screens." Industrywide, software conversion costs in Europe alone are expected to exceed $100 billion, says the Gartner Group. The estimate includes the cost of upgrading larger computer systems, but not PCs or the software that will be needed to support the euro. Meanwhile, the Meta Group says the combined crunch of the euro conversion and Y2K could extend the shortage of information technology workers until 2004. And the learning curve is steep: "If you got 100 programmers in a room, they could be briefed on year 2000 in 10 minutes," says a project manager at Chase Manhattan. "With the EMU, it takes a good three months before you get the full view of the issues." (Information Week 26 Jan 98)
2000 -- THE YEAR OF THE LAWYER:
It looks like the Year 2000 problem is going to be good for at least one
segment of society -- the legal profession. A presentation at a recent
underwriter's conference sponsored by Lloyd's of London estimated that $1
trillion or more will be at stake in Y2K litigation. "Almost every
reputable law firm has established some Year 2000 law practice," says one
attorney, and computer companies that sell systems to local governments are
among the first vulnerable targets, says another. (Investor's Business
Daily 28 Jan 98)
LAWYERS EXPECTING TO PROFIT FROM YEAR 2000 PROBLEM
New Orleans attorney Peter Butler Jr., who specializes in year 2000
computer problems (arising from the inability of old software to know which
century a two-digit date code designates), says: "If there is a problem
caused to a business, somebody is going to be responsible for that." But
Heidi Hooper, an executive at the Information Technology Association of
America, says: "Obviously, when there is a hint of anything, the lawyers
come out. Why worry about suing now instead of fixing the problem? People
need to ask the questions and find out whether they have a problem."
(Washington Post 21 Jan 98)
ESCAPING THE "YEAR 2000" PROBLEM:
Seventy-seven-year-old Bob Bemer, co-designer of the COBOL programming
language and the man responsible for developing ASCII text and the escape
sequence, thinks he knows an elegant way to deal with the "year 2000"
problem (which arises because older software programmed with two-digit year
designations will not know if "00" means 2000 or 1900). Whereas most
companies are planning a painstaking rewrite of perhaps billions of lines of
applications-level code, Bemer's idea is to work below that -- at the level
of object code. Though a number of large companies are skeptical, Bell
Atlantic is testing Bemer's proposal. (New Yorker 12 Jan 98)
BANKS FORM GROUP TO ADDRESS YEAR 2000 CONCERNS: An international group of major banking institutions, including Citicorp, Barclay's Bank, Deutsche Bank, Bank of Tokyo and Hong Kong Bank, has banded together to develop a set of guidelines for addressing the Year 2000 problem. The Global 2000 Coordinating Group's guidelines will be distributed throughout the banking industry by managers and regulators. The group plans to look at financial issues, such as cash-payment systems, securities clearance and custody systems, stocks, bond futures, commodity exchanges, foreign currency exchanges, and derivative trading. It will also attempt to gauge the readiness of industries linked to the economic infrastructure, such as utilities and transportation groups. (Information Week 9 Apr 98)
Some Things Never Change .... see this