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