The Year 2000

.. r line currently. Some expects it to at least double over the next few months. Experts say, there is still hope for late starters. If they act quickly.

Late starters still benefit from others’ denial of the problems(6). Outsourcing still remains a option for some. Some large and many small consulting firms are still seeking new businesses. Off-shore providers can also provide some relief. More companies are also getting back to their retirees for help.

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The retirees may have not only the necessary experience, but they also may know the system better than the outsiders. What’s in the Future? Companies that have their project 2000 well under control as well those who are starting out — both needs some future planning. If nothing else, they should review the legal issues involving their business and have a well drawn contingency plan in place. Buying a liability insurance, just as other business insurance, may not be an option – – companies cannot insure out of this one. While some insurance coverage is available, the cost of coverage and loopholes in policies make it prohibitive. Companies spending money on insurance will never get return on their investment. Policies are likely to provide false security and companies are better of putting their money and effort to solving problems at hand (15).

Legal issues Legal issues arising from year 2000 problem alone can put many organizations out of business. By the turn of the century, business managers and IT vendors will be seeing lot of year 2000 related lawsuits. Many has wrongfully believed the problem to be a primarily a technical issue. But lot of companies will fail to conduct business even before the deadline hits home. Produce Place International Inc. of Warren, Michigan recently had its newly installed Unix Point-of-Sales system come to crashing halt when a customer tried to use a credit card with 00 expiration date.

All the register froze. Though the business could accept cash or checks, lots of people walked out in frustration due to backed up line at the registers. After many support calls to the vendor, the store has sued the manufacturer of all American Cash Register Inc. for breach of warranty and breach of duty of good faith, etc.(8). Vendors are not going to face the lawsuits alone – – IT managers who fail to meet the Y2K compliance and would cause contamination in customers’ and partners’ systems may also find themselves defending in court of law.

Some experts asks IT managers to take it as a legal issue as well and to document their Y2K repair efforts. There are other lawsuits pending in the Superior Court of the State of California. It is likely that all these early cases will be settled out of court to avoid public attention. Some companies are taking actions now. The big three auto manufacturers has joined together to write to the suppliers to fix the problem or face litigation in future (8).

The vendors are likely to use the theory that the risk was unforeseeable or there was a disclaimer of warranty explicit or implied in the transaction. Another issue would be of the statute of limitations. Generally warranties does not last as long as acceptance and delivery of the goods. Many are discussing of alternatives to all possible litigation and product liabilities. But, prudent business managers should not count on it to defend themselves(11). Many experts say that disclosure is the best defense against Y2K litigation – the board of directors and shareholders need to know. SEC advised companies to disclose internal Y2K issues, relationships with customers and suppliers, a timetable for carrying out the plans, and a total dollar amount the customer estimates will be spent on Y2K issues.(8) Some government agencies are trying to pass laws that may protect them.

However, that is not a choice for companies. In California, a bill has been proposed that, if passed, will limit awards for year 2000 lawsuits to ‘reasonably incurred costs regarding relevant computers and software’ and may weaken businesses’ ability to recover actual damages (9). A case for contingency planning When an information system group at the state of Washington performed a routine test of its disaster recovery plan two years ago, it also decided to take a look at its year 2000 problem. But when they set the mainframe’s system date forward to 2000, it caused the entire test to crash. The computer informed that testers’ passwords has expired (4). The moral of the story is that the companies not only need contingency plans, it also needs to test those plans thoroughly.

But it remains an idea that many companies do not adopt. Preparing for the Year 2000, contingency planning is not only a good idea, but one that should not be ignored. Study shows that companies that need contingency plans are least likely to have them. Washington’s Department Social and health Services is field testing a commercial accounts payable package that can be turned on quickly if needed. One would suppose that it is their solutions to Year 2000 problem.

In the contrary, the department is far along in remediation of their 12 year old mission critical system. The Prudential Insurance Company of America has a broad contingency plan that covers application software, internal infrastructure, and external partners. Each of these area has a plan for not meeting January 1 deadline, if it fails after January 1, and if a problem is not discovered until later. Similarly, Geico Corp. of Maryland plans to include manual backups for some mission critical automated processes by keeping paper copies of data that would allow cross-checking of data if disputes arises from online transactions (4).

Not only companies need Year 2000 contingency plans, but also needs to test those plans. Even if remediation programs are going well, companies should have contingency plans. No matter how much care is taken, some systems will break unexpectedly, as Murphy’s law predicts. Take BankBoston for example. It operates in 24 countries and exchanges information electronically with about 500 institutions.

There is always the potential that its own system would be corrupted if these partners have not prepared adequately. Furthermore, BankBoston lends money to other businesses that must also be Year 2000 complaint. One cannot assume suppliers and partners won’t have Year 2000 problems that will impact the business(5). Build year 2000 contingency plans on top of existing disaster recovery plans. Like all disaster recovery plans, the Year 2000 plans should be tested under as realistic conditions as possible. Companies looking to establish a contingency plan should(4): Cover application software, internal infrastructure and external partners. Most companies are focussing on application software.

But the other infrastructure problems can be as big a problem – how does get into premises if lock would not open or places phone calls when the system is out? External partners should not be ignored at this age EDI. The whole system will fall as easily if EDI partners are not Year 2000 compliant when you are. Formally document the plan, widely distribute and test the plans. Everyone in the organization needs to know what the contingency plan is. 3. Contingency planning should include legal considerations as well. Prepare for damage claims from customers, partners and shareholders. Shareholder lawsuits will be encouraged if management does not adequately disclose Year 2000 problems. And Document Y2K remediation efforts well.

A case for testing With passing of time and as the January 1, 2000 nears, testing phase of the Y2K fixes are most likely to be the one to be ignored. The payoff of testing is great and once completed, one can rest easy that all are well. It is not the most fun part of the project by any means but a very important one — a fix is no good if it does not work. Securities Industry Association is planning for four testing before the final date gets here. Starting March 6, 1999 it will test all members system on four consecutive Saturdays.

The first test will mimic Dec 29, 1999, followed in order by Dec. 30, 31, and Jan. 3, 2000(13). According to a Eric Hammond, a technology Analyst, thoroughly testing a year 2000 fix requires that one runs it through three tests: functionality testing, year 2000 testing, and system testing. Mission critical systems should be tested first(12).

In the functional testing one makes sure that altered codes work with current date. In the year 2000 testing, an aging data of current data should be tested. In system testing phase all system components are brought together to insure their compliance. System testing is the most time consuming of all the three and generally left behind when time is short(12). Conclusions Management needs to fully understand the depth of the Y2K problem in their organization. Simple return on investment and cost-benefit analysis may not be adequate without considering other repercussions that may result due to failure to comply.

For many organizations, it may be as simple as either fix the problem while it can or else be out of business. Organizations that are on top of everything will still need contingency planning. As Murphy’s law state: If something can go wrong, it will. It may be appropriate to conclude by listing Don’t Forget the Basics, 10 Y2K reminders from Greenwich Mean Time, a Y2K software company in Arlington, VA(7): Don’t panic. While 2000 is an unavoidable deadline, the problem is finite. Be aware of your liability.

Business executives who brush off Y2K compliance may be considered negligent and face huge lawsuits when system fail. Develop an action plan. If you don’t have one, business partners auditors, bankers and insurers will begin to worry. Remember the domino effect. Even if your company is Y2K compliant, it is at risk if its customers and suppliers have not addressed the issue in their own systems.

Don’t look for a silver bullet. While tools exist to speed up the repair work, none will automatically solve the problem. Don’t underestimate the scope of the problem. It affects all companies, regardless of size, an impacts all systems, including PCs. Focus on business survival, not IT survival.

Create backup plan, even if it is as simple as making printed copies of every document you use. Start now. Otherwise bonuses, profits and share price will be jeopardized by the delay. Don’t rely on anyone else to solve the problem – they have their hands full with their own year 2000 problems. Don’t bet your business on promises. Make suppliers guarantee compliance of their systems in writing.

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