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Egg on Someone's Face

Egg on Someone's Face

Never has the gulf between IS and senior management been more evident than in dealing with the year 2000 problemWith fewer than 21 months to go before the year 2000 (Y2K) arrives, a survey of Australian IT users shows nearly one organisation in four may still have to take its first serious look at the system date problem. Perhaps even more disturbing is that CEOs and CIOs have different views of what is going on, and what is needed. The survey by Sydney-based Inform Business Development was the first of its kind and received 301 responsesPredictably, organisations with over 10,000 staff and mainframe computers were found to be the most attentive to the Y2K challenge. Smaller organisations seem to have more of a "suck it and see" approach. From some management levels, there are calls for special budget to handle this once-in-a-lifetime problem; and at other, senior levels, it is seen as simply one more task to be handed to the IT section with no extra budget, no extra staff, and no outside acquisitions of consultancy, software or hardware. While you're at the shops, drop off this letter, please.

On the other side of the ledger, some IT managers apparently recognise the Y2K issue as an opportunity to upgrade hardware, software and networking as well.

"In Australia, when we're good, we're very very good," says Inform survey director Terry Wiley, "but in meeting the year 2000 challenge, some of us are bad, and don't know it."Stakes in this unprecedented race against the calendar are high. Executives in many surveyed organisations agreed they were betting their enterprise on successful completion of a date conversion program. Publication of Inform's survey, The Year 2000 Challenge, preceded by days a Coopers & Lybrand report suggesting the national cost of conversion will be at least $5.5 billion.

"The issue will not suddenly surface on 1 January 2000," Australian Accountant magazine reported in February. "The volume, nature and impact of incidents will continue to grow. The pace at which [these] issues are surfacing is increasing in an exponential fashion."In this environment, the Inform report chills with its findings that Only 16 per cent of responding organisations have already implemented their solutions.

Nearly one respondent organisation in four reported no active plans to look at the issue, or else, not embarking on its response. In organisations where plans have been made to respond to the challenge and budgets presented, only 53 per cent of those budget requests were met.

The contrariety of vision between IT and senior corporate management were so glaring that Inform's report includes a complete chapter headed "Disparities in Vision". These include the fact that in response to the question "How much do you estimate that your company will need to spend to overcome the Y2K challenge?", the only response on which the share of views coincided was "Unsure". Most senior managers (81 per cent) estimate that they'll pay less than $100, 000 for their program, and less than half this number (39 per cent) of CIOs think this will be enough.

Nearly five times as many CIOs as corporate leaders believe they must hire additional IT personnel to handle the project. More than three times as many CIOs believe that no answer or the wrong answer to the issue could put their employer out of business.

Mahogany Row veterans will recognise one finding in the disparities chapter: senior corporate managers believe their door is always open and they offer a sensible hearing to colleagues with problems. Well, no, that's not how we see it, responded most CIOs. Half of them list convincing executive managers to allocate sufficient funds to the project, as a major challenge. This disparity in understandings might explain the finding that many more CIOs than senior corporate managers believe that enterprise boards regard the date change as an important issue. "We do, we do," responded over 80 per cent of senior managers; "you don't, you don't," responded nearly 30 per cent of CIOs.

Inform Business Development's survey differed from Coopers & Lybrand's in that it was targeted on organisations chosen in part for a spread of sizes, from organisations with fewer than 100 employees, to those employing 10,000 or more.

Coopers targeted the top 1000 private and public sector organisations in Australia, based on revenue. Differing responses to the two separate surveys suggest that the giant organisations take the Y2K issue more seriously, although not much more.

As reported above, Inform found 16 per cent of those surveyed had completed their solution program. The Coopers figure: 21 per cent. The US figure from 12 months earlier: 14 per cent. Inform reported 11 per cent of respondents with no plans. The 1997 US figure was 18 per cent. Coopers reported that 17 per cent of the top 1000 Australian enterprises still don't know whether they will need outside assistance, and among those who knew what they wanted to do, 30 per cent of their known and expected tasks had not started.

Despite all the publicity in the past 18 months, there seems little sense of urgency in Australian management's perception of the challenge's importance. In answer to an Inform pick-a-number question about how much of a priority the challenge is in their organisation, corporate officials picked, on average, 3 (average priority). CIOs chose on average a bit under 4 (a high priority). This is the more surprising in that elsewhere in the survey, 17 per cent of respondents said that failing the Y2K challenge would put their employers out of business, or cause "serious disruption, a disaster, or critical difficulties". About 10 per cent more blithely predicted no problems, or else very few; and they might have been right to do so. (See "Tonto, Where's my Silver Bullet".)Inform's free-response question about the price of failure produced several particular areas of concern including payroll, service delays, disrupted production, inventory and forward planning. This suggests that many respondents see how challenge failure could affect their closest professional interest, but are vaguer about overall impacts on their organisation.

Nearly one respondent in five (18 per cent) bleakly stated that the challenge was not important to their organisation's board of directors. There are issues of legal responsibility for directors in the Y2K challenge, and this lack of trust suggests either that some CIOs are not explaining the problem adequately, or some senior managers are deaf to the explanation they receive. Since 57 per cent of Inform's respondents see non-IS executives as responsible for budgeting their organisation's Y2K challenge response, the survey points to likely future problems for senior managements in organisations which have underestimated the impact of the challenge.

The Inform survey showed that most respondents expect to spend most of their Y2K response budget on software, less on hardware, and least on services - although some respondents suggested that service costs would run to over 90 per cent of total budget. Nearly 28 per cent expect to hire external professional services with Y2K expertise; 82 per cent expect to make do with existing staff.

Just like colleagues in the US, Australian organisations are part-funding their Y2K challenge projects by cutting back on new software development (18 per cent), ongoing maintenance (14 per cent) hardware upgrades (7.2 per cent), and initiatives in data warehousing, intranet and Web site development (23 per cent). Only 6.5 per cent of respondents said no cutbacks were planned to pay for meeting the challenge. Some organisations will shave the cost of compliance by abandoning some activities they cannot get round to before the cutoff date.

In hardware, 25.6 per cent of respondents do not know whether their hardware will need modification, and by coincidence, an equal number do not know whether it must be upgraded. Two out of five believe it needs no upgrading, and one in 12 sees the challenge as an opportunity to upgrade nearly all hardware - suggesting a coming bonanza in the Wintel market.

Australians prefer replacing non-compliant software to renovating it. The local figures are 68 per cent for replacement (in the US, 62 per cent), 40 per cent for renovation ( 58 per cent). The figures add to more than 100 per cent because some corporations cannot replace some older software products.

Inform surveyed organisations in 16 industry and service groupings, and responses were analysed by State or Territory, by hardware platform, by principal corporate activity, and by number of employees.

Australian companies facing the Y2K challenge have responded appropriately to its importance and are meeting it with international best-practice results," says Inform's Wiley. "Unfortunately, as recently as December 1997, when we conducted our survey, these organisations were in a minority." Inform Business Development conducted The Year 2000 Challenge survey of senior Australian executives in association with IDG, publisher of this magazine. For printed copies and further details of the Inform report, contact account manager Geoff Scott on (02) 9231 3200 (voice), (02) 9231 3122 (fax), or info@informbd.com.auWhy the Delay?Australian CIOs can take cold comfort in knowing that they are not alone in convincing their CEOs about the millennium bugIt's hard to imagine how executives conversant with their ABCs missed this, but for those of you who may have, take your nose off the grindstone and listen up: A LARGE COMPUTER GLITCH WILL KICK IN AROUND THE YEAR 2000. IT COULD CRIPPLE YOUR BUSINESS. FIX IT NOW.

We hope the preceding message helps, but the folks at Cap Gemini America (CGA) are doubtful. The New York City-based consulting firm's recent study in the US found that only one in six of the corporations surveyed have begun implementing a year 2000 (Y2K) fix. That's a less-than-whopping 16 per cent.

"It's a shock to me," says Jim Woodward, senior vice-president of CGA's TransMillennium Services. "The biggest issue is that companies aren't moving fast enough. They lack the required sense of urgency needed to get everything done on time." Woodward says that business executives have begun to grasp the importance of the Y2K problem but still have miles to go. Contributing to this procrastination is that some perceive money spent on Y2K fixes as simply an expensive way to maintain the status quo. Woodward also points out that many executives think the problem is easily fixed, when in fact, it can involve thousands of hours of analysing, testing and fixing millions of lines of old code. "There seems to be a sense of overoptimism on what can be done for what amount of money," he says. "The way this is going, everybody is going to be clamouring for help at the last minute."Some other findings from the survey:Fewer than a quarter of the surveyed firms (24 per cent) had a detailed implementation plan in place as of August 1997.

IT executives understand the urgency, ranking Y2K issues a nine in importance on a scale of one to 10.

Business managers are a little slower to catch on: IT executives were asked to rank the Y2K's importance to their business colleagues on the same scale; the average score was seven.

Seventy-two per cent of the companies plan to spend between 21 and 30 per cent of their total IS budgets on Y2K work over the next three years.

If companies still need a cattle prod to get them moving, Woodward has a doozey. The first lawsuit regarding Y2K issues was filed last August, and legal conferences have sprung up to teach lawyers how to take advantage of the potential bonanza of billable hours. Note to executives: You delay, you pay.

- Carol Hildebrand

Tonto, Where's My Silver Bullet?

Modern technology has its second silly, mistaken popular phrase. Close on the heels of "quantum leap", which is a leap too small to see, comes the "millennium bug", which isn't a bug, and since the next millennium will start in 2001, this has nothing to do with it. The phrase "millennium bug" is so attractive, however, that it probably will continue as the standard phrase for Y2K issues. These are generally known and arise from the fact that many softwares represent the year by two digits when giving dates. Nobody can say with total confidence when systems with the problem come up against the first year that does not start with the digits "19", and nobody can say with total confidence in which parts of many systems these short year fields appear.

The picture is clouded by the fact that many of the predictions about the likely effect of the problem are people whom Terry Wiley of Inform Business Development describes as "individuals with a financial interest in talking up the extent of any perils". CIOs have been besieged with a variety of software solutions to the problem, which they frequently describe mockingly as "silver bullets" - the weapon used by the superstitious to kill supernatural creatures.

It may be that some of these silver bullet solutions will solve all problems, but most CIOs work on the "if a thing sounds too good to be true, it probably is" principle: silver bullet vendors find it hard to get a foot in the door.

CIOs believe the only way to find and replace two-digit fields with four-digit fields with the total confidence they need and are required to guarantee, is to read through all corporate code, line by line.

Corporations which adopted IT within the last five years are likely to have minor Y2K problems, or none at all, for their internal operations - the qualification is important - since in this decade an increasing number of hardware and software vendors saw the problem coming, and produced goods that it would not affect. Any completely Y2K-compliant organisation is still at the mercy in some degree of customers and suppliers who have not met the challenge.

Monitoring what these people are doing is an important part of Y2K compliance, particularly so when these parties are components of the core corporate system, whether through wired-in connections, or Internet and extranets.

And while our main story is correct in saying that this is a problem that will display itself in full flower on 1 January 2000, the reality is that it's already here for many of us.

Are you doing any form of business beyond the end of 1999? Very likely. Several respondents told Coopers they already need temporary fixes and workarounds to do that business. Some use special codes to represent dates from 2000, intending to convert these into appropriate year fields when their conversion program is complete. Some date all transactions after the end of this year as 1999, and adjust this fiction by hand - thus throwing away at least four of the major advantages of IT: speed, accuracy, transparency and freedom from manual operations.

A surprising informal finding from both surveys is that many respondents seem to feel that meeting the Y2K challenge is a bit like brushing your teeth or buying a box of matches: you do it, and it's done. This is a naive belief.

Getting it right in this field is a matter of doing it, then testing the results. Exhaustively. Most experts agree that for complete peace of mind, the testing should run for a full year. On this timetable, any Y2K conversion should be complete and ready for testing by the end of 1998. Organisations planning to start the project with budget approved for the year starting July 1 might find themselves at the back of a long queue, in an activity notorious for lengthy implementations and missed deadlines - not a happy position.

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