JAY, for the benefit of those who are just starting to research the Y2000 dillema ... here are the things you should consider :
1. The total cost has been estimated to be between $300 to $600 Billion, total lines of code involved is 200 billion, cost per line is $2 ... DON'T TAKE THIS FOR FACE VALUE ... however extensive the research was, it is at best a wild guess ... nobody really knows how much it will cost ...
2. This cost estimate has been the driving force for all the hype concerning these Y2000 plays ... not one of them at this point ... including VIASOFT, the supposed to be leader, has shown the explosive growth that will confirm the story ...
3. Nobody really knows the cost, but most in the industry agree that assessment/conversion will eat up 20% of the cost, proj management/documentation will be another 20%, and the rest goes to testing/implementation/support ...
4. Companies doing the assessment/conversion or marketing tools will benefit, but expect a lot of companies to crop up ... there are no barriers to entry in this area ... none of them will be the perfect solution and most of them will have a consulting company partner ... these companies' earnings will accelerate sometime in late 1997, early 1998 and will peak in late 1998 early 1999 ... so as you can see, these companies are in a race for a cure but by 1999, the patient has either been cured or is near death ...
5. Consulting companies will do good because of the demand ... programmer's rates will escalate ... currently the structure is for a $500 daily billing rate, indendent contractor (programmer/analyst) makes $400 to $450 ... at the peak, billing rate may go to $800, programmer makes $600 to $700 ... as you can see, rates may go up, but programmers know that they are the prime commodity so they won't let the mother company screw them ... so at best, I could see earnings of consulting companies growing 50% annually for the next 3-5 years, but again ... there are no barriers to entry in this sector ... I'm an independent contractor ... I don't really care if I work for Andersen Consulting or Sam's Software Body Shop ... I'll make more money with the little body shops ... so don't be fooled by all the growth prospects being bestowed to CHRZ, DDIM, CIBR ...
6. A lot of major companies will do the work inhouse bacause the testing phase demands people who are involved in the systems being converted ... some of them may hire a consulting company to do the assessment/conversion ... there are no fast rules
THE MAJOR POINT TO CONSIDER IS:
Yes there is a Y2000 problem, yes there is money that will be spread around, but no, nobody really knows who gets what ... only time will tell ... isn't it ironic that the first rule of investing is look at the company's story, start at the 1st page ... but the way most of these companies are being hyped, its like doing movie reviews having read only the script ... EXECUTION IS THE WORD ... HOW WELL THESE COMPANY'S EXECUTE WILL BE THE BOTTOM LINE |
