Preparedness of [Canadian] firms for the Year 2000
Released By Statistics Canada today
1997(initial findings)
Less than half of all Canadian firms have taken action to prepare for anticipated computer problems when the calendar
hits January 1, 2000, according to a new survey conducted this fall.
Less than 10% of all companies were not aware that there is a Year 2000 problem. A further 46% of all firms said they
were aware of the issue, but had not done anything about it.
This survey, conducted in October and November, covered 2,000 Canadian companies. It is representative of all
businesses with more than five employees, excluding public sector offices, schools and hospitals. It was conducted for
Task Force Year 2000, whose members are Canadian business executives who responded to Industry Minister John
Manley's invitation to assess and report on the Year 2000 problem.
The Year 2000 issue refers to the need to fix computers whose programming assumes that every year begins with "19."
Most of the world's existing computers are programmed to identify years by their last two digits only, using "97," for
example, to mean 1997.
Unless they are updated, in most cases a time-consuming process, they will assume that the day following December 31,
1999, is actually January 1, 1900. This has been identified as having tremendous implications. It can affect the hardware
and software companies use to process everyday business information, as well as the embedded computers that control
plant machinery, robotics, office equipment, elevators, building climate and security systems.
Cost of Year 2000 problem roughly $12 billion
The economic implications of this problem are not fully understood. The survey estimated (in very rough terms) that the
problem could cost the Canadian economy a minimum of $12 billion in direct costs to fix. This total excludes the
unidentified costs of the many businesses that have not begun to address the problem. Even among firms already taking
action, about 40% were not able to report the direct costs.
Additional costs may be incurred if workers with systems-oriented skills must be shifted from regular business activity to
fix the problem. Preliminary survey results estimate that, to convert and test systems for the year 2000, businesses have so
far identified a need for some 7,000 project managers, systems analysts, programmers and testers not currently available
from internal ranks.
With the Labour Force Survey reporting a 2.5% unemployment rate for systems analysts and programmers, human
resources in this field are already hard to find. However, the Year 2000 survey suggests the labour shortage has not been
a serious problem for employers to date. Businesses tended to report only moderate levels of difficulty in finding outside
workers with the skills required to fix the Year 2000 problem.
Many small- and medium-sized firms not taking action
Businesses taking no action tended to be small- (between 6 and 50 employees) and medium-sized (between 51 and 250
employees) firms. Among small firms, 61% were taking no action, while among medium-sized firms, a full 30% had not
begun to address the problem.
Note to readers
The Survey on Preparedness of Canadian Business for the Year 2000 was completed in the fall of 1997. Initial
findings are presented here, and analysis of more detailed information from the survey is ongoing. Release of
additional information is planned for January 1998.
Among large companies (those with more than 250 employees) less than half (48%) had made formal plans to tackle the
problem, though most (92%) were addressing the problem in some way.
To be considered formal, a plan should include a complete assessment of all systems used by a business, followed by
conversion and testing of those systems requiring modification. This method is the most consistent approach to avoiding
costly business disruptions after 2000 arrives, particularly for firms relying extensively on high-level technologies.
Steps considered informal include consultations with information technology suppliers and software vendors, informal
discussions with in-house systems staff, and contracts with external experts. About 7% of all businesses taking informal
steps said they had already bought, or were intending to buy, new computer systems.
Finance and insurance sector leads in tackling problem
Firms in the finance and insurance sector have led the way in tackling the Year 2000 issue, with 65% taking formal or
informal steps. This compares with between 42% and 50% for firms in manufacturing, transportation, communication,
utilities, wholesaling, retailing and other service industries.
Companies in the primary industries have been slowest to take action. Only 35% had taken either formal or informal
action.
Most firms not investigating preparedness of business partners
About 13% of those firms aware of the problem reported that they were investigating the preparedness of their business
partners, including customers, suppliers or service providers such as banks or intermediaries.
Most firms (82% of those aware of the problem) do not believe there is potential for litigation if a lack of preparedness on
their own part should disrupt the business of partners. Again, large companies are more likely to be concerned about
inter-business linkages or litigation than are small- and medium-sized firms.
Slightly more than one-quarter of businesses not taking action were not worried yet
Companies indicating they were not taking either formal or informal actions provided a variety of responses when asked
why this was the case. Slightly more than one-quarter of the firms not taking action (27%) said that they were not worried
about the problem yet because there would be enough time to fix it later.
Some 23% said that it was not an important issue for their company, usually because they use computer systems only
minimally. About 14% of firms said they had no time, money or staff to devote to the problem, while another 10%
expected their information technology suppliers to deal with it.
Some 7% were expecting software developers to come up with a solution that would solve the problem with a mere
software installation or upgrade. However, no generally accepted magic-bullet solution yet exists.
For further information on this release, contact Jamie Brunet (613-951-6684; Internet: brunjam@statcan.ca), Small
Business and Special Surveys Division.
Table: How businesses are approaching the Year 2000 computer problem
______________________________________________________________________________
Having Taking Aware of
formal plans informal problem but
steps not taking
action
______________________________________________________________________________
% of businesses
_______________________________________________
All businesses 9 36 46
Small firms 6 33 51
Medium firms 20 50 29
Large firms 48 44 8
Primary industries 3 32 57
Manufacturing 10 40 43
Transportation and
communications 7 42 44
Finance and insurance 15 50 34
Wholesale, retail and
other services 8 34 48
______________________________________________________________________________
Not aware of Total
problem
______________________________________________________________________________
% of businesses
______________________________
All businesses 9 100
Small firms 10 100
Medium firms 1 100
Large firms 0 100
Primary industries 8 100
Manufacturing 7 100
Transportation and
communications 7 100
Finance and insurance 1 100
Wholesale, retail and
other services 10 100
______________________________________________________________________________
Table: Level of difficulty businesses are having hiring outside workers to
address Year 2000 computer problem
______________________________________________________________________________
Mean score(1)
______________________________________________________________________________
Project managers 2.8
Testers 2.4
Programmers and
systems analysts 2.3
______________________________________________________________________________
(1) On a scale of 1 to 5 where 1 is no difficulty and 5 is extreme
difficulty.
Note: Applies only to businesses currently hiring (5.3% of all businesses).
Table: Examples of informal actions being taken
______________________________________________________________________________
% of(1)
businesses
______________________________________________________________________________
Consulted/consulting
with information
technology suppliers
or software vendors 58
Ad hoc internal
discussions with
systems staff 24
Contracted/contracting
external expertise 21
Informal in-house
conversion of systems 8
Have bought/will buy
all new systems (at
least in part
because of Year 2000
problem) 7
______________________________________________________________________________
(1) As a percentage of businesses taking informal action.
Note: Applies only to businesses taking informal action (36% of all
businesses).
Table: Inter-business linkages and litigation
______________________________________________________________________________
Investigatin-(1) Concerned(2)
g partners about
litigation
______________________________________________________________________________
% of businesses(3)
______________________________
All businesses 13 18
Small firms 11 17
Medium firms 17 21
Large firms 32 39
Primary industries 6 15
Manufacturing 6 17
Transportation and
communications 8 19
Finance and insurance 20 25
Wholesale, retail and
other services 14 18
______________________________________________________________________________
(1) Investigating preparedness of partners. Partners can include suppliers,
customers and service providers such as banks and intermediaries.
(2) Believing there is potential for litigation if their own unpreparedness
disrupts partners. Partners can include suppliers, customers and service
providers such as banks and intermediaries
(3) As a pecentage of businesses that are aware of the year 2000 computer
problem.
Note: Applies only to businesses aware of Year 2000 computer problem (91% of
all businesses). |
