From The Times On Sunday in London. Located on front page of the Business section or at sunday-times.co.uk.
Regards,
Bond
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Costs soar as suppliers struggle Millennium bug alarms Unilever
UNILEVER, the Anglo-Dutch consumer-products giant, has
trebled to œ300m its estimate of the cost of eliminating the
millennium computer "bug" from its operations.
Niall FitzGerald, chairman of the British arm, warned last week
that up to a fifth of its small and medium-sized suppliers may
not have fully removed the bug by January 1, 2000.
Unilever's discovery that the cost of fixing the bug is far higher
than anticipated, and FitzGerald's warning about the risk to
smaller suppliers, will sound an alert throughout British
industry. "I'm concerned that up to one-fifth of our suppliers
worldwide may not be fully ready for 2000," said FitzGerald.
Unilever has set its executives the target of ensuring their
operations are 2000-compliant by next October. In common with
many big companies, it is likely to drop suppliers if it concludes
that they will not be ready for 2000.
The group is warning of the disruption to the business cycle the
bug will cause, with takeover activity likely to dry up and huge
inventory-building expected to create buffer stocks ahead of
January 1, 2000.
Iain Anderson, Unilever's technology director and a British
Telecom (BT) non-executive, said last week: "There will
effectively emerge a sterile zone for acquisitions. I don't know
when it will start, but I doubt if there will be many acquisitions
after September 1999."
Unilever's comments will attract the attention of the
government, whose efforts to tackle the bug in Whitehall and
to alert business to its danger have been criticised by Robin
Guernier, head of the independent Taskforce 2000, which is
trying to raise awareness of the threat.
The problem has arisen because many computer systems use
only two digits, rather than four, for dating purposes. When the
year changes from 99 to 00, experts say many applications will
crash or create data that are, literally, rubbish. Many systems in
the food industry would, for example, decide goods so labelled
were out of date and should be scrapped.
Anderson said the costs of tackling the bug were soaring because
of the scale of the problem, particularly concerning so-called
"embedded" chips - microchips installed deep in manufacturing
equipment and computer systems whose software has to be
checked line by line and, if necessary, rewritten.
Anderson said: "The challenge isn't because it is intellectually
difficult, but because there are just billions of things to be done.
It's the sheer scale of the task and the relatively small number
of people in the world qualified to do the work."
Cap Gemini, Europe's leading computer-services company,
believes solving the millennium bug will cost Britain œ31
billion. The global cost could be as much as œ340 billion.
Many British companies are still reluctant to reveal how much
they are spending on the problem. Unilever's estimate is one of
the biggest so far, equal to that stated by BT.
However, following news that Unilever has underestimated
the cost of the operation, experts believe many firms will realise
that the problems are deeper than first thought.
Americans are already feeling the effects of the millennium
bug. In Kansas, a 104-year-old woman recently received a letter
telling her to register for kindergarten. In Washington, a
Pentagon supplier with a contract for delivery of goods in 2003
received a warning that it was 94 years behind schedule.
Many critics claim the process of re-writing software is moving
far too slowly. One survey conducted by Cap Gemini found that
only 33% of America's biggest companies had detailed rescue
plans in place. |
