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Technology Stocks : Y2K (Year 2000) Stocks: An Investment Discussion

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To: Philip H. Lee who wrote (1521)11/2/1996 10:41:00 AM
From: William J. Cook, Jr.   of 13949
 
You're half right.

"I was also told that a lot of companies have replaced systems over the few years, substantially mitigating their Y2k risk. At many companies, old mainframe code has mostly been converted to client-server applications, which run a much smaller Y2k risk. Do you agree with this assessment?"

In terms of Y2K, this is an all or nothing thing. Most organizations have ADDED capability to their core systems but have had to retain their "legacy" systems because they still perform key operations or have other system dependencies. If you do your research on client-server you will see that, in most cases, they are not handling the extremely high transaction volumes. Being "mostly" converted will not be good enough. We have to be aware of what the guy at the DoD said about people's understanding of technology... He says, what scares him is not the "NON-TECHNICALS" it's the "NEW-TECHNICALS." These are people who are relatively young and new to computing, are becoming more influencial, but don't believe that this problem exists because they would never have built systems that didn't use proper date logic. Programmers in client-server systems have typically never had to be constrained by memory and storage limitations. Relational databases have date datatypes that support proper storage of date information. The problem is, that the majority of systems that are in use today are not based on client-server or relational databases. So when you go and ask all of the current techno-geeks what their assessment of the problem is, they tell you it's no big deal. It is a reversal of the sixties anthem.... Only this time it's, "Don't trust anybody UNDER 30!!!"

One unique thing about Y2K is that it is not a function of "market share." You don't have to demonstrate the problem in every system at every company. If a substantial enough percentage of systems in use today are at risk, we will have this multiple cascading failure scenario I alluded to last time that will drag down the whole thing.
Even if some organizations are completely converted in time, if 25% of their suppliers or customers fail, they go down the hopper with everyone else. If the government can't get their act together in time, there are social order implications that need to be considered. The business, public-sector, and high technology organizations are in a state of denial. The galvanizing event, will be a major system outtage somewhere, that will move us from the denial phase to acceptance. At this time, all of the "Captains of Industry" will issue their, "Make it so" decrees only to find that "All the King's horses, and all of the King's men..."

In closing, consider the words of Winston Churchill:

"Owing to past neglect, in the face of the plainest warnings, we have now entered upon a period of danger. The era of procrastination, of half measures,... of delays, is coming to its close. In its place we are entering a period of consequences.... We cannot avoid this period; we are in it now. Unless... [management] resolves to find out the truth for itself, it will have committed an act of abdication of duty without parallel." -- Winston Churchill, 11/12/1936

It is ironic how humanity is doomed to learn tough lessons based on our defense mechanisms of waiting until the very last minute to fight or flee.

BC-out.
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