'Year 2000, June 8, 1998 How much will it cost to fix the year 2000 problem? Probably less than we've been hearing, wrote Paul A. Strassmann in his Computerworld column on May 18. Strassmann used first-quarter 1998 filings with the Securities and Exchange Commission to estimate that companies are budgeting only $50 billion to fix year 2000 troubles - a surprisingly low 8.3% of their annual information technology budgets. That column triggered an E-mail debate among other millennium experts, Leon A. Kappelman, Capers Jones and fellow columnist Ed Yourdon, who say the cost of fixing the problem will be much higher than Strassmann's projections. What follows is a virtual roundtable discussion on the subject:
Leon A. Kappelman (University of North Texas and SIM Year 2000 Working Group): I find some of Strassmann's conclusions troubling. In a nutshell, the SEC data is weak due to off-Y2K-budget items (for example, upgrades, replacements) and underreporting errors (85% of corporations think their year 2000 estimates are too low [Newsweek, May 18]). As the Society of Information Management's Year 2000 Working Group points out in our new white paper, there is often an enormous disconnect between upper management (those who approve SEC paperwork) and the people running Y2K projects (those who answer the SIM study questionnaires). From what I've seen about these projects, I'd place my money on the project managers.
And these project leaders tell us that their enterprises are spending about 38% of one year's IT operating budget dealing with their Y2K problems - and that that number only marginally includes embedded systems and desktop/PC problems.
Strassmann: Before you place your trust in project managers, you need to be convinced that they have no conflict of interest in reporting higher year 2000 costs.
Kappelman: Just like management may have a bias for reporting a lower one. The truth is somewhere in between, perhaps? Seems that both samples pose validity challenges.
Strassmann: Arguing that "the truth is somewhere in between" does not recognize that the biases do not have equal validity. When I weigh the biases of project managers reporting to SIM and management reporting to the SEC, all I can say is that management may be held accountable for what they say. It becomes a matter of record and subject to litigation and liability suits. Project managers filling out SIM questionnaires cannot and would not ever be held accountable for what they say. Furthermore, the project managers claims remain anonymous, while SEC filings are on the public record and signed by a CFO.
Kappelman: Agreed. Permit me to clarify: I didn't imply they were equal, else I would have said "in the middle" rather than "in between." Still, the decision of what one enterprise includes as a Y2K budget may be very different from the choice of another.
In light of no standardized definitions for things such as "Y2K compliance" or "Y2K expense" and what I think is management's bias toward underreporting this figure, I suspect the SEC figures are on the low end of the scale.
Capers Jones (chairman, Software Productivity Research): I've been studying estimating accuracy for more than 20 years. For large software project estimates, these are the approximate results from among our clients: Out of every 100 estimates, about 70 will be extremely optimistic, 25 will be within plus or minus 10%, and 5 will be conservative by more than 10%.
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