Telstra puts its Y2K bill at $500m
By David Crowe
Telstra yesterday confirmed the mammoth nature of its millennium bug
challenge in a filing to the Australian Stock Exchange, putting a $500
million cost estimate on the carrier's year 2000 compliance.
The Telstra filing was just one of scores as companies including Boral,
Amcor, Davids Ltd and Country Road outlined the impact of Y2K on their
businesses.
The likely cost of the Y2K problem varied enormously, illustrated by the
$2 million cost estimate of Telstra competitor AAP Telecommunications.
A series of filings from small mining, investment and manufacturing
companies revealed the cost of the bug to be as low as $10,000 at
companies with only personal computer systems to be upgraded and no
other exposure to date-change problems in electronic systems.
But in the rush to file Y2K statements to the Australian Stock Exchange
by the close of business today, some companies, such as the Seven
Network, declined to give a cost estimate.
Telstra told the ASX its Y2K risks included not being able to bill
customers, legal action from customers or trading partners for loss of
service, or fines from regulators for any failures. "Telstra's
expenditure on year 2000 for the financial year 1997-1998 will be lower
than initially anticipated," it said, attributing this to lower than
expected remediation work on some of its biggest information systems
such as the Flexcab billing system.
It also said it had deferred the installation of some Y2K-compliant
systems to later this year due to changes by some suppliers.
AAPT separated the $2 million cost of its Y2K program from the ongoing
upgrade of its network.
"In the course of ongoing business and anticipated capital investments,
AAPT will ensure that the switches will be compliant by June 1999," it
said.
Industrial companies such as Boral and George Weston Foods drew
distinctions between the installation of new financial systems and year
2000 remediation.
"Boral estimates the cost of the year 2000 Project will be of the order
of $40 million. This includes the cost of new hardware and software,
re-programming costs testing, project management and contingencies," it
said.
This included internal costs and the costs of external suppliers and
consultants but not the pre-implementation costs of Boral's Finance 2000
Project.
While some tried to pinpoint the final cost of the bug, George Weston
said it could not break out the costs of the millennium bug from the
costs associated with its SAP R/3 software project.
"Because of the wide-ranging objectives and rationale behind adoption of
the SAP project, it is not possible to allocate with any degree of
accuracy the proportion of the cost applicable to year 2000 compliance
per se, and therefore, the total year 2000 project cost," the company
said.
"It is considered that any arbitrary cost-allocation could be
misleading. However, it is acknowledged that the total cost impact of
the year 2000 project in both direct cost and dedicated human resources
in the period 1997-2000 will be significant and material to the group's
financial performance." |
