Many small firms are behind on Y2K, but it's not too late
Steve Alexander / Star Tribune
Published Monday, July 20, 1998
The government message after President Clinton's Year 2000 speech last week was that there still is time to correct flawed software, even for some companies that haven't begun.
The Labor Departmentrevamped a Web site where companies could look at resumes of people who are qualified to help solve their "Y2K" problems by finding and correcting software that can't recognize the date abbreviation "00" as the year 2000.
The site (http://it.jobsearch.org ) was expanded to help overcome a shortage of computer professionals that has been exacerbated by Y2K. The effort is aimed largely at small businesses because most big corporations have correction efforts underway.
"Many small businesses are just waking up to the fact that they have to pay attention to this," said Kitty Higgins, deputy secretary of labor.
But when Higgins was asked whether firms just beginning Y2K work are too late to meet the Jan. 1, 2000, deadline, she struck an optimistic note.
"We all wish we had started sooner on this, but I think it is not too late," she said. "We still have time, and with adequate resources and a high level of attention, it can be solved."
But the department appears to be facing an uphill battle in creating Y2K awareness, based on testimony last week before a U.S. House panel. Small businesses in the United States and other countries largely are unprepared to deal with Y2K and don't plan to do anything about it, the House Small Business Committee was told.
"When we speak to small-business owners, there is a surprising lack of urgency," said Debra Taufen, manager of global small-and midsized-business initiatives for IBM. "Some think they are ready; some think they have plenty of time, and some feel the issue is all hype and they will not be affected."
While an estimated 25 percent of small companies worldwide are reprogramming their computers and electronic equipment to deal with the problem, the rest believe that it's out of their hands, Taufen said.
A big price tag
British Airways last week estimated that it will spend $164 million to upgrade its computers for Y2K-compatibility. The spending is about one-fifth of the airline's profit last year; it's also one of the highest amounts being spent to tackle the problem among any of the world's airlines, which collectively are spending about $1.6 billion.
The airline industry maintains that the most serious risk -- an accident caused by a malfunctioning computer -- is slight. But it says flights could be grounded in some places shortly before midnight on Jan. 1, 2000, unless airports and air traffic control authorities take steps to upgrade computers that control flight plans and other essential systems.
"There will never be a risk of planes falling out of the sky -- airlines simply don't fly if planes can't operate safely," said Tim Goodyear, a spokesman for the International Air Transport Association in Geneva. "Our concern now is that the major suppliers of services to the airlines themselves are Year 2000-compliant."
Dueling viewpoints
A recent Merrill Lynch report that minimized the effects of Y2K has drawn fire from Edward Yardeni, chief economist of Deutsche Bank Securities and a leading pessimist about Y2K preparedness.
In a direct contradiction to many recent predictions, Merrill Lynch's new survey said that corporations across the world are making aggressive efforts to tackle the problem and that most are making headway. The report found that most U.S. corporations surveyed expect to be fully compliant by the end of 1998. In Europe many firms are using the problem, combined with the introduction of the euro currency, as an opportunity to upgrade their systems.
Likening Y2K to a space-shuttle flight, the Merrill report said, "We do not see Armageddon, but like every space flight so far, there is an element of the unforeseen. If there are glitches, and there always are, companies expect to manage their way through them as they do in power blackouts, and as they did when the AT&T and [America Online] networks have occasionally shut down."
But Yardeni said the data Merrill Lynch reported could be interpreted in a much less optimistic way.
He noted that, in the electric utility industry, the report said some companies still are assessing the problem rather than acting to correct it. The report also said there is "a risk that Y2K issues could result in power-flow interruptions for the transmission grid." And despite giving the utilities poor marks for Y2K disclosures, the report said most firms likely will be ready.
He also criticized the study for identifying only one telecommunications company, in Brazil, as very likely not to be Y2K-compliant at the turn of the century.
"A recent U.S. State Department survey showed that roughly half the nations . . . are not moving fast enough to fix their phone systems," Yardeni said.
And he chastised the survey for being "surprisingly upbeat about banking in Asia," considering that "25 percent of respondents fear the interbank clearing and settlement systems may not be compliant in time."
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