NY TIMES: Part 2.
The Hidden Problem: At the Mercy of Microchips
f the year 2000 cleanup involved fixing only business software it
would be hard enough. But the potential for Y2K problems also
lurks in the tiny computers that have permeated all corners of modern
life. The flow of chemicals in a refinery, the injection of fuel into
automobile engines, even the flushing of some toilets is controlled
electronically.
Sometimes the controller is a single chip, like one in a factory that
merely opens or closes a valve based on readings from a temperature
sensor. In other cases, an entire computer with more complex software
is used.
Experts say that only a small percentage of such systems -- called
embedded systems because the computer or chip is embedded in some
other piece of equipment -- will have date problems. But with billions
of such chips in use, even a small percentage is enough to scare Y2K
experts.
British Petroleum's giant Grangemouth refinery complex identified
2,132 embedded systems and found that 15 would fail in a way that
would shut down operations if they were not fixed, said Ian Jenson, the
project manager.
The embedded-chip dimension of the Y2K problem surprised many
companies. International Paper Co. doubled its estimate of its year 2000
repair costs to $135 million, largely because it belatedly identified
vulnerable electronic controls in its mills.
The investigations have turned up some good news. Despite popular
fears about airplanes falling from the sky, for instance, Boeing Co. has
concluded that there are only three embedded Y2K defects in its
aircraft, all easily dealt with and related to navigation data.
But medical equipment remains a major area of concern. The Veterans
Health Administration found a $150,000 machine used in radiation
therapy for cancer that could theoretically calculate wrong dosages after
2000. The machine uses the date to calculate the age of the patient and
the strength of the radiation, which decays over time. In the 1980s,
several patients were killed because of software errors in a different
radiation machine.
At New York Hospital, Louis Wetstein, a 31-year-old biomedical
engineer, is trying to determine the status of the hospital's 16,000
medical devices, about 2,500 of which contain microprocessors. Robots
and electronic machines perform tests on vials of patients' blood
without human intervention. Infusion pumps deliver medication with a
precision beyond human capability. Even the beds contain
microprocessors, which adjust the bed's position and weigh the patient.
To test an electrocardiograph machine, Wetstein and colleagues first
hooked it up to another electronic device that simulates a heartbeat.
Then they set the electrocardiograph's internal clock to 23:58 on
31-DEC-99 and waited two minutes.
The machine continued into 2000 without missing a beat, printing the
squiggly lines of an electrocardiogram on a strip of paper and recording
00 as the year. A four-digit year would be ideal, but this was not bad.
Then the clock was set back again to just before midnight for a second
test. But this time the machine was shut off. When it was turned back on
two minutes later, the printout still read 23:59. The machine was stuck
in the last century. The date on the printout made no sense at all --
03-MAR-A6, with A6 being an error code.
Nevertheless, the machine was still able to record heart rhythms,
because it did not need to know the date to do that.
Wetstein said he had found similar record-keeping problems with some
defibrillators and ventilators, but had never found a problem that would
cause the equipment to stop functioning.
"Medical equipment is not designed to stop working," Wetstein said. "It
is designed to keep working. The failure is not to shut down."
Still, incorrect date-stamping could pose legal problems or contribute to
incorrect diagnoses. At New York Hospital, electrocardiograms are
stored in a computer so doctors can log on from their homes or offices.
But if the dates were wrong, doctors might conceivably not be able to
find the EKG or might look at the wrong one.
Moreover, some experts say, even if a machine does not need to have the
date to perform its job, it might be built with off-the-shelf components
that do keep track of the date and might shut themselves off if they
cannot handle the transition to 2000.
So to be safe, some companies are checking everything, and there is
disagreement on the risks.
"I would have surgery at midnight," Wetstein said confidently, referring
to the start of 2000.
But the head of the hospital's overall Y2K effort, Susan Auman, whose
background is in data processing, was more cautious, saying: "I
wouldn't schedule surgery. I wouldn't fly."
Enter the Lawyers: Efforts Stymied by Fear of Lawsuits
ne reason to test everything is to avoid being sued. The Y2K
problem has attracted armies of lawyers, who have done more than
anything else to elevate it from a concern of programmers to one of top
management.
The lawyers are needed to deal with regulators like the Nuclear
Regulatory Commission and the Securities and Exchange Commission,
which are requiring companies to prepare Y2K plans and to disclose
their progress. In other cases, top management is worried about being
sued if computer malfunctions disrupt business enough to make the
stock plummet or hurt a customer.
The year 2000 problem has led some law
firms to set up specialized Y2K practices.
"It's the bug that finally gives lawyers the
opportunity to rule the world," Evelyn
Ashley, an Atlanta lawyer, said at one of
the several Y2K panels at this year's
American Bar Association meeting in
Toronto.
Some 30 lawsuits have been filed already,
mainly focusing on whether software
companies like Intuit and Symantec are
obligated to provide free upgrades to
programs that cannot handle the date
change. Other questions being raised in court include whether insurance
policies will cover damage caused by the year 2000 problem.
But if legal fears have pushed companies to take the Y2K situation
more seriously, they have also made it harder to solve the problem,
because companies are afraid to disclose information about problems
they have.
The lawyers' defensive instincts are generating volleys of letters from
companies to their suppliers, asking whether the suppliers will be ready
for 2000. Sometimes the letters come with a threat to cut the supplier
off if it is not moving fast enough.
The initial mailing from a group set up by five big automakers surveyed
39,000 auto-parts manufacturers, because an entire assembly line could
be idled if even one crucial part were not delivered. The airline industry
has hired a consulting firm to survey the air traffic control, fuel supply,
luggage handling and other systems at all 550 airports in the United
States.
"Everyone is sending letters to everyone," Iacino of BankBoston said.
"We're like ants in an anthill. We're all stepping on one another."
But the same lawyers who advise customers to query their suppliers are
advising the suppliers not to answer the queries, or to answer them only
vaguely. That is because statements about a company's readiness can be
used against it in court.
The legal gridlock has caused alarm. "We've got to get this litigation
monkey off our back so we can do our job," said Philip Rock, who is
supervising Y2K work at the Bell Atlantic operations center in
Framingham, Mass.
Several medical groups and members of Congress have publicly rebuked
makers of medical devices for not disclosing information about
potential problems.
Responding to concerns, Congress hastily enacted a law in October to
shield companies from lawsuits based on wrong information they
provide, as long as the disclosure is neither reckless nor fraudulent. But
lawyers are advising that the law's protections are limited, which has
discouraged companies from dropping their guard.
The Y2K Economy: New Strategies and New Jobs
awyers are only part of a whole new niche in the economy created
by vast spending on the Y2K problem. So many companies offer
fix-it services or software that stock indices have been created to track
them.
Programmer shortages, though not as great as was initially feared, have
pushed salaries of Cobol experts to $75 an hour in some cities. To
retain its best programmers, Bank of America is offering bonuses of up
to $75,000, half not payable until May 2000. Some of the work has
been shifted to India and other countries where programmers are
cheaper.
Retired or laid-off Cobol programmers are getting second chances.
Randall Bart, 41, of Torrance, Calif., who specializes in Unisys
mainframe software, could not get another programming job after being
laid off in 1988. "I had dead-end experience," Bart said. He worked as a
poker dealer, among other odd jobs. But this year, he found work as a
programmer again, fixing millennium bugs on the Unisys computer of a
pen maker.
"Come 2001, I'll still have experience that people don't want," he said.
"But at least I'll have made some money by then."
Investors are already moving away from some companies seen as
vulnerable to year 2000 problems. The stock of Executive Risk
Insurance of Hartford, Conn., dropped sharply in July after Moody's, the
credit-rating agency, said the company could face huge claims from
clients that experience business breakdowns in 2000.
On a broader scale, Global 2000, an international committee of major
banks, is planning to issue a report card on the readiness of different
countries in February, a move that politicians fear could cause capital
flight from lagging nations.
The millennium bug is also helping reshape corporate strategies.
Corestates Financial Corp. of Philadelphia said the escalating cost of
technology, including year 2000 repair, was one reason it agreed to be
acquired this year by First Union Corp. of Charlotte, N.C.
Some 18,000 Massachusetts Medicaid patients were recently forced out
of the Tufts Health Plan because Tufts decided it could not reprogram
its computers to handle changes in Medicaid while also fixing Y2K
problems.
"It was a very difficult decision for us because serving the Medicaid
population is part of our mission," said Richard Shoup, Tufts' chief
information officer. "But this is about business survival."
Jan. 1, 2000: Ready or Not, Deadline Nears
s midnight approaches on Dec. 31, 1999, some people will be
happily participating in the greatest New Year's celebration of the
last 1,000 years. Others will be bracing for disaster. But the final
accounting will not necessarily come quickly. Indeed, Gartner Group
projects that less than 10 percent of the disruptions will strike in the
first two weeks of 2000.
Edward Yardeni, the chief economist for Deutsche Bank Securities in
New York who built a strong following on Wall Street by correctly
forecasting the stock-market boom of the 1990s, has said that there is a
70 percent probability that the millennium bug will cause a worldwide
recession equivalent to the one that followed the 1973 oil shock.
Enough computers will fail, Yardeni argues, that economies will not be
able to maintain their current level of output. Many other economists,
however, think the economic impact will be more transient, like that of
a hurricane.
The clashing prognosticators agree that, like the weather phenomenon
El Nino, Y2K will be blamed for some problems in which it has no
role. But also like El Nino, Y2K problems are certain to cause real
disruptions. Many companies and government agencies are simply too
far behind to finish in time. And some that seem to be on schedule will
fall behind, because software projects are notorious for missing
deadlines.
Some big companies are confident that they will be ready.
"I'll probably be here that night because they'll probably want me here,
but I'll be here yawning," said Rock of Bell Atlantic.
Robert Green, Y2K manager for Public Service Electric and Gas, had a
similarly calm forecast. "Hopefully on December 31, 1999," he said,
"the only ball dropping will be at Times Square."
Cap Gemini, the consulting firm, found in a survey of 1,680
multinational companies that spending on the year 2000 problem had
doubled in the six months ending in October, a positive sign.
Still, the U.S. companies had spent only 61 percent and Europeans 48
percent of their year 2000 budgets, meaning that a huge chunk of work
still lies ahead. As of the end of the third quarter, Chevron Corp. had
spent only $40 million of its projected $200 million to $300 million.
And companies are finding the problem more costly than they thought.
Merrill Lynch & Co. raised its budget in the last six months by $100
million, to $400 million.
The estimated cost to fix the federal government systems has almost
tripled, to $6.4 billion from $2.3 billion in March 1997, with numerous
agencies, including the Defense Department, rated by congressional
overseers as hopelessly behind schedule.
Even if the big companies are ready in time and the federal government
catches up, surveys have shown that many small businesses, as well as
federal, state and local government agencies, are way behind. So are
many foreign countries.
A minister in Jamaica said it would take that Caribbean nation until
2004 to be ready for the year 2000. Economic crises are diverting
attention in Russia and Asia, while European companies must grapple
not only with Y2K problems but also with the reprogramming needed
for the new currency, the euro.
Peter de Jager, the Canadian consultant who is perhaps the best-known
year 2000 Paul Revere, now predicts that the world will probably
muddle through without the catastrophe he once foresaw. It might not
be a glorious goal, but many Y2K experts would be delighted if it were
attained. After all, the world is now so dependent on computers that
there is no going back.
"We cannot go back, because the infrastructure that undergirded our
entire society 25 years ago has been dismantled," Sen. Robert Bennett,
R-Utah, who is chairman of the special committee on the year 2000
problem, said this summer. "The skills are gone, the people are gone, the
equipment is gone. Like it or not, we have no choice in this situation but
to plow forward and, one way or the other, make it work."
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