Haim--
You wrote:
An additional issue which was not voiced often if at all are the disappearance of the Y2K factor. As most corporation have already
updated their Information/Computer Systems over the last 3 to 5 years to be Y2K compliant, an substantial amount of high paid workers
will be laid off and will need to search for new employment. This factor by itself can drain substantial amount of cash from the current
income pool of consumers which will dampen the economy further...
I'm assuming you're referring to IT types here...project directors, programmers etc...
Given this recent report from CIO Magazine (see below) I think there's more to worry about than just the IT types being laid off and draining cash from the consumer economy.
Thursday September 30, 12:00 pm Eastern Time
Company Press Release
SOURCE: CIO Communications, Inc.
Y2K Experts Poll Exposes Incompletion and Complacency
CIO Magazine, ISACA, & Dr. Ed Yardeni's Y2K Center Poll
NEW YORK, Sept. 30 /PRNewswire/ -- The results from the second Y2K Experts Poll conducted by IDG's CIO magazine, ISACA and Dr. Ed Yardeni's Y2K Center exposes corporate ill-preparedness, complacency and misplaced vendor trust. Eighty-one percent of large, global companies polled are not Y2K ready at this time. In addition, 43% now predict project completion dates will move from the third to the fourth quarter of 1999, a significant increase of 27% since the first poll in June. In spite of the fact that 81% admit their organizations are not ready for the date rollover today, when asked about their overall assessment of Y2K compared to three months ago, 91% were still optimistic.
According to Ed Yardeni, noted economic forecaster and Y2K expert, ''I am puzzled that information technology professionals are so optimistic about the impact of Y2K on their organizations. Many of them are not ready yet. They are clearly expecting a victorious outcome, which may be raising complacency levels so high that people will not prepare for any possible malfunctions and failures.''
The Y2K Experts Poll is a real-time snapshot of Y2K readiness among global, large firms with an average of 1,360 suppliers. The poll is developed and deployed by an informal public-interest coalition of CIO magazine, the Information Systems Audit and Control Association (ISACA), and Dr. Ed Yardeni's Y2K Center. The coalition members conduct the poll among Y2K experts in an effort to help the public and their policy officials assess the Year 2000 readiness of organizations around the world. The first Y2K Experts Poll was conducted in June 1999 and the results of the first poll and the current poll are compared in this release.
Highlights of the Poll:
Project Completion: As stated above, 81% of companies (6/99: 92%) are not done remediating the Y2K problem at their organization. A significant number (30%) of companies still have not completed their Y2K projects and are behind schedule, with 12% of them expecting to finish in Year 2000 and beyond. It appears that respondents are pushing back their expected completion dates compared to June 1999 poll results. There has been a notable drop (21%) in the number of respondents selecting third quarter 1999 as their completion date and, as mentioned above, a substantial increase (27%) in the number selecting fourth quarter 1999. Twelve percent plan to complete their Y2K remediation in 2000 or beyond.
Completion Date September 1999 June 1999
3rd Quarter 1999 31% 52%
4th Quarter 1999 43% 16%
2000 or Beyond 12% 9%
Abbie Lundberg, Editor in Chief of CIO magazine, says she is ''''alarmed at the number of companies that do not expect to complete their Y2K work before the end of the year. Of those that do expect to finish in time, entirely too many expect to do so at the eleventh hour. Given the business world's abysmal track record for technology project delivery, this does not bode well.''
Supply Chain: The external assessment of vendor readiness remains consistent with what was revealed by the first poll. Once again, poll results show a high-level of trust with 69% of large global companies simply sending out questionnaires and only 13% conducting on-site inspections.
Michael Cangemi, a spokesman for ISACA, says he is concerned that more companies are not verifying Y2K readiness with their partners. Cangemi, who also serves as the Executive Vice President and CFO for Etienne Aigner (a $150 million design and distribution company) has professional experience with this issue. ''We are a vendor supplying approximately 70 major retailers and 1,000 small retailers. I can tell you that the majority of our customers sent us questionnaires by mail. Only one major customer called to follow up on the information.''
Every company relies on outside business partners--vendors and suppliers-- to conduct business. It is widely accepted that as the number of dependencies increases so too does the risk of failure somewhere in the supply chain. ''When you think about the great web of interdependencies this creates in our world, it's inconceivable that there won't be interruptions to the flow of goods and services,'' says Lundberg. ''It's reassuring to see that companies are taking the supply-side risk seriously and gathering good information about the plans of those they do business with. But it's not enough to send out surveys with no follow up, as some companies are still doing. If you really want to know if a critical supplier will be able to deliver the goods, you've got to look him in the eye and ask.''
The Y2K experts who took this poll say that on average, 25% of their vendors are not ready compared to 30% in the June poll. While more vendors appear to be ready for business as usual come the turn of the century, the fact that 25% are not ready is significant because the risk for supply chain failures still exists ninety-days out.
In related news, Y2K experts' confidence in electricity & telephone service is up by 10% with over half indicating no problems are likely to occur. More than one-third believe there will be problems, with the majority expecting the interruptions to be minor.
Yardeni comments, ''I call on the Y2K-remediation community to redouble their efforts to assess their supply chains and to implement their business continuity plans in light of our poll results.''
Mission Critical Software: There are fewer respondents waiting for Y2K compliant mission-critical software from third-party suppliers at 23% compared to 35% in June. Interestingly, as in the previous poll, there is a disconnect between readiness confidence levels and the reality of waiting for mission critical software from suppliers.
In addition, close to 40% of respondents believe somewhere between one and 10% of their critical systems might fail. Says Lundberg, ''Since a critical system is one you must have to either produce or deliver goods or serve customers, it is my fervent hope these people are just being cautious in their assessments.''
Contingency Planning: The second survey again suggests there is widespread blind faith among Y2K experts' that their suppliers will be compliant. Some large firms are preparing contingency plans consisting of back-up and substitutions. In spite of preparing the plans, only 30% of companies are presently implementing plans, which is consistent with the June poll findings. The survey also finds 48% (6/99: 50%) of companies without a formal plan and/or still in the process of creating one. This group's contingency planning does not include significant stockpiling of inventories (i.e., materials, supplies or products).
According to Cangemi, ''It's amazing that almost half have no formal plan or are still formulating contingency plans at this point. One of the most challenging aspects of contingency planning is that you can not plan for what you are not aware of. More than ever before, Y2K issues will include the unanticipated and therefore contingency planning is even more difficult.''
Legal Considerations: Legal issues are a concern for 59% of the respondent group. Twenty-seven percent believe lawsuits against their organizations are likely. On the other hand, 25% say that they are in better shape than their lawyers will allow them to say.
Personal Perspectives: Almost half of respondents in both Y2K Experts Polls rate the Y2K problem as being most like a natural disaster lasting a few days. In the September poll, 5% more respondents selected this rating over other ratings such as ''no impact,'' ''minor disruptions'' or ''global recession.'' Further, 56% (6/99: 53%) of these corporate leaders are personally stockpiling food. The average number of day's worth of cash and food remains consistent with the last survey. Respondents plan to put aside nine days' worth of food, and ten days' worth of cash. The number of people who have sold stocks rose by 2% to 6% in the current poll.
Almost half (43%) of the respondents are required to be on duty the weekend of January 1, 2000. This increased by a margin of 8%.
Demographics: The corporations responding to the Y2K Experts Poll are large size, global companies (20%), and 57% of all respondents have more than 1,000 employees. The September poll generated a consistent sample response, with 993 respondents (6/99: 892). Twenty-three percent are from the financial industry, followed by manufacturing, government, and healthcare. According to Yardeni, ''Our sample is skewed toward firms that should be in good shape because they have the resources to fix Y2K ... all the more reason to be concerned about our findings.''
Conclusion: In summary, Yardeni says, ''As one of the only economists predicting a Y2K recession, I was hoping the latest poll results would give me the opportunity to moderate my forecast. Unfortunately, I can't do that. I hope in the next and final poll (November/December 1999), the optimism of the Y2K-remediation community will be supported by a surprisingly fast dash to the finish line before the date changes to 01/01/00.''
Lundberg recommends companies that are not Y2K-ready take special precautions to minimize the potential negative effects of Y2K:
1) Rehearse a one-day ''worst case scenario'' by turning off the telephone and power. Experiencing business without these basic services will enable the organization to evaluate the impact, adjust operations and create contingency plans for various emergencies. (Note: While widespread power outages and other worst case scenarios are likely not to happen, simulating such exercises will give smart companies an advantage in their Y2K preparation.)
2) Prepare for a drop in profitability as the cost of completing Y2K compliance projects will diminish the company's bottom line. Where possible, keep all receivables current. (The Year 2000 could temporarily put some businesses out of operation, causing an interruption in business income/collections.)
3) Set up manual processes for accounting and other critical systems. Stock up on inventory where necessary. Any kind of disaster can interrupt the movement of goods and vital services and a surplus of inventory will enable day-to-day business operations to continue.
4) Research all of the various legal liabilities.
5) Inform employees about the company's Y2K compliance work progress so that all employees know what management is doing to remediate and plan for Y2K.
Small Business Perspective: Smaller companies are by their very nature focused on the day-to-day operations of their businesses and have limited resources relative to the larger companies responding to this survey. Statistical drill-downs of the data from June and September results are available at www.peoplespoll.com/results/cio/091599.asp. Navigate down to the bottom of the page for the drill down links. By country drill downs are also available.
Y2K Experts Poll Background and Methodology: Both Y2K Experts Polls (June and September 1999) reached men and women on the frontlines of Y2K remediation, testing, auditing and contingency planning. CIO magazine invited 15,000 chief information officers (CIOs) and other high-level executives from its subscriber list to participate; ISACA invited 18,000 of its worldwide members. The most recent Y2K experts poll was conducted online September 15- 22, 1999. The poll closed with a final, qualified sample size of 993 respondents. An email invitation from the three coalition members asked recipients to participate only if they were professionally and actively involved in Y2K projects. Respondents linked to the electronic polling form from the email solicitation. The results of the third Y2K Experts Poll will be released in December , 30 days from the turn of the century. Results from the June and September polls will be used as benchmarks to trend data from future polls.
About the Y2K Experts Poll Coalition Members: CIO Communications, Inc. was formed in 1987 to help chief information officers (CIOs), information technology (IT) executives and other senior management executives succeed in their enterprises through the use of information technology. The company publishes CIO magazine, a publication of International Data Group (IDG). Dr. Ed Yardeni's Y2K Center is a public service of the Chief Economist of Deutsche Banc Alex. Brown. ISACA is a recognized global leader in Information Technology (IT) governance, control and assurance with more than 20,000 members in 100 countries. ISACA also publishes Contingency Planning for the Year 2000 with the Canadian Institute of Chartered Accountants.
NOTE TO EDITORS: Complete findings, as well as visual documentation, from the September 1999 Y2K Experts Poll are available at peoplepolls.com
Photo of Dr. Ed Yardeni is available at www.yardeni.com/bio.html.
Photo of Ms. Lundberg is available at cio.com. Photo of Mr. Cangemi is available at etienneaigner.com.
SOURCE: CIO Communications, Inc.
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