To: C.K. Houston who wrote (725 ) 12/21/1997 9:00:00 AM From: R. Bond Respond to of 9818
From The Times On Sunday in London. Located on front page of the Business section or at sunday-times.co.uk . Regards, Bond ------------------- Costs soar as suppliers struggle Millennium bug alarms Unilever UNILEVER, the Anglo-Dutch consumer-products giant, has trebled to œ300m its estimate of the cost of eliminating the millennium computer "bug" from its operations. Niall FitzGerald, chairman of the British arm, warned last week that up to a fifth of its small and medium-sized suppliers may not have fully removed the bug by January 1, 2000. Unilever's discovery that the cost of fixing the bug is far higher than anticipated, and FitzGerald's warning about the risk to smaller suppliers, will sound an alert throughout British industry. "I'm concerned that up to one-fifth of our suppliers worldwide may not be fully ready for 2000," said FitzGerald. Unilever has set its executives the target of ensuring their operations are 2000-compliant by next October. In common with many big companies, it is likely to drop suppliers if it concludes that they will not be ready for 2000. The group is warning of the disruption to the business cycle the bug will cause, with takeover activity likely to dry up and huge inventory-building expected to create buffer stocks ahead of January 1, 2000. Iain Anderson, Unilever's technology director and a British Telecom (BT) non-executive, said last week: "There will effectively emerge a sterile zone for acquisitions. I don't know when it will start, but I doubt if there will be many acquisitions after September 1999." Unilever's comments will attract the attention of the government, whose efforts to tackle the bug in Whitehall and to alert business to its danger have been criticised by Robin Guernier, head of the independent Taskforce 2000, which is trying to raise awareness of the threat. The problem has arisen because many computer systems use only two digits, rather than four, for dating purposes. When the year changes from 99 to 00, experts say many applications will crash or create data that are, literally, rubbish. Many systems in the food industry would, for example, decide goods so labelled were out of date and should be scrapped. Anderson said the costs of tackling the bug were soaring because of the scale of the problem, particularly concerning so-called "embedded" chips - microchips installed deep in manufacturing equipment and computer systems whose software has to be checked line by line and, if necessary, rewritten. Anderson said: "The challenge isn't because it is intellectually difficult, but because there are just billions of things to be done. It's the sheer scale of the task and the relatively small number of people in the world qualified to do the work." Cap Gemini, Europe's leading computer-services company, believes solving the millennium bug will cost Britain œ31 billion. The global cost could be as much as œ340 billion. Many British companies are still reluctant to reveal how much they are spending on the problem. Unilever's estimate is one of the biggest so far, equal to that stated by BT. However, following news that Unilever has underestimated the cost of the operation, experts believe many firms will realise that the problems are deeper than first thought. Americans are already feeling the effects of the millennium bug. In Kansas, a 104-year-old woman recently received a letter telling her to register for kindergarten. In Washington, a Pentagon supplier with a contract for delivery of goods in 2003 received a warning that it was 94 years behind schedule. Many critics claim the process of re-writing software is moving far too slowly. One survey conducted by Cap Gemini found that only 33% of America's biggest companies had detailed rescue plans in place.