Y2K study paints
grim picture
By Erich Luening
Staff Writer, CNET NEWS.COM
August 5, 1998, 12:25 p.m. PT
Although nobody is sure just how much
havoc the Year 2000 technology
problem will cause, a new study
released today paints a decidedly grim
picture.
According to the Gartner Group, the
millennium bug has already caused
some minor failures in computers and
the glitch will still be zapping systems
in 2002, plaguing global
telecommunication, transportation, and
utility industries.
That, according to Gartner, could lead
to a fair amount of Y2K-related
litigation. Already, just less than a
dozen Y2K-related suits have been
filed, two in the past 24 hours.
The Gartner Group report found that
companies began noticing failures in
the 1980s. At that time projection and
forecasting data that included dates on
and beyond 2000 began to cause
glitches in systems that didn't recognize
those dates. The same occurred in
1995 when five-year warranties were
processed, and again, earlier this year
when systems at financial firm First
Call's systems failed to process two
year forecasts.
More grimly, the survey found that the
industries on which the world's
economic infrastructure
relies--telecom, utilities, and
transportation--are laggards, barely
ahead of the least prepared
industries--healthcare, food
processing, and government--in their
Y2K preparations.
The Year 2000 issue is also scaring
insurers away from covering
calamities that are related to the bug.
According to the Gartner survey, 40
U.S. states have already granted
insurance companies exclusions which
will excuse them from covering Y2K
losses under existing business
interruption policies.
The survey, deemed "disturbing" by
Gartner, shows how the Y2K issue can
stem lawsuits, like those filed today
for instance. A medical equipment
vendor and a major software maker
have been slapped with Year
2000-related lawsuits in the past 24
hours.
A medical services company, Medical
Manager, has been slapped by a
class-action suit alleging that the
company violated the New Jersey
Unfair Trade Practices Act when it
marketed computer software without
disclosing that the software was not
able to process dates after 1999.
Also, software maker Quarterdeck is
being sued for allegedly selling
version 4.0 of its popular Procomm
Plus software for Windows 95
between November 1996 and July
1997 without disclosing its non-Y2K
compliant status.
"This will be a sticky issue as
litigation goes, as more and more
insurance companies don't cover
Y2K-related problems," Marcoccio
said.
The Gartner study also found that
globally, Japan and Germany are at
least 12 months behind the United
States, Holland, and Belgium in Y2K
fixes. Other countries falling behind,
with a significant risk of facing major
disruptions, are Argentina, Venezuela,
and all the Middle East, except Israel,
the study found.
Fifty percent of companies in the oil,
electrical, and gas utility industry
around the world expect mission
critical systems to fail because of the
Year 2000 technology problem,
according to the report.
Gartner researchers, led by Lou
Marcoccio, the director of the Year
2000 research team, surveyed 15,000
companies in 87 countries, along with
other "relevant" research to develop
the report.
The study also addressed the costs
facing companies dealing with the
Year 2000 technology problem. While
only 5 percent of all IT budgets were
dedicated to Y2K in 1997, that figure
will increase to 30 percent by the end
of 1998 before reaching 44 percent in
1999, the study reported.
Because of this transfer of available
funding for information technology,
businesses are cutting back on other
software spending. And since
everybody's shifting their priorities to
Year 2000 issues, there are few people
left to install new software, according
to researchers.
The Year 2000 problem will also
siphon off money for computer
training; for equipment needed to
maintain large data warehouses; and
for systems support, since many of the
technicians will be toiling on the
glitch.
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