'ITAA's Year 2000 Outlook
October 16, 1998 Volume 3, No. 38
Published by the Information Technology Association of America, Arlington, VA
Bob Cohen, Editor bcohen@itaa.org
Read in over 80 countries around the world
ITAA's Year 2000 Outlook is published every Friday to help all organizations
deal more effectively with the Year 2000 software conversion. To create a
subscription to this free publication, please visit ITAA on the web at
itaa.org. To cancel an existing
subscription, visit itaa.org.
ITAA's Year 2000 Outlook is sponsored in part by CACI International Inc., DMR
Consulting Group Inc., and Y2Kplus
Global Y2K Summit Issues Call for Concerted Action
Several of the world's leading international organizations and trade
associations this week called on governments and industry around the world to
step up dialogue and action on the Year 2000 conversion challenge. In a
statement issued at the Global Year 2000 Summit in London, the conference
organizers acknowledged that although international awareness of the Year 2000
challenge is growing, the problem continues to be underestimated and the threat
to world economies very serious.
Released by the Global 2000 Coordinating Group, International Chamber of
Commerce, International Telecommunications Users Group, Joint Year 2000 Council
(BIS), Organization for Economic Cooperation and Development, infoDev/World
Bank, Asia Pacific Economic Cooperation Telecommunications Working Group, and
the World Information Technology and Services Alliance (WITSA), the statement
calls on both industry and governments to more aggressively tackle the
"Millennium Bug," pointing to the interdependencies inherent in a global
economy, stressing that national preparedness is not enough, and calling for a
more sustained international dialogue on the issue.
Specifically, the statement calls for: global coordination and leadership,
assistance for developing countries, a global awareness campaign, cross-sectoral
dialogue, international contingency planning, and outreach to small and
mid-sized enterprises.
The statement says that the Summit organizers will work together to create
international committees in the contingency planning and cross-sectoral
interface areas. WITSA President Harris Miller delivered the statement in a
Thursday afternoon press conference and emphasized the need for work in these
particular areas.
"Last week, WITSA released a study entitled Digital Planet: The Global
Information Economy," Miller said. "[The study] documents international
spending on information and communications technology of almost $2 trillion.
"Nations have embraced IT as fundamental to their economic health and welfare.
When you consider the nation to nation interfaces implicit in a $2 trillion
market, you begin to see the complexity of the current crisis. And this number
does not include the money spent on embedded systems, such as you would find in
programmable logic controls and other intelligent devices," Miller said.
The Global Year 2000 Summit itself drew delegates from over 35 countries and
featured several high level speakers from a cross-section of industries and
countries. The Summit began with a dinner address by the Rt. Hon. Margaret
Beckett, the U.K.'s Leader of the House of Commons and Leader of the Privy
Council and an outspoken advocate of more action on Y2K on a global basis.
Calling "no man an island" in the information society, Beckett said the current
challenge is to find the true state of affairs on Y2K in an environment that
tends to either understate or overstate the nature of the problem. She said
that while the British government will focus its attention on fending off
disruptions to the national services infrastructure, UK businesses must act for
themselves. At the same time, Beckett said international action is a must.
"Put simply, in a global economy other countries' problems are our own. Supply
chains are increasingly international and no matter how well we do individually
in tackling the bug we cannot insulate ourselves from the impact of the bug on
our neighbors and trading partners."
Other Summit speakers echoed the global interdependence theme. In his
statement, Federal Reserve System Governor Roger W. Ferguson, Jr. noted that
"the current global financial upset has reminded us that the world is truly
interdependent and that counterparty and country risks can be, and are,
reevaluated quickly. An exchange rate problem that started in a small economy
in Southeast Asia has, within a little more than one year, created a contagion
that may potentially impact the growth performance, as well as the financial
performance, in the most highly developed industrial economies. Similarly Year
2000 problems, if not addressed…can have unexpected spillover effects."
Ferguson, who also chairs the Joint Year 2000 Council, also issued a call for
greater disclosure and transparency on the Y2K issue by companies and countries.
Noting that a lack of information feeds negative marketplace perceptions, he
added, "…we may experience what I call the "Year 2000 shadow" in the financial
markets. Financial market participants, and entire countries, may find that
capital will become scarce, or at least dear, if they are not seen to be making
sufficient progress toward resolving this problem. The uncertainty surrounding
preparedness for Year 2000 may make markets less liquid as institutions seek to
insulate themselves from risk with counterparties who are thought to be
unprepared. The financial cost of this is not clear, and I am not one of those
forecasting recession as a result of a Year 2000 slowing, but we know from
recent events that a flight to liquidity can have severe repercussions in the
real economy."
OECD Issues Y2K Impacts Report
The Organization for Economic Co-operation and Development (OECD) has issued a
comprehensive study of Y2K international and sectoral economic impacts. The
report refuses to take sides on the Y2K severity issue, noting, "Due to the high
degree of uncertainty, it is impossible to forecast any precise outcomes,
although it would appear that if the pace of remediation efforts continues to
accelerate, the most likely scenario would be some combination of the best and
worst cases, with wide variations between countries."
The Year 2000 Problem: Impacts and Actions was released at the OECD Ottawa
ministerial conference on electronic commerce earlier this month and distributed
at the Global Y2K Summit. Available on the web at oecd.org,
the report synthesizes a substantial volume of existing studies, testimony,
articles and like documentation. The report includes a survey on the Y2K
preparedness of OECD member states. Among the more recent data it contains:
· Belgium reports 39.5% of 41 public agencies have undertaken the effort;
· Seventy seven of 263 public sector entities in Mexico have completed
conversion projects;
· Twenty percent of the central government in the UK is more than 90 percent
through the correction;
· Fifty percent of 7,343 U.S. government mission critical systems are now
compliant.
Panel Points Up Global Interdependencies
A panel of experts at the Global Y2K Summit in London seem to suggest that
correcting internal information systems may be just the tip of the millennial
iceberg.
KLM Royal Dutch Airlines CIO Max Rens indicated that his company will be able to
fly on January 1, 2000 but whether it does or not is a difference issue. Rens
said the airline is supported by 2400 airports and 185 air traffic control
systems. A single flight from Dublin to Athens, he said, involves hand-offs
between eight separate air traffic control systems.
Rens was followed to the podium by Ron Balls, chairman of the International
Telecommunications Users Group Y2K Task Force. Balls said his group is
conducting cross-boarder programs in the areas of information management,
inter-carrier testing and development support. A survey of 5000 telecom
operators has helped the group identify where in the world help is needed.
Nick White, head of technology and telecommunications at Unilever, participated
on a different panel but his remarks clearly reflected the complex external
realities of the Y2K issue. White said Unilever does business in 100 countries
and draws on over 5000 infrastructure services, including those provided by 1000
communications companies, 1000 federal, state and local government bodies, and
1200 financial organizations.
The multinational conglomerate has over 22,000 suppliers. White said that Y2K
concerns may cause these firms-as well as customers-to change their normal
behavior, creating stockpiles, adopting new ordering and production patterns, or
becoming more cautious. Such changes could spell new and even harder to predict
supply chain headaches for the company. To date, White says 170,000
contingencies have been identified, although these are grouped by products and
processes.
Group Offers Y2K Status Templates
The Global 2000 Coordinating Group, an informal collection of 180 banks,
securities firms, and insurance companies, released an "analytical tool" this
week for evaluating the readiness of financial institutions and markets
worldwide. The group calls it a "comprehensive disclosure template" and says JP
Morgan, Citibank, DBS Bank (Singapore), Merrill Lynch and UBS (Switzerland)
intend to shortly use the form as a mechanism to release completed assessments
of their respective Y2K programs. The group says this self-assessment
information will be posted on the firms' websites and linked to the Global 2000
website at www.global2k.com. The standard format is intended to help the public
assess the state of readiness of the international financial community while
reducing the level of duplication institutions face in responding to voluminous
information requests. Global 2000 also says it has market information templates
completed for Australia, Canada, Denmark, France, Germany, Hong Kong, Japan,
Singapore, Switzerland, the United Kingdom and the United States. |
