INTERNET WEEK article for Nov 30th>>>
November 30, 1998, Issue: 743
Section: Managing Change
Y2K Still Takes A Big Bite Out Of IT Budgets
Anne Zieger
Year 2000 remediation spending will continue to dominate 1999
IT department budget plans and dollars, although advanced
client/server, Web and enterprise resource planning projects are
vying for funds, too.
Once the Y2K menace is tamed, managers say, these emerging
apps should make a quick recovery, as they remain central to IT
organizations' long-term plans.
At its annual symposium last month, Gartner Group said that
Y2K spending will rise steadily in the remaining days until
2000.
While 5 percent of IT budgets last year were spent on Y2K
issues, 29 percent will be spent on them in 1998, the
researchers said. And next year, Gartner expects about 44
percent of enterprise budgets to go toward Y2K-compatibility
work, including deployment and integration.
A fortunate few enterprises, such as the Holston Medical
Group, have put Y2K problems behind them. Chip Childress,
director of information systems at Holston, spent the last few
years building a next-generation, electronic medical records
system for its 55 physicians in 14 locations. Holston upgraded
hardware to Y2K-compliant models, consisting of thin-client
devices, three years ago when it began the project.
Childress says he expects to spend the majority of his roughly
$400,000 budget and his time in the next year upgrading to a
Windows NT 4.0 front end.
"Y2K is not a substantial part of our budget," Childress says.
"The thin-client devices have no Year 2000 problems associated
with them."
But for most IT departments, the next year will likely be
rockier. Y2K-related projects will pull IT staffers away from
just about every nonessential function.
IT executives at education retirement fund TIAA-CREF, for
example, must turn their attention away from their
still-incomplete disaster recovery project and focus on avoiding
Y2K nightmares.
Projects On Hold
To protect its data, TIAA-CREF has developed a Denver
backup site that mirrors the information stored at its New York
headquarters. The project has claimed the biggest chunk of
TIAA-CREF's IT budget for years. But for 1999, even that has
to come second.
"I've told my people that whatever's on their plate for next year,
they need to get it done during the first half of the year because
during the second half of the year we're going to have our hands
full with the Year 2000 projects," says Bill Wagner, vice
president of technological integration for the $240 billion fund.
He declined to provide specific budget figures.
Despite all the focus on Y2K spending, new client/server apps,
legacy integration projects and data management projects are
moving ahead as well.
And Web-related technology also should continue to be an
important corporate IT spending category next year, though all
of that spending may not go through the IT budget itself, says
Charles Callahan, vice president at consulting company
Booz-Allen & Hamilton Inc.
A growing volume of Web purchases are made by functional
departments such as purchasing, human resources and
marketing.
"Because it's still an emerging, evolving technology and set of
applications, Web spending is not that well coordinated or
managed," Callahan says. "That's often the way demand for
new technologies begins to develop some traction."
Once the dreaded deadline passes, Internet budgets and staffing
may increase dramatically, suggests Jerrold Grochow, chief
technology officer at consultancy American Management
Systems.
"The real spending on Internet technologies is going to come
when companies hook the Internet on the front end to
operational systems on the back end," Grochow says. "And
those are not projects that can be done in 30 or 60 days."
For example, TIAA-CREF's Wagner wonders whether he
should shift Web processing off of servers and onto his
mainframe infrastructure, given the importance of Internet
technology to his company's future.
The fund will build critical systems around its intranet
infrastructure, and has already begun developing its back-end
application logic in Java to accommodate the design, according
to Wagner.
But until the Y2K deadline is met, there's little time or
resources he can devote to such planning-and that's not very
reassuring. "I have this feeling that things we aren't expecting
could hit us," Wagner says about the Y2K efforts. "Any other
commitments we have may have to be pushed aside."
Anne Zieger is a freelance technology writer. She can be
reached at azieger@erols.com.
Copyright ® 1998 CMP Media Inc.
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