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There is so much information coming in each and every day about Y2K that it is getting difficult to decide what information to provide each month. I am also having to admit to bit of bias in my reporting. I assume that you are hearing the bad reports and the calls for concern about developments with Y2K. After all, whenever there is a negative report, I find it is reported over and over again in about a dozen legitimate sources, and about a hundred times on all of the new Y2K web sites that have popped up recently.
Just in case you haven't heard any bad news lately, let me share two of the latest concerns. It seems that many are beginning to agree that things are looking up here in the USA (more on that, later in the article), so the attention now seems to be focused on Europe and Asia. I would certainly agree that they are not as prepared as we are here in America.
The concern here would be that we have become such a global economy that if other countries have serious problems, we will have an economic down turn. Many of our banks have loans to companies in other countries as well as actual loans to other countries. If they have problems as a result of Y2K, then so will our banks. Of course this should have some impact on our economy. However, CNET news reported just this November 24th that a recent survey of over 30 top economist showed that they estimated Y2K would have, “a minimal affect on the economy over the next couple of years.” In fact, 29 of the 33 surveyed said, “they expected some impact on the growth of the economy because of Y2K.” The survey was conducted by the Federal Reserve Bank of Philadelphia.
The second concern that has peeked my interest has been the latest reports on how our government is doing in its preparations for Y2K. They are still not doing very well, particularly of interest is the Department of Defense. They have the largest number of “mission critical” computers and are therefore at the greatest risk. What are they doing about it? The Pentagon has stated that they have now undertaken the testing and Y2K prevention with a war like fervor. They are also preparing for contingency plans in case certain systems are not ready in time. In fact, the Federal Computer Week reported on Nov 23, 1998 that the DOD has staged their first Y2K war game, forcing their midlevel managers in DOD functional business areas to function without their computers to test their contingency plans. This seems to scare some people, however, I think contingency planning is one of the many solutions to the Y2K situation.
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Contingency Planning
When the Security Exchange Commission began to ask companies to present their Y2K reports on how their company was handling the problem, one of the things they asked them to do was to present their contingency plans for Y2K failures. This is not a last ditch scenario, but practical business planning. In fact, this is one of the reasons Y2K does not scare me. I know that ALL business reliant on computers, if they are smart, have contingency plans. A few months ago, American West had a complete nationwide computer failure for their schedule and ticket information. All across the nation, the ticket and boarding booth's computers went dead. In fact, they stayed dead for around four hours. What happened? Flights were delayed an average of ten minutes. Why? Because all across the nation, American West employees did NOT go screaming into the night because the computers were down. Instead, they fell back on a contingency plan that was developed for just such a situation. (They probably just got everyone in a line, pulled out a yellow pad and pen, and started reading the information typed on their tickets).
You have probably heard that big companies such as General Motors are reliant on “just in time inventory”. So if one area of our society breaks down, GM goes down the tube. What if one supplier has a major Y2K problem? As it is now, GM depends on parts to arrive at their plant just three days before they are pressed into service. Well, guess what? GM has announced that part of their contingency planning for Y2K is to start stockpiling certain critical parts if their confidence in the supplier's Y2K preparations is questionable. Sounds like good business, doesn't it?
You see, Y2K is basically a test. Smart people, in smart companies, will be just fine. People with their head in the sand, that don't know how to run their business, will go out of business. If it wasn't Y2K, it would have been some other problem. Business' in the USA are working hard to solve the problem, double test the problem, verify the solution, and then have a backup contingency plan just in case. This is true of utilities, transportation, etc.
I watched the short 15-minute presentation on 60 minutes, Nov 29, 1998. They mentioned that some believe the FAA might have problems with their computers. They also reported something few people realized. IF their computers failed, they would fall back to a manual contingency plan. This would limit flights by 30%, but airports actually CAN function and 70% of all flights would continue until they got the system back up. The controllers at Salt Lake City got a practice run just this last month when their computer, as well as their backup, both went off line. They immediately went to their manual system without any close calls. You see, with or without Y2K, computer systems fail us, and those that use them usually have a backup plan.
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Smart business will prevail
I have heard several sources make the comment that Y2K is not like other problems we have faced. They say you can not just throw money at it to make it go away. I disagree. While it took years to build the highways that were destroyed in 1989 in LA by an earthquake, when enough money was thrown at the repairs, they had it open in months. The same thing was true for the oil wells that were set on fire during the Gulf War. Remember the dooms day prophets predictions on how many years it would take to put out the fires, and how much damage would be done. Guess what, when there was enough money offered to solve the problem, companies popped up all over the place to get the job done, in months, not years.
The same is true for Y2K. Have you ever heard of early bonuses? Sometimes contractors will offer a builder a hefty bonus if they get a job done early. General Motors has just adopted this type of practice in their Y2K solution. GM has hired Electronic Data Systems to fix their Y2K problems, and they have reported that they have done their testing and are on schedule with Y2K fixes. However, because their can be so many little problems out there, GM has offered EDS a 75 million bonus IF they do not have a single Y2K problem in any system. Now, if you worked for EDS, that bonus is going to be passed down to you in a substantial lump sum. How well do you think you will do your job, as opposed to your ordinary work day somewhere else. Businesses are getting serious about the problem. Not only because they don't want a glitch in their production, but because they have to convince their stock holders that they are taking care of business!
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More good Y2K news
Power plants across the nation are announcing that they are ready for Y2K. You will hear them say that they “believe” they are ready. This is because their legal services have advised them to say this to protect themselves from liability. In fact, a few have come out stating that they can NEVER guarantee continual power. (Kansas City Power and Light has stated that they can not guarantee that they will be providing power on Jan 1, 2000, but they are stating that if they are not, it won't be because of Y2K!)
Now there is also a new twist. You will hear those preaching about a “worst case” scenario talk about the power “grid” going out. Utility after utility is now letting their customers know that if they are ready, but others have trouble, they will try to help keep the grid up. However, many are informing their customers that they DO have the option of disconnecting from the grid. What this means is that the chances of a power outage across the nation is virtually impossible. If the grid were to go down, and then have difficulty getting back up, utilities that are ready (now over 80 percent) would simply disconnect and thus insure that their customers get power!
Here is another inside report that I obtained. Recently Mr. Larry McManis contacted me. Mr. McMainis is the Director of Strategic Initiatives for Kraft Foods North America , and is responsible for all Y2K contingency planning efforts in the U.S. and Canada. He shared that Kraft had over 12,000 different suppliers that they depend on in order to accomplish their business. His evaluation of where the nation is on Y2K can be summed up by his statement to me that out of the 12,000 suppliers they deal with, at this point there are only 20 critical suppliers that they are concerned about. He also shared with me that despite rumors, the directors of major Fortune 500 companies like his are not panicked. They recognize the problem, and are getting it solved.
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Y2K Urban Legends
Do you know what an urban legend is? It is a story that got started and is believed to be true. However, when you investigate, you discover that it is not based on fact. Y2K has spawned a lot of urban legends. This is why I don't believe it will be as bad as some. As I hear dramatic testimony about how bad it will be, much of the time it turns out to be an urban legend.
Urban Legend – on January 1, 2000, computers everywhere will have the “Y2K bug”. The actual fact is that it is now estimated that of all of the Y2K bugs that will affect computers, only about 8% will actually happen at midnight as the new millennium begins (as reported in USA Today, Nov 13, 1998). In fact, the Detroit News reported on November 2, 1998 a recent survey showed that 44% of all businesses have already HAD some Y2K problem that they have had to resolve.
Urban Legend – according to a number of Y2K consultants, when the World Trade Center tested for the Millennium Bug, several elevator cars promptly shut down and couldn't be restarted for days. The Wall Street Journal reported this “urban legend” on Nov 22, 1998. They contacted the spokesman for the New York landmark, and he denied the story ever took place. They did admit that some of the parking garage gates had to be fixed because they found some Y2K problems in their timers.
I could go on. Urban legends now abound. Fire trucks won't start. Planes will crash. Missiles will take off by themselves. Your car might not start, etc., etc. All of these have been proven false.
In fact, as these urban legends are disproved and the actual facts continue to emerge, several important groups and individuals are changing their analysis of the situation. One of these is the Gartner Group. Recently, this is what they reported. “There are a number of myths, fallacies and irresponsible assertions circulating about the scope and impact of the year 2000 problem, accompanied by a significant volume of misguided and, in some cases, frankly bad advice.” In Michael Hyatt's book “The Millennium Bug - How to Survive the Coming Chaos” he states on page 12, “The Gartner Group, which is arguably the most respected and highly quoted Y2K research company in the world.”
In fact, it was just last July that Sen Robert Bennett spoke to the National Press Club Luncheon and suggested that if Y2K were to hit today, it would be the end of western civilization, as we know it. (I'm going to keep a copy of that speech on my desk until this is over.) What is he saying today? He just recently was quoted as saying, “My current assumption is that the United States will overcome this without overwhelming crippling problems”. I would say that is a major turn around for Sen Bennett, wouldn't you?
There still might be some economic affects from Y2K. There might be some weekend inconveniences, but now even the Gartner Group is saying that the affects on individual Americans is equivalent to a snow storm (something I said about 6 months ago.)
As I stated in the editorial, I am seeking to go on the road across America and speak on this subject. I will assume the costs of travel and lodging. I am already taking engagements in major cities starting in January. If you would like to know how you can help me come to your city and speak on this issue, please call our offices at 1-800-456-1868, or send me an email at steve@ccmag.com.
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