Australian Businesses Face Risk From Y2K Problems Elsewhere
Sydney, Jan. 14 (Bloomberg) -- P&O Australia Ltd., one of Australia's leading stevedoring companies, has ensured the Year 2000 computer glitch won't be a problem within its organization.
It's concerned, though, the so called Millenium Bug could disrupt companies supplying goods and services to its ports in less developed countries, like Russia and Mozambique.
''We're not satisfied with answers we've received from Russia and Mozambique about Y2K preparation,'' Jonathan Ladd, general manager of information technology said.
''Some of our international ports in developing countries may have to temporarily suspend operations in January 2000 and a loss in profits is also conceivable.''
The Y2K bug is a software fault that could cause computers and the devices they operate to malfunction or crash on New Year's Day, 2000. Left unfixed, many computer systems, processors and embedded chips won't be able to distinguish between 2000 and 1900 in date references threatening to cripple some of the world's largest companies, financial institutions, and government agencies.
Australian businesses are expecting to commit about A$10 billion (US$6 billion) fixing the glitch, nearly double the A$5.5 billion they were estimating at the start of last year.
P&O Australia, the Sydney-based division of the Peninsular and Oriental Steam Navigation Co., is concerned some key suppliers of energy and telecommunications -- the cornerstones of corporate survival -- might not be doing enough to fix the problem. Without these vital utilities, ports are unable to function, Ladd said.
No Energy
''No energy equals no activity.'' said Ladd ''Ports are very large users of energy, so it's crucial that our power suppliers are Y2K compliant.''
An average sized port uses between 10 million kilowatt hours and 20 million kilowatt hours a year for refrigerated containers and heavy container handling equipment. In comparison, an average four person household uses about 36,000 kilowatt hours a year.
Russia and Mozambique are two nation's singled out as running far behind the rest of the world in their Y2K preparations, according to a report by Gartner Group Inc., a Connecticut-based information technology consulting firm. About 66 percent of companies in those countries are expected to experience critical failures -- a shutdown of business, production, or product delivery operations -- in January 2000, the reports says.
It's a ''huge'' problem Graeme Inchley, chief executive of Australia's Year 2000 Program, told the Bloomberg Forum. ''The dependency is enormous -- one company on another on another and so on. If one (link) falls apart, you've got some serious problems within that whole chain.''
Growing Concern
That's worrying Australian businesses which perceive the greatest Y2K threat comes from suppliers and customers, according to a survey by PricewaterhouseCoopers, the world's largest accounting and consulting firm.
Not all Y2K experts, though, support the ''domino effect'' theory which suggests one company's collapse could trigger the downfall of the next company in line.
''The domino principle has been grossly exaggerated,'' Information Systems Lecturer at Monash University Doug Hamilton said. ''Actual case examples have been rare in the past and will be rare in the future.''
For example the failure of some computers to account for leap years has been resolved with little disruption to business activity, Hamilton said.
''The scenario of an economic doomsday is hard to imagine,'' he said.
Educating Suppliers
Some companies don't want to take chances. Telstra Corp., Australia's dominant telecommunications company, is working closely with the International Telecommunications Union to assist carriers in other countries with their compliance programs.
''Our good work could be undone,'' if other international carriers aren't prepared said Director of Telstra's Year 2000 Program Negba Weiss-Dolev. ''Customers making international calls need more than one carrier.''
Telstra, which expects to spend about A$500 million fixing the problem, is paying specific attention to regional telecommunication companies.
''We've made educating the region our priority,'' Weiss- Dolev said.
The Asian economic slowdown has left countries struggling to fund the fix. Only Singapore, South Korea and Taiwan made it into the Gartner Group's second tier where one third of companies are expected to experience a critical Y2K-related failure. About half of businesses in Japan, Malaysia and North Korea and 66 percent of business in Indonesia and China are headed for trouble, the report says.
''If Asian countries aren't prepared, Australian companies will suffer,'' Inchley said.
Mixed Outlook
Australia is among the 12 countries, including the U.S and Britain, to be placed in the Gartner Group's first division where only 15 percent of companies are expected to be seriously affected.
Despite the country's high ranking, about 43 percent of Australia's businesses are yet to start work on the problem, a survey by the Australian Bureau of Statistics and Year2K Industry Program showed.
While P&O and Telstra have been investigating dependencies, as much as 80 percent of Australian businesses haven't approached customers and suppliers.
The problem has been compounded by widespread reluctance to disclose Y2K compliance efforts for fear of litigation. This may soon change, however, with the government's introduction of the so-called ''Good Samaritan'' law.
The legislation to be introduced in February will limit companies' liability over information they give to others in ''good faith,'' Minister for Information Technology Richard Alston said in December.
Transparency of information is the key to solving the glitch Weiss-Dolev said.
16:56:31 01/13/1999 |
