According to projections by the Gartner Group Inc., more than half of all companies worldwide won’t be prepared for the Year 2000 computer problem. Companies which have started work on the problem are finding out that it’s more than they bargained for.
“I’m surprised at the systems I thought would be compliant which aren’t, or we haven’t figured it out yet,” says John Schwarz, director of Y2K compliance for Aurora Health Care. “It’s a lot bigger than I anticipated, and I think most companies will find this to be the case.”
Compared to six months ago when Aurora was first wading into its Y2K project, the project cost has taken what Schwarz will only describe as “a quantum leap.”
Many in-state manufacturers are already butting up against the Year 2000 as they make future projections for materials handling requirements.
At Appleton Papers, a material requirements application is used to plan for paper production at least 18 months in advance. That’s how long it can take to line up the sophisticated equipment required to produce the thousands of products made by the $1.3 billion Fox River Valley papermaker.
Because building a new paper machine is a complex effort involving a variety of vendors, if the material requirements application was not working by July 1998, there would be no way Appleton Papers could meet customer demands in the Year 2000, says Mike Pratt, the Y2K project manager.
“If the material requirements planning application was not working, our shop floor would simply shut down,” Pratt says.
Appleton Papers got started on the problem as early as 1995. With the help of Y2K consultant Compuware, the Fox River Valley papermaker launched a $3 million effort to convert 5.5 million lines of code. The project was completed in February, five months ahead of schedule.
Insurance companies and banks have been out ahead of the pack in dealing with the Year 2000 problem. That’s because much of the information those institutions handle is based on calculations that use dates as the basis for many of their applications. Last year, Allstate Insurance Co. estimated the cost of its Y2K fix at $40 million.
Like Allstate, Northwestern Mutual Life Insurance Co. has been actively working on the problem for two years, and has a targeted completion date of November of this year, says Kathy Oman, NML’s Year 2000 project director.
NML has 40 people working full-time on the project at its Milwaukee headquarters, and another 40 to 50 consultants from Infosys Technologies are attacking the problem offsite.
Infosys, an offshore company based in India, uses an automated tool to scan NML’s code and find out where the date hits are. Once they find the problem, they set about the task of “renovation.” Altogether, NML has about 150 different applications and 20 million lines of code to sort through, Oman says.
“Right now, only about 20% of our code remains to be looked at, so we should easily make our target date,” Oman says.
NML’s corporate service department is responsible for looking at the company’s embedded systems, which include elevators, security systems and anything else that is run by microchips. In addition, the insurer is analyzing the Y2K readiness of all of its electronic vendors, both hardware and software.
Don’t forget to
check the phone system
Most businesses will be affected in their accounting systems and also their telephone systems, says Tony Ollman, an information systems consultant with Virchow, Krause & Co. in Madison. In a survey of 200 Wisconsin manufacturers and distributors by Virchow, Krause revealed that 45% of the firms had not considered their phone systems as part of their Year 2000 planning.
“You can’t do business without a telephone, and that’s the most expensive system to repair,” Ollman says.
If your company has “homemade” programs from an outside programer, the best alternative may be to simply replace the application, says Steven J. Hyde, an information technology consultant with Kolb Lauwasser & Co. in West Allis.
That’s what Milwaukee Public Schools opted for in replacing its payroll system which was not Y2K compliant. While the new systems developed by Oracle and PeopleSoft are costly, it represents a good opportunity to do away with outdated code and upgrade with new software that should result in economies of scale, says Jim Bloom, a resource specialist with MPS.
Most companies will find it less costly and more timely to replace their systems with new packaged software that is Y2K-compliant, says Hyde, rather than continue to pay expensive
“My biggest concern is
that small businesses just aren’t getting it.”
– Carl Gerlach,
Apex Information Systems
programer wages which nationally average $90,000 per year.
Philipp Lithographing Co. in Grafton realized a tenfold increase in the speed of its IBM mid-range computer when it replaced it as part of Y2K compliance, says controller Dave Kaehny. After the computer upgrade in 1996, Kaehny had an outside consultant go through and work out the bugs in the company’s software in 1997.
Kaehny’s foresight resulted in a substantial savings for the company. From the time Philipp Lithographing got its Y2K problem out of the way, the cost of qualified programers has more than doubled, according to Carl Gerlach of Apex Information Systems in Cudahy, who performed the work.
“My biggest concern is that small businesses just aren’t getting it,” Gerlach says. “We have done a lot of public education through speaking at Rotary and Lions meetings, and have called on people who know for a fact that they’ve got a problem, but they just refuse to acknowledge it.”
Amid all the gloom, there are some positives that come out of a Year 2000 project.
By unbuttoning applications, businesses can create new processes designed to adapt to future changes, says Ernst & Young’s Lorne Richardson. Maintenance activities can be better organized, and systems can be made more flexible.
Simply eliminating dead computer code and multiple applications may generate substantial savings, Richardson says.
Each process that can be made more flexible and adaptive will add to the bonus. Also, data collected during your Y2K project can serve as a repository of application data which may prove invaluable when it’s time for upgrades and platform migrations.
“If you look at every program that you have and every date, it’s an overwhelming task,” MPS’ Bloom says. “But if you triage your systems and determine what’s going to fail, then it becomes doable.”
All Y2K consultants recommend that you identify your mission-critical applications first when you go about developing a plan of attack.
Also, remember to build in enough time to test your Year 2000 fix. Give yourself six months to a year to do all the testing, Aurora Health Care’s Schwarz advises.
“So you don’t have until next year to do it,” Schwarz says. “You should be doing it this year.”
By summer, companies that have not started the process of code conversion are probably not going to make it in time for the Year 2000, and could face potentially crippling systems failures, warns Y2K guru Peter de Jager.
“The companies who know that their very survival depends on their computers have already started making their systems Year 2000-compliant,” de Jager says. “For those who have not even begun to assess the extent of the problem, it’s too late. They won’t be ready by the Year 2000.”
April 1998 Small Business Times, Milwaukee
