Will High-Tech Companies Survive Y2K?

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This is about the computer industry "even though it has great insight into the problem". From Yahoo Y2K news dated March 16 <:)=

HANOVER (Reuters) - Few experts will be surprised if some information technology companies displaying their products at the annual CeBIT technology trade fair this week fall victim to the millennium computer bug and do not return next year.

``I wouldn't be at all surprised if a very major IT (information technology) company is in serious trouble by CeBIT next year,'' said Margaret Joachim, Year 2000 expert for U.S. computer services company Electronic Data Systems Corp (NYSE:EDS - news) .

``I won't say which one, but it is entirely likely that somebody will come unstuck,'' Joachim said.

Joachim also says there will be turmoil amongst smaller technology companies which may go bankrupt as the scale of the millennium bug becomes apparent in terms of costs and lawsuits.

Troubled smaller companies might also be taken over by bigger ones which can see damaging supply chain interruptions looming.

The millennium computer problem stems from the once-common practice of computer programmers of using only two digits for the year in dates, like ``97'' for ``1997.''

This has the potential, when dates change in 2000, to confuse computers and microchips embedded in machines, causing them to produce flawed data or crash.


Experts are divided on how successful companies, institutions and governments will be in protecting themselves from the bug. The information technology industry in particular, even though it has great insight into the problem is still considered vulnerable.

``It'll be interesting to see if the technology industry manages to scrape itself together to hold a CeBIT 00 (2000), given the rash of lawsuits they can expect when their products begin failing on January 1st,'' said author Simon Reeve.

Reeve co-authored ``The Millennium Bomb'' in 1996, which he says was the first book to warn of the potential technological chaos in 2000.

``It is astonishing that the technology/computer industry is so eager to get together and pat itself collectively on the back at CeBIT when it remains reluctant to get together and address the millennium bomb issue. It's known about it for years, problems are already emerging, and customers are now starting to really panic,'' said Reeve.


Nick Fitzhugh, Year 2000 expert at management consultants Ernst & Young, is a little less apocalyptic but still sees the possibility of major problems.

Fitzhugh said many technology companies have put themselves into reasonable shape, but doubts remain.

``No one is saying they are 100 percent confident everything's OK for two reasons. There's the pervasive nature of the problem, there's always the residual risk even after testing.''

``But I think the greater risk is the supply chain. It's all very well having all systems tested 100 percent and OK, but problems along the supply chain could impact business,'' said Fitzhugh.


So-called Just-In-Time (JIT) supply systems are in jeopardy, said Fitzhugh. JIT supply chains are designed to eliminate stocks, or push them back onto suppliers. JIT depends on meticulous, computer controlled timing of parts deliveries. When the production line needs the next delivery of parts the truck supplying it arrives five minutes earlier.

``But if the supply chain fails, everything fails. And the customer chain. If you are producing products and customers are not able to receive and pay for the products, these are significant issues,'' Fitzhugh said.

Fitzhugh said industry in general and technology in particular will need strong continuity planning.


EDS's Joachim suggested smaller companies probably can't afford such lifelines and that those that look vulnerable may be taken over by customers in order to protect themselves.

``During the rest of this year, a lot of smaller companies are going to disappear in voluntary, or involuntary, liquidation as the problems become all too much for them. They will suddenly find themselves taken over by somebody who is extremely concerned about them as suppliers,'' Joachim said.

``If key suppliers to large organizations look rocky, taking them over and making sure they perform is quite a good contingency plan. It could be cheaper than letting them go off the rails.

-- Sysman (y2kboard@yahoo.com), March 16, 1999



Could the next question be how?


-- Watchful (seethesea@msn.com), March 16, 1999.

I expect many high-tech companies to go out of business due to Y2K. They created much of the problem, and this has kept them from acting expeditiously.

In early 1997 I was a member of the San Francisco Bay Area Y2K users group. The Y2K project leader for one of the largest high-tech companies is Silicon Valley spoke about their situation. With less than 3 years to go at the time, he was the only person working on it. He said that the company's myriad divisions were like little fiefdoms, and several divisions had their own suite of systems rather than using common corporate systems. The company did awaken some. By mid 1997, his staff and budget had expanded significantly.

I just checked that company's latest Q10 (for the quarter ending in September 1998). At that time, the company had spent only $35 million of its estimated $250 million Y2K budget. (I do not name the company because the members of the users group promised to keep all information confidential.)

Silicon Valley's leading newspaper is the San Jose Mercury News. It was late in starting to report about Y2K, and it has carried very few in depth articles. The San Francisco Chronicle has done a much better job. While Santa Cruz and Oakland have active Y2K community preparation groups, Silicon Valley is wandering around in denial. The Valley simply does not want to get it.

-- Incredulous (ytt000@aol.com), March 17, 1999.


Some of them "get it." Not many.

Thankfully, the S.F. Chronicle and Examiner do a better reporting job than the Merc. We at least know Intel "gets it" since they testified at the state's recent Y2K meeting chaired by Vasconcellos.

Wonder what they are helping the others "get" around the valley?


-- Diane J. Squire (sacredspaces@yahoo.com), March 17, 1999.

Some will make it, some won't. Here today and gone tomorrow is a fact of life in the computer business world. Where is Compuadd, Visicalc, SouthWest - name your own favorite. Bought out, merged, bankrupt? Every economic downturn shakes out dozens more. Even Cray Research is no longer with us as an independent entity.

-- Paul Davis (davisp1953@yahoo.com), March 17, 1999.

Recently met a guy at a local computer club meeting. He works for a large mainframe manufacturer. The name is three letters and starts with "I". A coworker of mine introduced us as each being the only two persons he'd heard talking about Y2K in terms of serious, even life- threatening disruptions.

His job at I--? He's a Y2K remediation guru. Constantly on the road, doing on-site work at various client locations around the world.

His view? Bad. Really bad. VERY bad. SCARY BAD. He's doing client Y2K remediation and he's saying it won't matter. Fixing the computer systems won't save the clients because there are so many other "Y2K wolves" at their doors. "Wolves" being issues that the clients can't control. And they're at the mercy of those issues. You know the song: power, water, sanitation, law and order....

This guy's personal Y2K plan? Head for the mountain. I found his place on the mountain by accident one day. I was afraid I'd stumbled onto a military site. It looks like a Minuteman missile launch control facility, the above-ground portion at least. Eight-foot tall chain-link fence with twelve-inch barbed-wire topping. Concrete structures with more concrete added and vehicle-stopper posts along the road frontage.

Tell me he's confident that there will be lots of high-tech customer companies for his employer, or even that his employer around a year or more from now.


-- Wildweasel (vtmldm@epix.net), March 17, 1999.

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