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Every Friday, the ITAA sends out their "Year 2000 Outlook." Today's installment had this article in it that reflects another aspect of the problem's likely impact overseas... (Were any of those parts made in Germany, Taiwan, or Japan, by chance?)

ITAA's Year 2000 Outlook
April 9, 1999

Published by the Information Technology Association of America, Arlington, VA
Bob Cohen, Editor
bcohen@itaa.org

Vendors See Obstacles as Countries Wake Up to Y2K

This week the International Y2K Cooperation Center (IY2KCC) announced the creation of a Y2K Expert Service, otherwise known as the YES Corps, to help countries in need of technical assistance. Launched in springtime Washington, D.C. to head off a digital winter around the world, the grassroots humanitarian effort will focus on infrastructure repair issues. Still, countries behind schedule or just beginning to work on this eleventh hour issue will likely turn to the commercial marketplace for help, including U.S. information technology companies. The question is whether these firms will be available to provide the necessary assistance.

For at least one systems integrator, Y2K business is winding down with assessment engagements completed, renovation assignments finishing up and an almost exclusive focus on independent verification and validation. This firm's Y2K repair work force has largely been stationed in northern Europe, where customers have responded to Y2K with an open mind and the money to match. Hong Kong and Singapore engagements have also proved fruitful. Elsewhere, this firm has found international clients unwilling to commit the necessary focus and financial resources to get the job done.

Even when doors at the top swing open, strange things happen. This company was invited by a head of state to establish an in-country operation. The firm did so, along the way meeting with cabinet officials and making important contacts. Rather than the hoped for business boom, however, the firm found the country promoting its own Y2K contracting opportunities-not spending money to make internal repairs.

For this systems integrator, Y2K is now a matter of supporting existing clients and steering clear of engagements in high risk locales such as Eastern Europe or Central America.

Ability to pay is clearly a major market differentiator in the waning days of Y2K. "IT companies fear not getting paid," says the Gartner Group's Jim Cassell. "If Russia comes to you with a big problem, you understand and can help. But if it costs X, can [the customer] pay? You don't want Vodka in return. Companies are not in the barter business."

Perhaps a bottle or two of vodka would not hurt. Carlos Prima Braga, infoDev Program Manager at the World Bank, says that while developing countries are beginning to wake up to the Y2K risks they run, the amount of money being disbursed for repairs is not significant. Last year, Braga says, countries defined projects and allocated resources. But they remain timid about actually disbursing the funds, in part because the decision about how to spend precious resources for Y2K fixes is not always clear. "It's not easy to spend money in a serious manner," the bank official says.

Money or the lack thereof may not be the only factor keeping U.S. IT companies at bay. CCD Online Systems is an established player in Japan's Year 2000 market-one of the few. Rudolph Chow, vice president of the firm's Asia Pacific operations, indicates that even the Millennium bug fails to penetrate the country's cultural norms and business practices. While CCD Online Systems, a provider of independent verification and validation solutions, has many competitors in the U.S., it has virtually none in Japan.

"It's not easy to establish yourself in Japan," Chow says, "You have to have connections in place or start the process early." Even though Japan has an enormous need, Chow says international Y2K firms are closing their doors. Again, part of the problem is culture clash. "In the U.S., we're more than happy to have someone from the outside come in and check our work. In Japan, this is a culture issue-an admission that someone is not successful. Mistakes are taken very personally."

To save face and money, particularly in a recession-racked economy, Chow says many firms attempt to keep their Y2K projects in-house, often performing the work manually. According to the IT executive, the same issues reappear in China and other Asian countries.

Risky business to be sure. But the alternative may be even worse. Cassell claims that attempting repairs with a domestic workforce is a non-starter. "There's no hope," he says, pointing to the limited amount of time remaining, a dearth of skilled workers and the compounding factor of pirated software. As to the last, Cassell says that the installed base of software in what he calls "third tier" countries may be as high as 70 percent. That means that paid up versions of systems software must be acquired before work can start on applications.

Such problems have forced some customers to cut to the chase. A professional services firm helping telecommunications clients in the Middle East, the Caribbean and East Asia leap the Y2K chasm is focused on contingency planning operations for essential services, not Y2K remediation and 100 percent compliance. "Some don't realize how much is not going to get fixed," he says.

ITAA's Year 2000 Outlook is published every Friday to help all organizations deal more effectively with the Year 2000 software conversion. To create a subscription to this free publication, please visit ITAA on the web at https://www.itaa.org/transact/2koutlooksub.htm. To cancel an existing subscription, visit https://www.itaa.org/ transact/2kremove.htm.

-- Bill (billdale@lakesnet.net), April 09, 1999.

A global warning on Y2K

"Many nations are unwilling or unable to fix possible computer woes, leaving the U.S. in peril"

Chicago Tribune article, March 21, 1999

-- Bill (billdale@lakesnet.net), April 14, 1999.

LATIN AMERICA SCRAMBLING TO AVOID Y2K DISASTER (Source: AP, 4/17/1999)

Latin American governments, with a few exceptions such as Mexico and Chile, are coming realize they lack the time, money and programmers to forestall potentially crippling public sector failures when the Year 2000 arrives. Last year, at precisely the moment when Latin governments should have been investing heavily in Y2K fixes, the Asian financial crisis hit their economies hard. Now there is an almost universal shortness of cash. World Bank experts and independent analysts say Latin and Caribbean governments are left with no alternative other than focus on preventing outright disasters.

Colombia: Mired in perhaps worst recession since 1930s, this country of 40 million is seriously short of funds to address Y2K bug, and the government's Year 2000 Office only just kicked into gear in December. Managers of the state-run health care system are struggling to determine how to keep Y2K failures from scrambling the records of its more than eight million patients. Public hospitals are just beginning to inventory medical devices for bug-related defects. Federal bookkeepers are preparing to switch to paper ledgers until their computers are fixed. Colombian civil aviation officials say their radar systems will fail without repairs worth more than $11 million, money the federal government says it cannot provide. Air traffic controllers are being trained in guiding planes the old-fashioned way -- with radioed position reports and paper charts.

Venezuela: With its oil-based economy suffering from decline in petroleum prices, this country of 23 million expects serious Y2K-related failures. Government planners have given up on trying to fix many computer systems and intend to have 15,000 engineers at the ready on Jan. 1, 2000 -- along with the National Guard and army -- to resolve problems as they arise and keep order, says Alejandro Bermudez, deputy national Y2K coordinator. Most private companies are also way behind schedule, having completed about only 10-20 percent of work on Year 2000 problems. "We're going to have a food-supply shortage," predicts Bermudez. He estimates 40 percent of Venezuela's food-processing plants will be paralyzed when unfixed computer chips in automated factories shut down production lines. Only about 10 percent of Venezuela's electricity distribution system has so far undergone computer fixes, and the government says the country desperately needs $1.5 billion for Y2K fixes, adding that even with that money, repairs will take two to four years.

Guatemala: Scott Robberson, Executive Director of the AMERICAN CHAMBER OF COMMERCE said his electric company hasn't even started Y2K work, only two of Guatemala's 30 banks are ready, and few buildings in Guatemala City are fixing elevators and time-sensitive computerized building security locks that are vulnerable to failure.

Brazil: Latin America's most populous nation, with 166 million people, is among world's 10 most computerized countries, yet the government expects to spend just $300 million on Y2K projects, one-third of that this year. Marcos Osorio, the national Y2K coordinator, says fixes on the pension and health system are lagging, as are repairs on his country's energy and telecommunications sectors. Brazil's electrical utilities are already "taxed to the limit" and highly susceptible to brownouts. Brazil's chief public data-processing agency, SERPRO, which handles 60 percent of the Brazilian government's data processing, has worked diligently on Y2K but is still short $35 million to finish fixes. SERPRO is struggling to meet the conditions for a $41.5 billion bailout package from the INTERNATIONAL MONETARY FUND.

Information technology analysts at GARTNERGROUP predict half of all Latin American companies and state agencies in Argentina, Colombia, the Dominican Republic, Guatemala, Jamaica, Panama, Puerto Rico and Venezuela will see at least one critical failure -- from power outages to air transport interruptions. Even worse off are Costa Rica, Ecuador, El Salvador and Uruguay. Social unrest and paralyzed commerce are tangible fears. In this part of the world, "the public doesn't protest with phone calls and letters -- it riots and destabilizes the government," said Ian Hugo, Deputy Director of Britain's TASK FORCE 2000. (JG)

Link: http://cnn.com/TECH/computing/9904/17/latam.y2k.ap/index.html

Link: http://dailynews.yahoo.com/headlines/ap/technology/story.html?s=v/ap/ 199

-- Bill (billdale@lakesnet.net), April 27, 1999.