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TORONTO -- Financial damage caused by the millennium bug has already hit several Canadian companies in the hi-tech sector this year.

But their plight has nothing to do with faulty microchips or software.

These unfortunate businesses -- most of them software makers -- are having a tough time selling to clients preoccupied with their own Y2K woes.

"It definitely hit home with us last quarter," said Corinne Smirle, a spokeswoman for JetForm Corp., which makes business-form software.

"We continue to tell the analysts and investors that we want to be conservative over the next three quarters because the Y2K problem is going to be there until we click over" on Jan. 1, 2000, Smirle said.

The company, which announced a major restructuring and layoffs in mid-March, reported its revenue fell 17% to $23.7 million in the third quarter ended Jan. 31, mostly as a result of the Y2K spending shift.

The problem has become an acute source of pain for companies that offer so-called enterprise-wide solutions, applications that handle many functions for larger businesses.

What's happened is that most of Canada's big companies are now in a holding pattern. Having spent heavily to become Y2K compliant, they're in no mood to shell out more money for new products.

"Now they've decided that's it. They've got a year's grace to do testing and assurance to make sure what they've got is OK," said Dave Marshall, director of software research at International Data Corp. in Toronto.

"As we march towards Y2K, you have a lot of companies putting off big solutions ... They're not going to start something like that at this late stage."

Larry Simon, senior-president of year 2000 services at Ernst & Young, agreed.

"A lot of companies are planning to freeze software development in the fall," he said.

Aside from JetForm, Canadian software companies such as Toronto-based DataMirror Corp. and Geac Computer Corp. have also been side-swiped by Y2K.

"If budgets have been diverted to other things, the money simply may not be there," said Brendan Reay, a spokesman for DataMirror Corp., which makes software that integrates business databases.

There's no question the next eight months will be difficult for many software companies, but industry observers say there are signs the financial fallout won't be that bad.

Smaller corporations are expected to boost demand for new software towards the end of the year as they scramble to meet Y2K compliance requirements.

The industry is also counting on rapid growth in electronic commerce on the Internet. A recent report prepared by PricewaterhouseCoopers suggested widespread acceptance of e-commerce will lead to a technology spending boom.

But that won't happen until after the millennium bug has been exterminated, probably some time in mid-2000, the report concluded.

-- regular (zzz@z.z), May 03, 1999

Answers

"What's happened is that most of Canada's big companies are now in a holding pattern. Having spent heavily to become Y2K compliant, they're in no mood to shell out more money for new products."

It's also a concern being discussed in Silicon Valley for the big system software vendors.

Diane

-- Diane J. Squire (sacredspaces@yahoo.com), May 03, 1999.

regular,

The title to your thread is perhaps a little disingenuous, no? There I was looking forward to some good info about system crashes and frantic companies, and all I got was stuff about some software firms looking at a bad quarter or three.

-- Johnny Canuck (nospam@eh.com), May 03, 1999.

Diane,

Sorry to hear that!!! Not good news.

Johnny,

True, this isn't a "bug" inflicted problem. However, it illustrates perfectly the larger, looming picture on our horizon. One bad quarter to three bad quarters isn't too bad for a large, diverse corporation. Yet, when you consider that the majority of software companies as well as most companies in general is not a large, diverse corporation then you might begin to see how this could be very, very hurtful to the economy on every level. How well they manage through these times of lower or nonexistent growth could either make them or kill them. What would happen if they start to lose money as credit becomes harder to obtain?

This problem is not just about bugs in code or chips and the effects go much deeper than assessment, remediation and testing.

Mike =======================================================

-- Michael Taylor (mtdesign3@aol.com), May 03, 1999.

dagnabbit...

that should have read

"This problem is not just about bugs in code or chips and the effects go much deeper than assessment, remediation and testing can fix or affect.

(see...crazy, unexpected chit happens...my cat managed to jump on my mouse hand as I was proofing...click and away it goes!!! too cool)

Mike ==============================================================

-- Michael Taylor (mtdesign3@aol.com), May 03, 1999.