Much is being made of surveys, using % of Y2k budget spent to extrapolate the readiness of organizations. The latest Weiss survey is the most current example.

I, and others, have pointed out that this method is essentially useless, for a number of reasons. Testing and implementation will far exceed the expense of assessment, for example.

Here are some responses. From http://www.jrnl.com/news/99/May/jrn117180599.html

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Bell Atlantic irked by Y2K update

DOVER, Del. - Bell Atlantic Corp. officials are fuming over a Florida firm's claim that the telecommunications company is woefully behind in fixing the millennium computer bug.

Bell Atlantic is among the nation's largest corporations that are behind in retooling their computer systems to eliminate the Year 2000 problem, according to Weiss Ratings Inc., which provides Y2K-readiness ratings on banks, insurance companies and Fortune 1000 companies.

Ellsworth V. Edwards, spokesman for Bell Atlantic, called the Weiss report ``bogus'' and a ``shameless representation based on flawed methodology.''

Weiss relied solely on financial data provided on Web sites and in annual reports to get their information, and didn't speak to any Bell Atlantic officials before publicizing the ratings, Edwards said.

Bell Atlantic officials said they have been working on the Y2K problem since 1995. The company expects to have the bug fixed by June 30.

The Y2K meltdown may be caused when computers mistake the year 2000 for 1900 and shut down.

From http://biz.yahoo.com/bw/990524/ga_bellsou_1.html Monday May 24, 4:22 pm Eastern Time

Company Press Release

BellSouth Responds to Weiss Ratings Report on Year 2000 Readiness

ATLANTA--(BUSINESS WIRE)--May 24, 1999--Weiss Ratings recently issued a report on Year 2000 readiness by major U.S. companies. The group gave BellSouth a ``low'' rating based on the percentage of its Year 2000 budget the company has spent to date.

In response to the report, Rick Harder, vice president with overall responsibilities for the corporation's Year 2000 Program said: ``BellSouth is making enormous strides in its Year 2000 program. Only recently we reported that 85 percent of our local phone network is Y2K ready. We have extensively tested our network both internally and with other telecommunications companies and industry groups. All the results show that calls should go through as normal in the new millennium. The Weiss Group's methodology is both simplistic and flawed as it is based entirely on how much money as been spent. A true analysis of our Y2K remediation efforts would show that we will be ready well before December 31, 1999.''

---

Contact:

     BellSouth Telecommunications
     Clay Owen, 404/927-7443

Also, from Bell South's webbage: http://cluser1.bellsouthonline.com/year2000/y2k_readiness.html

Costs of project: Some of the costs associated with our Year 2000 compliance efforts were incurred in 1997 and 1998. We will incur the remainder during 1999 and 2000. You should note that costs are not incurred equally over all phases of the project, but increase over time. We anticipate that the conversion and testing phases will require an increase in spending over the earlier phases of the project. At March 31, 1999, we have spent approximately $123 in external costs towards Year 2000 compliance. We estimate the total external cost of our compliance efforts will be between $250 and $350 over the life of the project. We intend to continually reassess the estimated costs and status of Year 2000 remediation efforts.

-- Hoffmeister (hoff_meister@my-dejanews.com), May 24, 1999

Answers

w-e-l-l, sounds just a bit like somebody struck too close to home, for the corporations' comfort...

Arlin

-- Arlin H. Adams (ahadams@ix.netcom.com), May 24, 1999.

First comes the crying. Next will be the gnashing of teeth.

-- a (a@a.a), May 24, 1999.

Or, some just may not like BS being printed about them.

Naw, that couldn't be it.

-- Hoffmeister (hoff_meister@my-dejanews.com), May 24, 1999.

Hoffmeister,

Weiss has been around a long time and they are NOT beholding to any company as is Standard and Poors and a few other rating agencies. You might want to get a rating on your bank from them (800-290-9222).

What did you think of the 60 minutes report last night? Have not seen many responses from you Polly folks. Just another pile of lies I guess.

Ray

-- Ray (ray@totacc.com), May 24, 1999.

Well it would help if the blind men could at least touch the elephant.

Sure the % spent ain't accurate. First it assumes that the budget is accurate [insert maniacal laughter here]. Second it assumes a relationship between % spent and % finished. Third - aw heck, get to the point. So what IS an accurate method of figuring the odds on a corporation vis a vi Y2K? Trick question, there ain't one.... so... this is the best guestimator that Weiss could come up with.

P.S. Seeings how Weiss's guesses (ratings) on average are one heck of a lot more useful than Bests or S&Ps for banks and insurance companies, I wouldn't discount him that fast. Its not like some other rating service has a better track predicting company's Y2K perparedness, eh?

-- Ken Seger (kenseger@earthlink.net), May 24, 1999.

Hoff,

I agree with Ken; if you don't like the % spent per % budget than offer a superior metric with readily available (public) data that can be used to compare information - otherwise SHUT UP!

-- Bill P (porterwn@one.net), May 24, 1999.

Look, I have no clue what methodology Weiss uses in other ratings.

The fact is, that the methodology used in the latest survey, is fatally flawed, to put it mildly.

I expect most, if not all, organizations to continue testing and working on Y2k throughout this year, no matter what their status. That means personnel, that means testing systems, that means money, right up to and through the rollover. And as BellSouth stated, actual conversions and testing will cost proportionately more than other phases. It really doesn't matter if there is nothing better; you wouldn't use a barometer to gauge the temperature, just because it was the only thing available.

As well, some of the statements Weiss makes are outright misleading. Take for example the bank ratings. From http://www.weiss ratings.com/y2klies__21099.htm, he states:

"Furthermore," Weiss adds, "we must assume that, on average, institutions that did not respond to our survey are more likely to be late in fixing their Y2K problems than those that did."

However, look at this letter from the Iowa Superintendant of Banking, at http://www .idob.state.ia.us/bank/update/weissdgs.htm, to Weiss, in response to the survey:

Mr. Martin D. Weiss, Chairman

Weiss Ratings, Inc.

4176 Burns Road

Palm Beach Gardens, FL 33410

Dear Mr. Weiss:

I have informed Iowa state-chartered banks not to disclose their latest Year 2000 examination rating in response to your survey. Iowa Code Section 524.217(4) provides that under no circumstances shall a state-chartered bank publicly disclose the contents of reports and/or work papers compiled or communicated in conjunction with a state-directed examination.

Sincerely,

Michael K. Guttau

Superintendent of Banking

Obviously, he has received responses that indicate there will be no response, and not because they are on average late in addressing the problem.

-- Hoffmeister (hoff_meister@my-dejanews.com), May 24, 1999.

Folks, lets be a little easy on Hoff -- he and the other pollys are obviously having a very bad week -- and holy cow, its only Monday at that!

Playing statistical games is what Hoff does best, rest assured he will probably respond. But the important thing is that the year 2000 is approaching at the rate of 60 seconds per minute -- are YOUR personal preparations in order/progress for what is OBVIOUSLY coming to any but the densest of pollyannas?

-- King of Spain (madrid@aol.com), May 24, 1999.

But Hoff, look at the second line in your post, you phrase the problem and you don't even realize it:

"I, and others, have pointed out that this method is essentially useless, for a number of reasons. Testing and implementation will far exceed the expense of assessment, for example. "

So, what, they've been screwing around with a low burn rate to do the first couple years work, and now that 6 months are left they're gonna expend the rest of their money? I don't think so. They've run out of time, plain and simple. Despite what the CEO says, he can't change the metrics.

-- a (a@a.a), May 24, 1999.

No, 'a', you make essentially the same error that others do when they apply metrics such as "50% of a project is testing". The argument goes "they started in 1996, just now finished remediation, and still have 50% to go. No way they'll make it".

But the 50% applies to effort, not time. A company may have had a 5 person team for the first 2 years, to do assessment. That gets ramped up for remediation, then ramps up further for conversion and testing.

It's not a "slow-burn" rate, just that testing especially requires more resources, and more money. Much of the remediation team must still be there, for any errors uncovered. An additional testing team is employed. Plus the system setup and cost to perform the testing is incurred.

-- Hoffmeister (hoff_meister@my-dejanews.com), May 24, 1999.

Hoff, reread your post. Then consider these salient points:

- Started in 1995

- Will be done (remediation?) 30 June 1999

- As of 31 May 1999, have spent 123(M?) out of ~300M

By their own estimate, they have not spent half their budget but have expended almost 90% of their allotted time. Your argument about different phases incurring different burn rates aside, what am I missing?

It's the old "if it takes an hour at 60 mph to get to the airport, and because of traffic you can only drive 30 mph for the first half of the distance, how fast do you have to drive the remainder to make your plane" problem.

-- a (a@a.a), May 24, 1999.

Off, I say.

-- Hoffmeister (hoff_meister@my-dejanews.com), May 24, 1999.

Hoff - Weiss uses a variety of ratios and their changes over time. Example for banks, Net Capital /non-performing loans, Hot Money (jumbo CDs) /liabilites, liabilities /liquid assets, et cetra. Pretty standard stuff. He then makes a judgement call of what are safe, chancy, bad, and horrible ranges(A,B,C,D) of those individual ratios, then an overall grade based on a weighted scale.

The point is this. Whereas anybody can get the numbers off a bank's balance & P&L statements from government sources and run the ratios themselves and come up with their own opinion of how important Hot Money is, what is analogous in Y2K info? Baring fraud, thanks to AICPA, one bank can be compared to another in a fairly straight forward fashion. When you read NERC's 2nd report you find that one utility's definition of assesement is different than the next!?! Is one man's "critical system" another's non-critical"? Ever tried to build a house using cubits with every workman using his own arm to determine the length of a cubit?

This isn't much fun to a lot of people because they aren't going to go Milne and financially sit out of the market until the dust settles. They want some source of info to estimate different risk levels of different companies so they can park their 401k's in the places that have a lower percieved risk. Weiss and that other company (name escapes me for the moment) to my knowledge are the only two subscription sources that are giving ratings. This is why I said, "Well it would help if the blind men could at least touch the elephant." It would help Weiss and everybody else if there was hard data for all those people that don't want to close out all of their accounts. As it currently stands, the blind men can only sniff at the elephant.

There are no comparable "generally accepted accounting definitions" in the Y2K arena that I know of. If you can come up with something better, there are a lot of people that would love to know what companies are at a greater or lesser risk.

-- Ken Seger (kenseger@earthlink.net), May 25, 1999.

Hoff said, "But the 50% applies to effort, not time" Exactly. The remediation and testing effort takes other resources besides people. There are conversion tools, testing hardware (to come close to duplicating the production environment), testing tools (to advance the clock), and others. A Y2K project is quite different than any other development project; the requirements are known, the design is known. Most of the money is spent towards the end of the project.

Further, I have to ask, "Why do we care?" No data is no data. The doomers continue to try to extract some kind of information from no data. If you want to know how your bank is doing, ask them. If you're not satisfied with the answer, find a bank that claims compliance and put your money in there. Please continue to prepare for the end of the world. Get walkie-talkies for communications with your loved ones.

-- Maria (anon@ymous.com), May 25, 1999.

Whatever. You two just don't seem to understand the self reporting problem. I feel sure that if they were having problems they would continue to say all was well. Are the managers where you work any different?

Hoff and Maria, what did you think of the 60 minutes segment?

-- a (a@a.a), May 25, 1999.

King of Spain said . .

"Folks, lets be a little easy on Hoff -- he and the other pollys are obviously having a very bad week -- and holy cow, its only Monday at that!"

So (supposed) "bad news" on Y2K is bad for us, and therefore, by definition GOOD for you doomers ?

By logical extension therefore, we can deduce that a good week for you would be one where the worst fears of the extremist doomers were proved to be right ?

Why not just come clean and say that you WANT the worst possible scenario to play out over Y2K ? That you WANT TEOTWAWKI ?

Its clear that's your position, why hide it behind semantics.

As to 60 minutes and the rest . . big deal. Old news, debunked elsewhere. You all may have time to sit here and analyse the insides of your navels all day but I fear the debunkers are slightly more active individuals. Its been done.

Nice to see the true colours though.

-- I see your (True@colours.and.theyre.black.org), May 25, 1999.

A, that's just the point, find one that you are comfortable with. You ask them the questions, if you don't like the answers (you feel they are giving you the pat "all is well" routine), you continue to the next one until you find one that you like. It's up to you, not me, not Hoff, for you to find one. I can't answer your questions about what bank you will like.

I missed the report Sunday so I can't comment. I do have a life besides Y2K. By the way, did you find an answer about the santitation in Detroit?

I see your, your royal highness is pretty harmless; he's just looking for some good mud wrestling.

-- Maria (anon@ymous.com), May 25, 1999.

Some backup and illumination for Don Juan Carlos II Rey De Espaqa (if thats really him, which I doubt, as he seems a very sensible kind of person).

If you doubt the claim that the debunker silence is due to "seen it before, done it before" factors . . check the dates on these de-bunky posts and compare them to the top of this thread. (24th May, in case youre confused) Then you can save yourself the effort of claiming that we dont deal in fact). .

http://www.insidetheweb.com/messageboard/mbs.cgi? acct=mb237006&MyNum=927078554&P=Yes&TL=927066130

(posted 18th May)

http://www.insidetheweb.com/messageboard/mbs.cgi? acct=mb237006&MyNum=927336046&P=Yes&TL=927331358

(posted 21st May)

Nice to know youre both wrong, and behind the ball isnt it ?

-- Pull up your pants (your@butt.is.showing.com), May 25, 1999.

Maria: Detriot? No. Clue me in. Explan the mud wrestling comment. I think I'm getting turned on.

Pull: Those links only get you to the main portal...

-- a (a@a.a), May 25, 1999.

Even more absurd. Weiss rates Intel as LOW. Here are some snips from their May 10 10-Q:

At the end of the first quarter of 1999, 99.9% of the Company's critical and priority manufacturing systems were determined to be already year 2000 capable, or necessary remediation (replacements, changes, upgrades or workarounds) had been determined and unit testing and deployment had been completed. Remediation and deployment had been completed for approximately 93% of non-manufacturing systems as of the end of the quarter. Remediation and deployment had not been completed for some non-manufacturing systems where a vendor upgrade was pending, testing was not completed or a system was scheduled for replacement in the second quarter. All remediation and deployment for critical and priority internal systems is expected to be completed by the end of the second quarter of 1999.

....

The Company currently expects that the total cost of these programs, including both incremental spending and redeployed resources, will not exceed $175 million. Approximately $57 million has been spent to date, of which approximately $15 million was incurred in the first quarter of 1999. These costs are not incurred in a linear pattern. Spending is expected to peak in mid-1999 and to continue, at a declining rate, well into the year 2000. The remaining costs are expected to be incurred for remediation of internal systems not categorized as critical or priority, integration testing, contingency planning, customer service, supplier monitoring and program office management. A majority of the costs are expected to be included in cost of sales and in the calculation of gross margin. Year 2000 costs for manufacturing and non-manufacturing internal systems are expected to be less than 10% of the total information technology budget for 1999.

Question my views, if you want. But seriously, you're going to take Weiss' rating of Intel, over their own statements? You seriously think Weiss has a better understanding of Y2k than Intel?

I'll say it again. Lack of a vaild, overall rating method does not imply that an invalid, flawed method should be used.

-- Hoffmeister (hoff_meister@my-dejanews.com), May 25, 1999.

Hoff:

Is it possible that Weiss grades on a curve? It would seem so, since the middle is 'average'. And if Intel is LOW, isn't this very good news indeed? It means almost everyone is in better shape than Intel, and Intel is effectively ready today. From other 10Q reports as compared to Weiss ratings, 'average' meant that internal systems were completed, often with IV&V, while 'high' meant that all key suppliers had met the same standards.

By projection, it appears that the goal is for all Weiss-rated companies to reach 'average', which by that time will mean all are alike, compliant and ready.

-- Flint (flintc@mindspring.com), May 25, 1999.