To: y2kforum@efn.org
Subject: The Warren Bone Report...made readable
.... submitted a short summary of a Warren Bone analysis on the
Westergaard site, the other day. Any who went to the site that was
linked may have been boggled by the way the material was crammed
together. But the report is quite useful, and I took the trouble to
put it into a readable form, tonight, for some of my own people...and
then thought it might be worth posting here, in its entirety. Bone did
a really good job in analyzing the way in which the Mission Critical
System count has been systematically mangled, over the past couple
years. And his article is excellently footnoted.
Irv
Year 2000 Facts, Forecasts, and Areas of Concern
By Warren Bone
October 28, 1999
Small Businesses
--40% will not be ready for 2000.(1)
--28%, nearly one-third, plan to do nothing at all -- will just wait
and see what happens. They "think the problem is being blown out of
proportion." (2)
--Are putting themselves in economic jeopardy, according to the White
House.(3)
--Potentially 8,000,000 or more may be forced to close. Employ more
than 50% of the private workforce.(4)
--Generate more than half the nation's Gross Domestic Product
(GDP).(5)
--Number between 15 million and 24 million in the U.S.(6)
--Don't seem to care or understand the seriousness--they just don't
get it. Only 81 have applied for loans through The Small Business Year
2000 Readiness Act,(7) which provides SBA loans for consulting,
systems and software purchases and repair. That has been available
since 2 April 1999.(8)
Large Businesses
--81% are still not ready.(9)
--44% will not be ready for 2000.(10)
--92% rank the need for independent Y2K verification and validation as
high.(11)
This also provides further due diligence.
--59% are concerned about legal issues, with 27% believing lawsuits
against their company are likely.(12)
--Half the large companies do not have a contingency plan.(13)
Local Governments
--25% of counties in U.S. have no Year 2000 plan and will not be
ready.(14)
--63% of "911" call centers (mostly run by local governments) will not
be
ready.(15)
Healthcare
--60% of healthcare providers will not be ready.(16)
--15% of healthcare providers have done nothing.(17)
Education
--70% of schools and colleges will not be ready.(18)
Federal Government is not ready for 2000 and will not be ready.(19)
--Has been painting the "positive" picture for the public. "The
administration is fooling itself and luring the American public into a
false sense of security."(20)
--And the job is still not completed. Progress during this quarter,
which ended on August 15 (1999), is discouraging. The flurry of
activitywe saw among federal agencies earlier this year has slowed to
a snail'space.(21)
--The overall federal government improved its compliance rate by a
measly one percent during the last three months.(22)
--Will likely see the need to intervene in the economic sector, as
well as in the governmental sectors at the state and local levels, and
internationally. Pentagon officials say the idea behind the change is
to give a president options short of martial law to deal with domestic
crises.(23)
We may see the federal government intervene in the stock market by
suspending trading if the market begins declining rapidly. A
significantly sustained decline in the value of stocks will herald the
beginning of the worldwide recession, which I believe we will
experience. (See "Worldwide Economic Impact" topic below.) Also, the
government may need to regulate/adjust wholesale and retail prices and
interest rates in an effort to stave off the deflationary effects of
Year 2000 problems worldwide.
Almost every Year 2000 report you see, from every source, talks about
*mission critical systems*. These are the systems, which if not
working, can shut the business (or government) down; they are
essential to the "mission" of the organization. The federal
government's count of its mission critical systems has varied monthly:
[[The basic message contained in the data
between the rows of +++++s below is this:
The Federal Government's REPORTED Y2K compliance
record may be as much as 25% HIGHER THAN its ACTUAL
compliance record, since in the last two years it seems
to have reclassifieds hundreds of its mission-critical
systems as non-mission-critical. Therefore, it seems
highly likely that the Federal Government is not as Y2K
compliant as it is claiming.
The data below, between the rows of +++++s, can be
considered a footnote providing evidence for that assertion.
If you wish, you can skip down to the second row of
++++++s and continue reading. -- Tom Atlee]]
+ + + + + + + + +
--U.S. Federal Government's Year 2000 Percent Compliance Reported,
versus its Actual Percent Compliance, Considering Reclassified Mission
Critical Systems (24)
For each line below: Date Data Received//Number Mission Critical
Systems Reported//Ref#//Number Compliant Per the Report//Percent
Compliant Per the Report//Actual Percent Compliant Based on Nov. 97's
8,589 Count (Before Reclassification Began)//Compliance Percentage
Points Gained by Government's Reclassification of "Mission Critical
Systems." Analysis
follows.
June 97 7,649(25) 1,598 21% n/a n/a
Aug 97 8,562(26) 1,646 19% n/a n/a
Nov 97 8,589(27) 2,296 27% 27% n/a
Feb 98 7,850(28) 2,716 35% 32% 3%
May 98 7,336(29) 2,913 40% 34% 6%
Aug 98 7,343(30) 3,692 50% 43% 7%
Nov 98 6,696(31) 4,069 61% 47% 14%
Feb 99 6,399(32) 5,045 79% 59% 20%
Mar. 31, 1999 Deadline* 6,123(33) 5,633 92% 66% Compliant. NOT
92%.26%
May 99 6,190(34) 5,780 93% 67% 26%
Aug 99 6,343(35) 6,126 97% 71% Compliant. NOT 97%.26%
*President's deadline to have all federal government systems compliant
was 31 March 1999.
>From November 97's high of 8,589 to March 99's low of 6,123 the
government managed to reclassify 2,466 systems (29%) as "not really
mission critical after all." (Again, see note 25.)
An explanation of the calendar of events between the Feb. 99 and May
99 reports, is in order here:
--The Feb. 99 data above was received from the agencies, dated 12
February 1999. (That report of 6,399 systems and 79% compliant was not
released
to the public until 18 March 1999, one month later -- all the
Quarterly Reports are issued a month following receipt of the data.)
--On 23 February 1999, only one week after receiving the February
data, Mr. Koskinen, Chairman of the President's Council on Year 2000
Conversion, announced (at a press conference) that the federal
government's mission critical systems would be 90% compliant by 31
March 1999, the President's deadline. (36)
--On 18 March 1999 the February 12 data was issued.
--On 31 March 1999 Koskinen reported that, "according to the most
recent data obtained from the agencies" 92% were now compliant, and
had met the deadline.(37)
--Then the May 99 figures were issued. "Despite their stellar work,
the overall federal government improved its compliance rate by a
measly onepercent during the last three months. This performance rate
is simply not acceptable."(38)
--The bottom line to all this is that the number of systems identified
as "mission critical," has continued to drop up to the point of the 31
March 1999 deadline set by the President.
--Now note that immediately after the "big deadline" the number of
systems began to increase again. The Defense Department added 333 more
systems.(39)
PAY CLOSE ATTENTION TO THE LAST TWO COLUMNS OF MY TABLE ABOVE:
The agencies in their inventory of mission critical systems had
identified eight-thousand-five-hundred-eighty-nine(!) systems critical
to their operations, by November 1997.
--Using that number (8,589) (as the number of mission critical systems
which really should be made compliant) the percent compliant each
quarter then looks quite different. Two good examples are the 31 March
deadline (government reported 92%; should really be only 66%), and the
report of August 99 (government says it is 97% compliant; it is
actually only 71% compliant.)
--I suspect that by 31 December 1999 -- we should see that report
about 15 January 2000 -- the government will be reporting 100% ready,
while my projection right now is that the actual will only be about
75% compliant. (I expect the count of mission critical systems to stay
rather much like it shows for August 1999: 6,343. DOD may be still
doing its inventory at this late date, but I am sure the other
agencies will find that more of their mission critical systems are
really not critical after all, and even more can be dropped off the
list prior to year end. That will make the government's numbers come
out just right: 100% just in time! Using my formula: If the total
number systems is 6,343 and the government finally reports 100% of
them are compliant, then that's 6,343 in the "Number Compliant"
column. 6,343 is 74% of 8,589.
--To round it all off, and to give the government the benefit of the
doubt regarding what is really critical or not, let's say the total
number reported and compliant at year end is 6,000, and that since the
November 1997 inventory there really were 589 of those systems that
were misclassified to begin with, then the number of systems to be
made compliant is 8,000. 6,000 is 75% of 8,000. The government
mission critical systems will probably be at about 75% compliant at
millennium end. (Even if they say they are at 100%.)
--The government has gained 26 percentage points on its reporting by
simply reducing the base of the calculation.
+ + + + + + + + + + +++ + +
The number of non-mission critical systems for any company or
organization is probably five to ten times greater than what it calls
mission critical (and this would not include all the individual
PC-based software in use).
Most companies have concentrated on the mission critical. Enough
"non-mission critical" systems exist to cause severe disruption if
they, too, are not made ready.
We must constantly remind ourselves that the mission-critical systems
we talk about are but the tip of the iceberg -- approximately one
eighth of the installed base of systems (referencing federal
government systems). Roughly speaking there are 8,000 mission-critical
systems plus 60,000 second and third tier systems--uncounted millions
of embedded computer chips. We can not allow all of these so-called
non-mission-critical systems to fail. The collective confusion of tens
of thousands of secondary systems failing could be catastrophic.(40)
Worldwide Economic Impact
--Overall, the U.S. is not in good shape for Year 2000. To put it
another way: The U.S. private sector and the federal, state and local
governments are all in bad shape for 2000. (I would normally put a
footnote here to substantiate these statements; but if you will
disregard the efforts to paint a "don't worry, be happy" picture for
us all -- from the federal, state and local governments and from all
those businesses making their Year 2000 Readiness Disclosure
Statements and SEC disclosures -- you will realize there are thousands
of articles and documents to substantiate my statements--too many to
"footnote," of course.)
--The rest of the world is much further behind than we are.(41)
--Many are at great risk and will suffer deep and severe related
problems, many of which will negatively impact our economy. "It is
amazing, but true, that the Year 2000 computer bug could harm the
world's largest and most robust economy."(42)
--75% chance of severe global recession. 60% for recession or
depression.(43)
Summary:
--Only 58 workdays to get it all done.
--40% of small businesses will not be ready, and don't seem to care.
--48% of large businesses will not be ready.
--25% of counties will not be ready.
--60% of healthcare providers (including doctors) will not be ready.
--70% of schools and colleges will not be ready.
--The federal government will not be ready.
--The rest of the world will not be ready. Major problems.
--75% chance of a major deflationary recession worldwide.
Reference Notes (from figures in parentheses, above)
1. National Federation of Independent Business (NFIB), Survey shows
half of all small firms preparing for Y2K; Almost three million have
acted to prevent "millennium bug" (NFIB Online: News Releases, May 24,
1999. (This address may not work as a link from this page. May get
"Illegal Operation." If so, type this address in manually on your
browser: http://www.nfibonline.com/. Once there, click on "SITE
SEARCH," then type in "survey shows half" and click on Search. Then
click on the title
of the article to view it.) The President's Council on Year 2000
Conversion, VARBusiness, and many others quote this report.
Also see:
President's Council on Year 2000 Conversion, 100 Days to Y2K (Press
Release, September 22, 1999. http://www.y2k.gov/new/0922prls.html),
and
100 Days to Y2K: A Resource Guide for Small Organizations
(http://www.y2k.gov/new/0922doc3.html).
Also, David Myron, Y2K Looms Over Small Business (VARBusiness,
September 27, 1999.
http://www.techweb.com/se/directlink.cgi?VAR19990927S0023) NFIB
research indicates that 60% of the small businesses had done
something to prepare for Year 2000; therefore, 40% had done nothing,
with 75% of that group actually planning to do nothing (which is 30%
of the total).
--My position is, and my projections are, that any company,
organization or government, which was not completely ready by mid-year
1999, will not be completely ready by 2000. A portion of that 60% of
small businesses will not be fully ready, and since 30% actually plan
to do nothing, it is easy to see that at least 40% of all small
businesses will not be ready for 2000 when it arrives.
--I have taken this position with all sectors on which I have reported
in this document: i.e., 100% of the sector, less the percentage of
those "ready" leaves the percentage of those "not ready." Those not
ready will also not be ready at 1 January 2000. Given that any survey
results are usually several months old by the time we digest them, in
the case of Year 2000 I have seen that the patterns displayed by any
particular survey hold true from report to report, survey to survey.
At this late date in the Year 2000 issue those patterns for any group
or sector under observation will continue until 2000 gets here, and
beyond.
2. Ibid.
3. Stephen Barr, All Okay On Y2K? Not Yet (Washingtonpost.com, Sept.
27,
1999.
http://www.washingtonpost.com/wp-srv/business/feed/a47772-1999sep27.ht
m)
4. David Myron, Y2K Looms Over Small Business (VARBusiness, September
27,
1999
http://www.techweb.com/se/directlink.cgi?VAR19990927S0023).
5. Ibid.
6. Ibid. Also: Statement of John A. Koskinen, Chairman, President's
Council On Year 2000 Conversion. January 20, 1999.
(http://www.y2k.gov/council/JKTE0120.htm).
7. Stephen Barr, All Okay On Y2K? Not Yet (Washingtonpost.com,
September
27, 1999.
http://www.washingtonpost.com/wp-srv/business/feed/a47772-1999sep27.ht
m).
8. Small Business Administration (SBA), Y2K Action Loan Program
(http://www.sba.gov./financing/fry2k.html). Also: U.S. Senate,
Small
Business Year 2000 Readiness Act (February 23, 1999.
http://www.itpolicy.gsa.gov/mks/yr2000/hill/106srpt106-5.htm).
9. CIO Magazine News Bureau, Y2K Experts Poll Exposes Incompletion and
Complacency (Press release, September 30, 1999.
http://www.cio.com/info/releases/093099_y2kpoll.html).
10. Cap Gemini America, With 100 Days Remaining, 82 Percent of Major
Firms
Say Year 2000 Poses "No Significant Business Risk" (Press Release,
September 22, 1999.
http://www.usa.capgemini.com/news/pr99.asp?id=109).
11. Ibid.
12. CIO Magazine News Bureau, Y2K Experts Poll Exposes Incompletion
and
Complacency (Press release, September 30, 1999.
http://www.cio.com/info/releases/093099_y2kpoll.html).
13. Ibid.
14. President's Council on Year 2000 Conversion, 100 Days to Y2K: A
Resource Guide for Small Organizations
(http://www.y2k.gov/new/0922doc3.html).
15. Ibid.
16. Ibid.
17. Ibid.
18. Ibid.
19. Rep. Stephen Horn, R-CA, Chairman of the Subcommittee on
Government
Management, Information, and Technology, Horn Releases Ninth Y2K
Report
Cards (News Release, September 10, 1999.
http://www.house.gov/reform/gmit/y2k/990910.htm).
20. House Majority Leader Dick Armey, R-Texas, USAToday, Most critical
govt. systems Y2K-ready (USAToday Tech Report, April 1, 1999.
http://www.usatoday.com/life/cyber/tech/cte770.htm).
21. Horn, Horn Releases Ninth Y2K Report Cards (News Release,
September
10, 1999. http://www.house.gov/reform/gmit/y2k/990910.htm).
22. Ibid.
23. Jamie McIntyre, Military Affairs Correspondent, CNN, Expanded
domestic use of U.S. military raising civil liberty concerns (CNN.com,
October 7, 1999.
http://www.cnn.com/US/9910/07/military.civilian/index.html).
24. Executive Office of the President, Office of Management and Budget
(OMB), 4th Quarterly Report (February 15, 1998.
http://www.cio.gov/docs/y2k4q.htm).
This was the first of the reports explaining why the number of
mission critical systems identified keeps going down: "This change
occurred because senior management in several agencies refined their
lists of mission-critical systems." The 5th Quarterly Report noted
below, also contains such text: senior Federal managers have
reevaluated which systems are critical to their organizations'
missions and set priorities within their organizations." Further
reports use the same text with simply adding the words continue to
reevaluate.
25. OMB, Getting Federal Computers Ready for 2000. Progress Report,
(first
report, June 23, 1997. http://www.cio.gov/docs/yr2krev.htm).
26. OMB, Progress on Year 2000 Conversion (second summary report,
August
15, 1997. http://www.cio.gov/docs/y2krp897.htm).
27. OMB, Progress on Year 2000 Conversion, 3rd Report (November 15,
1997.
http://www.cio.gov/docs/y2knov97.htm).
28. OMB, 4th Quarterly Report (February 15, 1998.
http://www.cio.gov/docs/y2k4q.htm).
29. OMB, 5th Quarterly Report (May 15, 1998.
http://www.cio.gov/docs/598rpt.html).
30. OMB, 6th Quarterly Report (August 15, 1998.
http://www.cio.gov/docs/y2k6q.htm).
31. OMB, 7th Quarterly Report (November 15, 1998.
http://www.cio.gov/docs/decdraft6.htm).
32. OMB, 8th Quarterly Report (February 12, 1999.
http://www.cio.gov/files/8thQuarterlyReport.pdf).
33. USAToday, Most critical govt. systems Y2K-ready (USAToday Tech
Report,
April 1, 1999. http://www.usatoday.com/life/cyber/tech/cte770.htm).
34. 9th Quarterly Report (May 14, 1999.
http://www.cio.gov/files/9thQuarterlyReport.pdf).
35. 10th Quarterly Report (August 13, 1999.
http://y2k.gov/new/10th_omb.htm).
36. Paul Malamud, Koskinen Says U.S. Government is Y2K Ready (U.S.
Department of State, U.S. Information Agency, February 24, 1999.
http://www.usia.gov/topical/global/y2k/99022401.htm).
37. President's Council on Year 2000 Conversion, Federal Government
Nears
Completion of Y2K Work On Mission-Critical Systems (Press Release,
March 31, 1999. http://www.y2k.gov/new/0331PRL2.htm).
Also: Major Federal Departments and Agencies-Y2K Status, (March 31,
1999. http://www.y2k.gov/new/AGENTOT.htm).
Also: U.S. Department of Energy, Most Federal Agencies Ready for Y2K -
92% of Mission Critical Systems Meet March 31 Goal for Compliance
(Y2K
Fast Facts, April 2, 1999.
http://cio.doe.gov/y2k/OtherInfo/Y2KnYou/FF04-02-99.htm).
38. Rep. Stephen Horn, R-CA, Chairman of the Subcommittee on
Government
Management, Information, and Technology, Horn Releases Ninth Y2K
Report
Cards (News Release, September 10, 1999.
http://www.house.gov/reform/gmit/y2k/990910.htm).
39. Ibid.
40. Horn, Governmentwide Year 2000 Issues and the Department of the
Treasury (Opening Statement, March 18, 1998.
http://www.house.gov/science/horn_03-18.htm).
41. Dale Vecchio, Gartner Group, Inc. Quoted in the following: David
Myron, Y2K Looms Over Small Business (VARBusiness, September 27,
1999.
http://www.techweb.com/se/directlink.cgi?VAR19990927S0023).
42. Horn, Governmentwide Year 2000 Issues and the Department of the
Treasury (Opening Statement, March 18, 1998.
http://www.house.gov/science/horn_03-18.htm).
43. Dr. Edward Yardeni, Chief Economist & Global Investment
Strategist,
Deutsche Bank, Alarmist Shrugs (The Y2K Reporter, October 1
-- Jean Wasp (jean@sonic.net), October 31, 1999