BOEING CO Y2K disclosure For the optimistsgreenspun.com : LUSENET : TimeBomb 2000 (Y2000) : One Thread
Now this is a good disclosure, short, sweet, informitive, timely and believable.
BOEING CO - Quarterly Report (SEC form 10-Q)
November 12, 1999
Year 2000 (Y2K) Date Conversion -
The Y2K issue exists because many systems, including computer, product-embedded, facilities, and factory-floor production equipment systems, utilize a two-digit date field to designate a year. As the century date change occurs, date- sensitive systems may recognize the year 2000 as the year 1900, or not at all. This inability to recognize or properly treat the year 2000 may cause systems to process financial or operations information incorrectly.
State of readiness: The Company recognized this challenge early, and each operating group started working on the problem in 1993. The Company's Y2K strategy, to make systems "Y2K-ready," includes a common companywide focus on policies, methods and correction tools, and coordination with customers and suppliers. This focus has been on all systems potentially impacted by the Y2K issue, including information technology (IT) systems and non-IT systems, such as product-embedded, facilities and factory floor systems. Each operating group has responsibility for its own conversion, in line with overall guidance and oversight provided by a corporate-level steering committee.
The Company has capitalized on its history of integrating large complex systems, and has an experienced Y2K team and Program Management Office, headed by the Company's chief information officer. Since 1993 the Company has identified, assessed and remediated, if necessary, over 53,000 IT and non-IT systems for Y2K readiness. The Company believes these systems will be substantially operational during and after the Year 2000 rollover.
A companywide, coordinated process to assess supplier readiness began in the second quarter of 1998. This process encompasses four major activities: survey of suppliers, assessment of supplier preparedness, risk mitigation, and contingency planning. The first two activities were completed in 1998 and the remaining activities are scheduled for completion during the fourth quarter of 1999. The Company is currently conducting on-site visits to selected suppliers as part of its contingency planning. The Company has been generally satisfied with the results of these supplier visits.
Costs to address Y2K issues: The Company's Y2K conversion efforts have not been budgeted and tracked as independent projects, but have occurred in conjunction with normal sustaining activities. The Company estimates that IT Y2K conversion efforts represent the majority of conversion efforts, and have averaged annually approximately $35 million over the last three years, representing on average approximately 10% of the total application-sustaining IT costs during that period. Y2K conversion costs are expected to represent a lower percentage of total application sustaining IT costs in 1999. In addition to these sustaining costs, the discretely identifiable IT costs associated with Y2K conversion activities are expected to total $16 million. The Company does not expect a reduction in sustaining costs when Y2K conversion activities are completed because normal sustaining activities will be ongoing. Reprioritizing sustaining activities to support Y2K has not had, and is not expected to have, an adverse impact on operations.
Risks associated with Y2K issues: Due to the Company's early recognition and start on resolving the Y2K issue, the Company believes there is low risk of any internal critical system, product-embedded system, or other critical Company asset not being Y2K-ready by the end of 1999. The Company continues to assess its risk exposure due to external factors and suppliers, including suppliers outside the United States. Additionally, the Company is working with its customers and suppliers, conducting test scenarios to assess Y2K readiness. The Company has no reason to conclude that any specific supplier represents a significant risk. Although the most reasonably likely worst-case Y2K scenario would entail production disruption due to inability of suppliers to deliver critical parts, the Company has no reason to conclude that any specific supplier represents a significant risk.
The Company's contingency planning has been divided into two phases: Phase I - Develop a Year 2000 Corporate Business Continuity and Contingency Plan; and Phase II - Implement Business Continuity and Contingency Plan through the Site Transition Plan. Phase I is complete. The Company has developed a risk assessment-based Year 2000 Business Continuity and Contingency Plan consistent with the Company's computing disaster preparedness goal, which is to "reduce vulnerability and enhance risk management." Where appropriate, this plan leverages existing Company system and supplier contingency and disaster recovery planning. This contingency planning incorporates information from leading information technology organizations in the industry and government, including the U.S. General Accounting Office (GAO) guideline, "Year 2000 Computing Crisis: Business Continuity and Contingency Planning," dated August 1998. The plan provides a structured approach to assist operating groups with business continuity and contingency planning. Phase II - Implement Business Continuity and Contingency Plan through the Site Transition Plan - is ongoing. A Site Year 2000 Transition Plan template has been developed which outlines the specific staffing and contingency plans for before, during and after the year 2000 rollover, and further describes the major elements required to complete the plan. Each operating group is developing and implementing a Site Year 2000 Transition Plan. Each group's progress is reported to the Year 2000 Program Management Office on a monthly basis.
An enterprise-wide test was successfully conducted during the third quarter to validate the Company's ability to communicate under multiple emergency scenarios. Additional testing will be conducted during the fourth quarter. While the Company does not anticipate significant challenges during the Y2K rollover period, its communication centers will be fully staffed during the transition. The Company continues to work closely with local, state and federal emergency management organizations to ensure coordinated plans are in place should infrastructure problems occur in the year 2000.
-- Brian (email@example.com), November 15, 1999
Y2K is going to divide those who prepared early from those who didn't. It looks good for Boeing- a major employer to say the least. Now about those dominoe (Quayle spelling) effects........
-- Forrest Covington (firstname.lastname@example.org), November 15, 1999.
The statement made by Boeing is pure fiction. Boeing claimed to be Y2K ready on 31 December 1998. They in fact only completed the initial assessment of systems at that time. No budget assigned meant that most programs did nothing but list what systems they had. No remediation has been performed in many of these programs. In addition, Boeing's suppliers are not likely to be compliant. If Boeing is being used as an example of what is Y2K ready, then we are all in big trouble.
-- K.C. Farmer (email@example.com), November 15, 1999.
If you have any information that would back up your statements I would be happy to hear of them.
Boeing has been a model of sorts for Y2K remediation yet it isn't the lawyers that fix the systems.
-- Brian (firstname.lastname@example.org), November 15, 1999.