Recent Y2K cost estimates I recall:

Chevron $200-300 million

Sears $143 million

Citigroup (or was that estimate only for before the merger w/ Travellers?) $650 million

General Motors $500 million

IRS $1 Billion on top of whatever they've already spent

That's more than $2.5 billion right there!!!

Run for the hills!!! :)

-- Buddy (DC) (buddy@bellatlantic.net), November 09, 1998

Answers

I've been wondering whatever happened to the Gartner Group's estimate that the federal government needs to spend $30 billion to get ready for Y2K. Isn't the government right now only planning to spend $6 billion?

It's obvious too that "remediation done by December 31, 1998, leaving a year for testing in 1999" is not what's happened. The Gartner Group says 5% of each corporate dollar spent on IT in 1997 went to Y2K, and the figures rise to 29% for 1998 and 44% for 1999. Sounds to me as if there's going to be more spending on Y2K in 1999 than in 1997 and 1998 combined.

That's too late for a lot of businesses...

-- Kevin (mixesmusic@worldnet.att.net), November 09, 1998.

They're still having a parade, Kevin. Pretty soon they won't be able to hide what isn't there.

-- Diane J. Squire (sacredspaces@yahoo.com), November 09, 1998.

Could someone please tell me why the cost is so enormous? Is the money going for wages, equipment, paper, please, someone enlighten me.

-- Bardou (Bardou@baloney.com), November 09, 1998.

# # # 19981109

Okay, Bardou ... I'll give it a quick shot ...

1. It costs money to INVENTORY EVERYTHING that PLUGS IN in to an electrical outlet.

2. It costs money to ASSESS ( does it have date code? ) the INVENTORY from step #1.

3. It costs money to REMEDIATE/RETIRE/REPLACE/REMANUFACTURE the ASSESSed INVENTORY ( hardware and software ), LINE-BY-LINE-BY-LINE, EACH AND EVERY LINE OF CODE ( if they SOURCE CODE is anywhere to be found, or a functional compiler is still available to reconstruct it ), from step #2.

4. It costs LOTS MORE money ( ~50-80% of ANY Y2K-effort ) to TEST the REMEDIATEd/REPLACEd/REMANUFACTUREd, ASSESSed INVENTORY from step #3.

5. It costs money to IMPLEMENT the TESTed, REMEDIATEd/REPLACEd/REMANUFACTUREd, ASSESSed INVENTORY from step #4.

??. What do you do, now that you've IMPLEMENTED, TESTed, REMEDIATEd/REPLACEd/REMANUFACTUREd, the ASSESSed INVENTORY from step #5, ... and your suppliers [ up | down ]stream of you haven't got their sh*t together, so you can throw the "switch" on without corrupting your NOW-Y2K-COMPLIANT environment??? ... OUCH!!!

Has anyone thought to ask BCBS what they plan to do when their doctors, clinics and hospitals can't process their claims because they're not Y2K-compliant? How would these business partners perform their procedures if their high-tech medical equipment fails to operate after 01/01/00? Even if these business partners had claims to fill out by hand, how would they deliver them to BCBS if the United States Postal Service ( USPS ) can't get THEIR EQUIPMENT to operate and process the mail? ( Manually? Ha! Ha! ) How would USPS deliver all that mail without fuel ( if the electrical power grid is "System Black" ) with their truck fleet? ( Pony Express? )

Hmmm ...

So that's how the costs escalate -- to where, nobody really ever knows -- and the domino effect will bring down even the most Y2K- prepared enterprise. How much is enough? ... How much can you afford? ...

"Exponential" Regards, Bob Mangus

"I'm a computer 'Y2K-bomb' technician. If you see me running, try to keep up." RMangus

"Sometimes a majority simply means that all of the fools are of one mind." [Author Unknown] # # #

-- Robert Mangus (rmangus@mail.netquest.com), November 09, 1998.

C'mon, Buddy, where'd you leave your brain? God gave it to you for your own private use. Try it sometime.

It's not the cost of Y2K that has people here worried, it's the systems that aren't remediated. Are you really that thick or are you just into yanking peoples' chain to see if you can get a rise out of them. Put on your thinking cap next time before you post.

-- Franklin Journier (ready4y2k@yahoo.com), November 10, 1998.

so let me try to turn it off again...

-- Arnie Rimmer (arnie_rimmer@usa.net), November 10, 1998.

C'mon Franklin, use your brain. Doesn't the fact that many organizations' original cost estimates were way off the mark give us cause for alarm?

I started off studying this problem with much skepticism and I tried to prove the doomsayers wrong. Well, they can't be proven completely wrong, at least not yet. And the more I study the worse the situation looks.

BTW, my "run for the hills" comment was tongue-in-cheek. I don't believe that the bug-out solution works for most of us.

-- Buddy (DC) (buddy@bellatlantic.net), November 10, 1998.

I agree with you, Buddy. Many companies have had to increase the amount they originally thought Y2K work would cost them. That shows me that the problem was more pervasive than many thought it was.

-- Gayla Dunbar (privacy@please.com), November 10, 1998.

Bardou:

I appologize for the efforts, however well meaning, of the previous posters who have not really addressed your question. The short answer is "Yes."

Now, that may be as clear as mud but........ What you asked was where this cost came from....salaries, hardware(purchases), software (purchases), etc.

Primarily, the cost is in time (salaries) with hardware a close second and software coming on strong. The references top the costs of demonstrating, testing, remediation, etc are salaries and internal billing project costs (read salaries). And, don't you love it when the caps button is intermittently left on? Or was he really SHOUTING FOR US TO HEAR?

Anyway, this should help.

Chuck

-- Chuck, etc (rienzoo@mospam.en.com), November 10, 1998.

Sorry for the crabby answer, Buddy. Too short on sleep. I suspect that we haven't heard the last word on the cost of Y2K. But I get really annoyed with the "analyses" of the problem that just add up the cost of remediation and conclude "Now what's so bad about that?" I thought that's what you were doing. The single thing that has me so concerned, that did indeed prompt me literally to run for the hills, was the likelihood of large numbers of systems partially or poorly remediated and the subsequent breakdowns. And sorry to all for the bold faced type; I learned something new today.

-- Franklin Journier (ready4y2k@yahoo.com), November 10, 1998.

Franklin, I guess if you have been reading this forum for awhile you may have seen some of my posts that sounded like I was a pollyanna. I never thought I was, but perception depends on your point of view. I guess this post could look like a jab at doomsayers, but it wasn't.

Anyway, while looking for answers I like when I find something I can sink my teeth into like cost figures. If we can find $2.5 billion in 4 corporations and the IRS, then it's not hard to extrapolate that even the Gartner Group's $600 billion is underestimated. Evidence of serious trouble here.

-- Buddy (DC) (buddy@bellatlantic.net), November 10, 1998.

When looking at the cost of Y2K remediation. there are several things to keep in mind:

1. Systems projects have a long history of going over budget. That comes in no small part from the fact that time and cost estimation of systems projects is generally done with far too little discipline and experience. In this regard, Y2K projects are probably no worse than other systems projects. Sadly, they are probably no better, either.

2. What is $300 million as a percentage of Sears' total IT budget? The companies that you name have HUGE software protfolios, so of course it is going to take a lot of dollars to fix them. However, the total dollars spent may still be a reasonable percentage of the total IT budget for those companies. What constitutes a reasonable percentage of the IT budget for Y2K remediation? I don't know.

3. The IRS is a good example to show how much money is being spent on the problem as a whole, but probably a bad example to show how much money is being spent outside of government. Federal projects have a long history of running even later and more over-budget than private sector projects. They should proably be considered separately.

4. A lot of Y2K cost figures are including the cost of new systems to replace older systems that may or may not be compliant. Installing a new systems is generally more expensive in the short term than modifying an old one, and it is those short-term dollars you are seeing reported.

Still, even taking all of this into consideration, that's a whole heap of money being thrown at this problem.

-- Paul Neuhardt (neuhardt@ultranet.com), November 10, 1998.

From Sears' website:

Sears' Total costs and expenses (in millions) 1997 39,302 1996 35,981 1995 33,130

If their Y2K costs are $143 million, then that is 0.0036 or .36% of their total expenses for 1997. That estimate is likely to go up in my opinion.

They lost $475 million when they had to pay back reaffirmation agreements with bankrupt individuals. They didn't like that anymore than they're liking this.

I haven't found any evidence of their IT budget yet.

-- Buddy (DC) (buddy@bellatlantic.net), November 10, 1998.

I don't know the specifics in terms of money, but I wouldn't worry about Sears. I know from Gary North's site that Sears takes Y2K seriously. Seriously enough that they have company officers pay their vendors a visit in person to find out off the record if the vendor is compliant. If a vendor needs advice on being compliant, Sears gives it.

I just quit Sears recently. I know that in their call centers, they are replacing the terminals with PC's around the beginning of 1999.

-- Kevin (mixesmusic@worldnet.att.net), November 11, 1998.

How much does it cost to replace a chip that is no longer available? If you are a hospital and your MRI machine won't work because of some chip that can't be replaced, won't you have to buy a new one? I think the replacement of equipment which can't be repaired could be the biggest cost of y2k. Tens of billions worth of equipment ordered, but will it be ordered and replaced in time?

Soon there won't be budgets for y2k. You will hear, "We will spend whatever it takes" If I were a programer, I would not sign any employment agreement ever. The price for someone who knows what they are doing will rise to thousands of dollars per day.

-- Bill (bill@microsoft.com), November 11, 1998.

There are crooks, thieves, and cheaters out there too (we could be nice and call them "over-enthusiastic salesmen out to make a quick buck from scared companies to cheap to investigate things" - but crooks is shorter).

Read a story from San Antonio TX in the Express-News about 4 weeks ago - talked about a local small hospital in a country town - 70-80 beds size. They had investigated Y2K probelms, found many things that will fail, found many inconsistancies and things they aren't sure will work, found many things that will probably be okay. (The usual mixed result you would expect.)

They are also, by the way, testing contingency plans, and testing emergency plans - like assigning nurses on duty the first hights with flashlights to cover things if power fails.

So a vender calls the hospital, says "Our gadget will fail in year 2000." Hospital says, "Thank you, can you fix the one we've got now?. Vender says, "Nope, you've got to buy a new one from us at 30,000.00"

Hospital says, "Thank you very much, we will do just that - buy a new one from somebody else."

Vender finds a fix - for 1500.00 dollars.

-- Robert A. Cook, P.E. (Kennesaw, GA) (cook.r@csaatl.com), November 11, 1998.

Buddy,

A rule of thumb is that in retail, the IT budget is usually around 10% of total expenses.

Of course, the problem is that Sears is also into a whole heap of non-retail activities, so that rule might not apply here.

-- Paul Neuhardt (neuhardt@ultranet.com), November 11, 1998.