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Y2K: Where are we now? Where are we going? Personal and Societal Implications of the Millennium Time Bomb

Contact Information Steve Hartsman Beyond 2000 Awareness Project, Metro Milwaukee Y2K Preparedness Group (414)228-7393 hartsman@ticon.net

Y2K Myths  Theres plenty of time  Someone will find a quick fix soon  Only mainframe computers are affected  We are throwing enough money and people at the problem to fix it  With so many new computers out there, we cant be vulnerable to a problem created 40+ years ago  Large companies will make it; small ones wont  With luck, it wont affect me

The problem: 2 digits instead of 4  To save valuable memory and limited space on punch cards, programmers dropped the first two digits on all year fields  The first two digits were assumed to be 19  It was known that this would cause problems in the year 2000, but everyone assumed the problem would be dealt with  In 2000, 00 will be interpreted as 1900, not 2000, causing bad data

The simple solution: Expansion vs. Windowing  Expanding all year fields to 4 digits is the preferred method, but is more costly and time-consuming than windowing  Windowing keeps 2-digit year fields, but uses a pivot date--numbers less than the pivot are assumed 21st century, greater than the pivot are assumed 20th century  Both methods are being used, resulting in a lack of standardization of date formats

Why are dates so important?  Determine if someone should receive something:  Social Security  Medicare  Retirement benefits  Salary increases  Tax refunds  Seniority  Etc.  Used in industry to control:  Manufacturing processes  Maintenance schedules  Machine operations  Shelf life/expiration  Just in time inventories  Etc.  Business applications:  Invoicing  Payroll  Fiscal year calculations  Ordering  Forecasting trends  Etc.  Banks and finance:  Interest calculations  Due dates  Delinquent accounts  Mortgages  Stocks  Etc.

Why are dates so important? An example  If you were born in 1962, today you are 36 years old (98-62=36)  In 2000, a non-compliant computer thinks you will be -62 years old!! (00-62=-62)  How will the computer interpret this result?

How hard is it to simply change the dates?  Have to change every reference to a date, in every program and file in use, archived, and stored  Massive logistics problem  40% of companies no longer have their original source code

Why is there justification for pessimism?  The IT industry has a consistent track record for being substantially behind schedule and over budget for normal projects over the past 40 years  Y2K projects are the largest and most complex projects undertaken by most organizations  Even if they do finish in time, the IT industry has a consistent track record of delivering buggy software  on average, one defect per function point after testing

If its technically simple to fix, why are Y2K projects so difficult?  Pervasiveness of dates in applications  Interdependence: Computers do not operate in isolation  Inconsistency: Must inspect every line of code (LOC)  Size: Most large corporations and government agencies have thousands of programs containing millions of LOC  At least 600 programming languages  A programmer can fix about 100,000 LOC per year; roughly 200 billion LOC to fix; translates to 2 million person years!!  500,000 mainframe programmers in U.S., most are NOT working on a Y2K project  No agreed-upon date standard  No coordinating agency with the power to impose sanctions for failing to comply  No agreement on definition of compliance

Project Time and Cost Breakdown  Awareness is 1%  Inventory is 1%  Assessment is 5%  Solution Design and Planning is 15%  Development and Modification is 20%  Testing is 40-70%

The main reason companies wont finish on time? They started late! An enterprise starting in 1997 is likely to get through only about 80% of its applications; if it waits until 1999, only 30%. And even conceding that only 30% of the applications may be critical to the business of the enterprise, that 30% is probably attached by data to another 40% of the other applications that wont make the transition in time. At best, the organization will be crippled; at worst, it will no longer exist. -Peter de Jager, "Managing 00: Surviving the Year 2000 Computing Crisis"

The Domino Effect  Global economy relies on computer networks communicating reliably and efficiently  A chain is only as strong as its weakest link  What if your company is compliant but not all of your suppliers and vendors are?  What if the US is compliant but Europe, Asia, South America, etc., arent?  Impact of corporate fortressing

Y2K is already here  Numerous examples of Y2K failures:  Water plants failed or dumped toxic chemicals  Smith Barney deposited $10 trillion into accounts  Tons of food destroyed  GM robotics froze  Chrysler security gates locked  Prison doors defaulted to open  Numerous power plant date rollover tests have crashed the system, resulting in plant shutdown  44% of businesses surveyed have had Y2K failures in production environment, 67% in test environment

Topics to discuss  The Power Grid and Nuclear Power  Telecommunications  Banking and the Stock Market  Government  Transportation  Health Care  Food Supply  Imported data  Embedded chips/systems  PCs  Testing  Global perspective  Personal preparedness  This list is not comprehensive!

The Power Grid Reliable electrical supply is the most basic linchpin of a civilized, modern society. -Ed Yourdon, Mainframe programmer; co-author, Time Bomb 2000 Nobody in authority is talking about the relation of Y2K and the electrical power generators of the world. Yet there is no issue more critical to our survival All it would take is 60 days without electricity to pull the plug on this civilization -- and this may be too optimistic. -Gary North, author and historian Having an interconnected system really makes for more efficient use of our natural resources and keeps the cost down. But it means when something goes wrong, it can cascade through the system. -Lynn Baker, spokeswoman for Bonneville Power Administration, which oversees the power grid in the Pacific Northwest, after a single short-circuited line caused by an overgrown tree in Idaho caused 15 western states and parts of Canada and Mexico to lose power in July, 1996 It [the North American power grid] is a very complex system. Its probably the most complex system ever invented by man, more complicated than a moon shot. -Michael Gent, president, North American Electric Reliability Council (NERC) While these utilities [nations 10 largest] are proceeding in the right direction, the pace of remedial efforts is too slow and the associated milestone dates are so distant that there is significant cause for concern Firms are not confident that they have a complete and accurate picture of their present Y2K compliance, making assurances of timely Y2K compliance little more than a hope. -Executive Summary of survey conducted by the Senate Special Committee on the Year 2000 Technology Problem The state of year 2000 readiness of the utility industry is largely unknown Failure to fully understand now the potential seriousness of the issue for energy companies may be the greatest problem we currently face. -James Hoecker, chairman, Federal Energy Regulatory Commission The interlinking nature of utilities, with gas-fired generators, systems that rely on telecommunications and electrical equipment throughout the supply chain, makes guarantees impossible. -Energy Intensive Users Group (EIUG), as quoted in Business Day, 10/15/98 We have a lot of work to do I cant make you feel 100% confident that everything is going to function. -Tom Clark, Year 2000 Project Leader, Ontario Hydro I am genuinely concerned about the prospects of power shortages as a consequence of the millennial date change Its a certainty that if the year 2000 were to hit us today at the state of readiness we are in today, the power grid would fail. -Senator Bob Bennett, Chairman, Special Senate Committee on the Year 2000 Technology Problem Quite honestly, I think were no longer at the point of asking whether or not there will be any power disruptions, but we are now forced to ask how severe the disruptions are going to be. -Senator Christopher J. Dodd, Vice-Chairman, Senate Special Committee on the Year 2000 Technology Problem For each electric company thats deeply involved in the task at hand, there are two peers who are struggling with either starting a program or proceeding beyond Y2K inventory Its time for the non-IT sector of the electric utility business to get out of denial, and start understanding and accepting the scope of this problem. -Rick Cowles, author, Electric Utilities and Y2K; Director, Industry Y2K Solutions Youll never get us to say that CU [City Utilities] is 100 percent Y2K compliant. This is a huge problem. -Brenda Putman, the chairwoman of CUs Y2K task force Automated systems are indeed widespread throughout power utilities. Exposure to the industry would in my opinion rate as extreme Any suggestion that power systems dont use dates or could not be affected by the Year 2000 problem is at best ill-informed. -John Catterall, Year 2000 Project Manager, Western Power Embedded logic control is the dirty little Y2K secret of all production facilities (manufacturing and utilities) that has the most significant potential to bring whole companies to their knees The party line of the industry remains: everythings OK, this isnt a big deal, well get it fixed. However, anyone in the industry who understands the total scope of the problem, and who will speak off the record, is scared to death. -Rick Cowles, author, Electric Utilities and Y2K; Director, Industry Y2K Solutions The energy sector is extremely dependent on information technology systems. For all practical purposes, there really are no longer any manual alternatives The industrys Achilles heel is that it is virtually impossible to test Y2K compatibility because the system must be kept online all the time. -Edward Yardeni, Chief Economist, Deutsche Bank Research The electric-power industry has an enormous amount of work to do, and it is doing a terrible job of getting ready for Y2K Many power-industry experts admit privately that they think large-scale and extended power outages, beginning in January, 2000, are inevitable. -Jim Seymour, PC Magazine article, 10/6/98 issue Never before has there been a threat to the power system of such sweeping scope and magnitude as Y2K It is already too late to finish Y2K remediation for many companies, but it is not too late for disaster preparations. -Dick Mills, who has created software for power plants for over 30 years I think it is axiomatic that there are going to be power failures due to Y2K. The only thing that is uncertain about it is how many are you going to have and the extent to which the problem cascades. -John Pike, analyst with the Federation of American Scientists, a Washington D.C., think tank Will the lights go out? The answer is that no one knows for certain yet what the effects of Y2K will be. The risks that Y2K may impact electrical system operations are real Y2K poses the threat that...failures...may result in stressing the electric system to the point of a cascading outage over a large area An individual electric utility that invests tens of millions of dollars in solving Y2K problems could be affected in a major way by an outage initiated in neighboring systems that have not been as diligent The industry will succeed or fail together in its readiness for Y2K. -Excerpts from the NERC (North American Electric Reliability Council) report, 9/98 Not one of the utilities in any of the hearings I have attended have told the audience how well they are being graded by a teacher (an outside consultant whose job it is to grade them)... Self-grading does not make a utility a Y2K success. We are 100% in the dark as to how well any of our utilities are doing from a teachers scoring standpoint. -Roleigh Martin, founder, The Year 2000 Paul Revere Community Alert Campaign on the Y2K Threat to Core Infrastructures, responding to the 9/98 NERC report Customers and residents must realize that every major power company in the nation is connected to the grid. We anticipate that there may be Y2K-related grid problems Unfortunately, there is no way to know exactly what the grid will do when Y2K comes If other power companies go down, they could take us down with them. -Washington Water Power (WWP) An attorney for a major electric utility said the company is encouraging its customers to look into alternative energy sources, including home generators, in anticipation of power failures as a result of the [Y2K] problem Mari Nahn, an attorney with Madison-based Alliant Corp.-Wisconsin Power & Light Co., said power failures are likely, as are failures of municipal water systems. -From a story in The Milwaukee Journal Sentinel, 10/7/98. An Alliant spokesman backed away from this statement the next day, stating It was not meant to reflect the advice we are giving our customers. Power failures are possible. Anyone who has told you they have fixed the problem -- guaranteed -- is not understanding the scope of the problem. -David Giroux, spokesman, Alliant Energy Corp. of Madison [Wisconsin] Were working very hard to make sure this is a non-event, but we wont know until Jan. 1, 2000 Its not possible for Wisconsin to be ready and to be OK. -Pamela Wegner, executive vice president of Alliant Corp.-Wisconsin Power and Light Co. We are doing everything possible to provide continuous service, but its difficult to predict if power interruptions will occur. The fact that the nations electric and natural gas systems are closely interconnected makes us vulnerable to the problems of other utilities and suppliers We encourage you to learn as much as you can about the issue and to develop your own back-up plans for necessities. If you choose to purchase a back- up generation system, be sure to verify that the unit is Year 2000- compliant and that the fuel source will be readily available. -Erroll B. Davis Jr., President and CEO, Alliant, in a letter sent to all of its customers How come so many utility company employees and executives are ordering generators from the sellers of backup power or wind generators? How come so many engineers in Public Utility Commission offices nationwide--who are studying this problem--are ordering backup power generators? -Roleigh Martin, founder, The Year 2000 Paul Revere Community Alert Campaign on the Y2K Threat to Core Infrastructures I am convinced there is a 100% chance that a major portion of the domestic electrical infrastructure will be lost as a result of the Year 2000 computer and embedded systems problem. The industry is fiddling whilst the infrastructure burns. -Rick Cowles, author, Electric Utilities and Y2K; Director, Industry Y2K Solutions  About 8,000 power plants, none compliant  Much of industry still in assessment phase (over 90% of the work still remains)  Some utilities have no formal Y2K plan  Grid in US, Canada, and part of Mexico is interconnected  Plants rely on regular rail shipments of coal  Over 5,000 water plants rely on power

Nuclear Power We dont have any problems yet. Well deal with the problem in the year 2000. -Vladislav Petrov, a spokesman for the Russian Nuclear Power Ministry, Russia Today, 7/7/98  Nukes supply 20% of power in US  Every nuclear facility which has not conclusively proven Y2K compliance (none currently have) may be required by the NRC to shut down before the end of 1999 for safety reasons  If this happens, cascading effect could take down the entire grid prior to 2000

Telecommunications The global telecommunications infrastructure is the central nervous system of modern society I have great concerns that [it] can ride out the millennium date change without significant disruptions. -Senator Bob Bennett, Chairman, Special Senate Committee on the Year 2000 Technology Problem You may have products in compliance, but the interfaces with other equipment may not be in compliance. It may result in dropped calls. We dont know what will happen. -Bill Nichols, Director of service planning, Federal Telecommunications Service Its like a food chain. Everythings interconnected. If the phone companys not working, it doesnt matter if the banks are because you wont be able to send wire transfers to get money. -Juan-Francisco Roque, an economist based in Washington, with a computer consulting operation in Bolivia This is a problem of gigantic dimensions and with so many complexities that its very hard to think something will not slip. -Bichlien Hoang, executive director of Year 2000 network solutions at Bellcore, a communications software, engineering, and consulting firm [I am]...concerned that the year 2000 problem has the potential of disrupting communications services worldwide Every sector of the communications industry--broadcast, cable, radio, satellite, and wireline and wireless telephony--could be affected. -William Kennard, FCC Chairman The potential problems are further compounded by the global nature of todays telecommunications systems, which rely on seamless connections among widely scattered and widely diverse networks Year 2000 failure in the telecommunications infrastructure would bring potentially disastrous consequences. -Congressman Steven Horn, Subcommittee on Government Management, Information and Technology We must ensure that the international system is ready for the Year 2000 -- because one weak link in the system will hurt us all. -Al Gore, Vice President, in a speech to the U.N. International Telecommunications Union (ITU), October 13, 1998  Over 1,400 providers in US, none compliant  Many network devices made before 1996--including bridges, routers, gateways, multiplexers, private branch exchanges (PBX) and E-mail servers--have a 90% chance of failure in 2000  Large providers have hundreds of millions of lines of code  Can not test the entire system

Banking The year 2000 issue is potentially the biggest challenge ever faced by the financial industry. -Central bankers of the G-10 top ten industrialized countries The lack of concern and action on the part of the international banking community is particularly distressing. The ability of international banks to operate effectively after the Year 2000 is, in our estimate, seriously in question. -Larry W. Martin, CEO, Data Dimensions, testifying before Congress It will only take 5 to 10 percent of the world banks payment systems to not work on that one day [1/1/2000] to create a global liquidity lock-up. I dont think the markets have quite grasped the implications of what will happen if the entire system goes down. -Robert Lau, managing consultant, PA Consulting, Hong Kong I do not think it would be possible to overstate the importance of the Year 2000 problem as an issue for financial markets. The Year 2000 problem is an issue for every country, firm, organization, government agency, bank and piece of critical infrastructure in the world. -William McDonough, President, Federal Reserve Bank of New York The largest banks on earth are in Japan, where 70 percent of the computer systems use customized code, as opposed to 30 percent in the U.S., making repair more difficult. The repercussions of their failure could be felt here for a generation or more. -Scott Olmsted, software engineer, founder of prepare4y2k.com My suspicion is that were going to run into a lot of problems We have ordered a very major increase in the currency available. I have no question that were going to have very unusual things occurring. -Alan Greenspan, Federal Reserve Chairman Nobody can give the Congress a 100 percent guarantee that this problem will be fixed until you get to January 2 of the year 2000. -Eugene Ludwig, Comptroller of the Currency We gotta be careful not to construct catastrophic scenarios, but the fact is that a bank that is unable to transact business in a country thats experiencing financial difficulties in 2000 creates greater problems -- and theres a national security dimension out of that instability. -George Tenet, head of the Central Intelligence Agency If youre prudent, youd like a little money on hand, wouldnt you? The problem is that if everyone in the U.S. decides to act prudently, well run out of cash. -Larry W. Martin, CEO, Data Dimensions Theres only a finite amount of currency available in the U.S. If a problem arises, there will probably be a rationing of currency. -Lee Ann Paladino, chief investment officer, Empire Corporate FCU, Albany, N.Y., as quoted in Credit Union Times, 11/9/98 There is not one compliant bank on earth, and they all must share data with each other. The day the data cannot safely be shared is the day the entire industry collapses. -Gary North, author and historian This is not a prediction, it is a certainty -- there will be serious disruption in the worlds financial services industry Its going to be ugly. -Londons The Sunday Times  Over 11,000 Banks in US, a few compliant  15% of large banks, 35% of small banks did not have Y2K plans in place in 1997; at least 12% are late, according to 10/98 survey  Federal Reserve to add $100 billion to reserves as precautionary measure in 99  Australia, New Zealand, Canada and UK printing extra currency; others may follow  Mergers and poison pills

Fractional Reserve Banking  Deposit obligations--what people think they have safely saved in their checking and savings accounts: $3.7 trillion  Total dollars in circulation around the world (only 1/3 is in US): $480 billion  Actual cash reserves--what banks actually have on hand as cash: $43.2 billion  The only thing that can save this system from collapse is if the public maintains confidence in the system and does not withdraw funds

Stock Market With what we know now, I wish it was 1995 again. -Michael Tiernan, Vice President of Credit Suisse First Boston, a brokerage firm, and chairman of a Year 2000 committee You only have to look at international markets at present to see how dependent they are on confidence. The year 2000 will undoubtedly be a confidence factor in 1999 It is important for financial firms and governments to be aware of that issue and have sensible plans to deal with those concerns. -Tim Shepheard-Walwyn, Global 2000 Coordinating Group Any company that neglects this looming problem is simply asking for trouble. If a firm is eventually hit by a Year 2000 breakdown, it will probably be put out of business--not by the authority of any regulator, but by the power of the market itself. And its not just the institutions Im concerned about. Its the investors who do business with them. A Year 2000 breakdown could do incalculable damage to investors finances, and could undermine their confidence in our entire financial structure. -Arthur Levitt Jr., Chairman, Securities and Exchange Commission It is not, and will not, be possible for any single entity or collective enterprise to represent that it has achieved complete Year 2000 compliance and thus to guarantee its remediation efforts. The problem is simply too complex for such a claim to have legitimacy. Efforts to solve Year 2000 problems are best described as risk mitigation. Success in the effort will have been achieved if the number and seriousness of any technical failures is minimized, and they are quickly identified and repaired if they do occur. -Securities and Exchange Commission  5,160 securities firms surveyed by National Association of Securities Dealers (NASD): 21% had not prepared a Y2K plan in 1997  SEC fined 37 firms for failing to report readiness, NASD fined 59 firms for late filing (10/98)  Beta test (7/98) was a test of the testing methodology, not a full blown test: 10% errors, 1% Y2K-related  Tier I Test is a full test scheduled for March-April, 1999: 16% of Securities Industry Association (SIA) is not scheduled to participate  Tier II Test in May, 1999 for stragglers

Government As we ring in the 21st century, we will be ushering in the mother of all computer glitches - one which could cripple critical government functions. -U.S. Representative Constance Morella The Year 2000 computer crisis is now upon us and the federal government is even more woefully unprepared than the rest of society. -Steve Forbes, publisher and likely Presidential candidate in 2000 The public faces a high risk that critical services provided by the government and the private sector could be severely disrupted by the Year 2000 computing crisis. Financial transactions could be delayed, flights grounded, power lost, and national defense affected. -Joel C. Willemssen, Director of Information Resources Management, US General Accounting Office (GAO) If federal computers fail because they cannot understand the year 2000, the distribution of benefit checks could be disrupted, the air traffic control system could become gridlocked, and computerized records could be lost or damaged More than one-third of the federal mission-critical systems will not be ready in time... At best, we may face a major headache; at worst, an electronic disaster. -US Congressman Stephen Horn, Chairman, House Government Management, Information and Technology Subcommittee Failure to complete year 2000 conversion could result in billions of dollars in benefits payments not being delivered. Potential problems states cited were that new recipients could not be added to the recipient file, eligibility for new applicants could not be determined, recipients could be denied benefits, payments could be underpaid or overpaid and payments could be delayed. -General Accounting Office (GAO) report, Year 2000 Computing Crisis: Readiness of State Automated Systems to Support Federal Welfare Programs, from Government Executive Magazine, 11/10/98 Eighty-four percent of all technology projects are finished late or not at all. Y2K is the largest technology project in history and it has a fixed deadline. Why is the government trying to convince us it is about to pull off the greatest technical miracle in history? -Jim Lord, retired software engineer; author, A Survival Guide For The Year 2000 Problem The federal government is not going to finish its Y2000 project. No maybes, no ifs, ands, or buts. No qualifiers, no wishy-washy statements like unless more money is spent or unless things improve. Were not going to avert the problem by appointing a Y2000 Czar or creating a National Y2000 Commission. -Ed Yourdon, Mainframe programmer; co-author, Time Bomb 2000 About half of all government agencies in North America wont solve the year 2000 problem in time so you have to plan for failure. -GartnerGroup  9/98 report card: Overall grade of D  15 of the 24 major federal agencies are significantly behind schedule  States have no coordinated effort and are generally in very poor shape  No government above county level is compliant (only a few counties are)  At current rates of progress, these agencies will not complete their Y2K Projects until:  2019: Department of Energy  2019: Department of Labor  2012: Department of Defense  2010: Department of Transportation  2004: Department of Treasury  Mid-2000: Federal Emergency Management Agency (FEMA)

Government: The best--The Social Security Administration  Only agency to get consistent grade of A  Began assessment in 1989  Began actual renovation in 1991 of roughly 30 million lines of code (LOC)  400 full-time programmers assigned  By June, 1996, it had fixed 6 million LOC  In November, 1997, SSA found 33 million additional LOC in its state offices

Transportation We dont have the people to handle a major systems failure anymore. Maybe we should make sure crews can still handle the sextant and Morse code. -Malcolm Gosling, Head of Electrical Services at Royal Dutchs Shell Trading and Shipping Company From the beginning stages of awareness regarding the effects created by the Year 2000 computer problem, most organizations, both public and private, have been slow to respond. The enormity of the tasks involved have been dramatically underestimated, miscommunicated or ignored The condition of the National Airspace System is past a timeline for an orderly assessment and renovation phase. Contingency plans must be constructed for all potential occurrences -- up to and including complete system-wide breakdown At the current pace, disaster avoidance will rapidly become disaster recovery. -Daniel G. Thorsen and Chris Monaldi, National Air Traffic Controllers Association (NATCA) What we found in our inventory was that practically everything at the airport was potentially affected What we know about other airports is that for the most part they have started their programs later than we have, and are planning to spend fewer resources Congress should defer other national issues if necessary to focus on developing a comprehensive emergency plan for the country. -Paige Miller, commissioner, Port of Seattle, which is responsible for the Seattle-Tacoma airport (SeaTac), and which began its Y2K project in 1993 The attitude of the insurance industry will play the dominant role in what happens to airlines at the end of the century If insurance companies say they will not cover an airline for a year 2000 problem, airlines will not be able to cover themselves. -Andy Kyte, GartnerGroup, 11/3/98 Im fearful that we will not be ready in time; there will be delays and detours. Planes will stay on the ground and this means capital will not be generating money. Within a half a year some airlines will be facing bankruptcy. -Max Rens, Chief Information Officer, KLM Royal Dutch Airlines  Over 500 airports in US, none compliant  35% of US airports have no plan for Y2K as of 9/98!!  Several airlines have already announced they may cancel flights in January, 2000  More than 16,000 chips in a Boeing 747  Manual railroad switching no longer possible  Large ships have hundreds of chips, 20% are defective  Most auto manufacturers have been silent about potential problems (newer cars have 20-50 embedded systems, such as fuel injection and power train)

Health Care Anybody who still does not believe the millennium bug exists should take a trip to University College hospital in central London. Large luminous green stickers warning employees of year 2000 faults within hospital equipment can be spotted plastered all over a disturbingly prominent number of devices. -From a story in Englands Sunday Business There are medical machines that will fail in ICU units. There are hospitals that are far enough away from other hospitals that they have no backup, and if they have a failure in some of their machines or in some of their supplies, there will be people who will be affected by that in terms of patient care. -Senator Bob Bennett, Chairman, Special Senate Committee on the Year 2000 Technology Problem When Mrs. Smith brings in her prescriptions on Saturday January 2, 1999, I will know pretty quickly if the system is compliant. If it is not, the expiration date of January 2, 2000, will cause an error and reject the prescription. -Richard Carbray, American Pharmaceutical Association The healthcare industry will probably only be through the assessment phase by the end of 1998. I wish I could point to a leader, but theyre few and far between. -Gary Clark, a consultant on Y2K readiness HCFA [Health Care Financing Administration] and its contractors are severely behind schedule in repairing, testing, and implementing the mission-critical systems supporting Medicare As of June 30, 1998, less than a third of Medicares 98 mission-critical systems had been fully renovated, and none had been validated or implemented It is highly unlikely that all of the Medicare systems will be compliant in time to ensure the delivery of uninterrupted benefits and services into the year 2000. -US General Accounting Office (GAO) Report to Congressional Requesters, Medicare Computer Systems: Year 2000 Challenges Puts Benefits and Services in Jeopardy, 9/98 The doctors who I have talked to tell me we have long since quit dealing with HCFA with paper. All of our interconnections with HCFA are electronic, and if that system goes down, the ripple effect will be tremendous. -Senator Bob Bennett, Chairman, Special Senate Committee on the Year 2000 Technology Problem  Over 5,000 hospitals in US, none compliant  10/98 GartnerGroup survey: 36% of US hospitals have not even begun dealing with the problem!!  US hospitals receive roughly half their revenues from Medicare/Medicaid  50% of medical equipment will fail either completely or through inaccurate diagnosis  10,000 to 15,000 medical devices affected  As of 10/98, 88% of 16,000 manufacturers refused to respond to FDA survey on the Y2K status of their products

Food Supply I expect to see a great deal of panic buying, particularly in the last few weeks of December [1999]. Thats not difficult to foresee Imagine how long the lines would be if we had to run around getting price checks on every single item, hand-write receipts, manually calculate sales tax and total, etc. In all honesty, I would lock the doors. -Store Manager, requesting anonymity, of a large grocery store chain Food suppliers, like so many businesses, are heavily dependent on computerized processing and information exchange Any interruption along this farm-to-fork chain can result in a direct loss to those who supply food. That can mean more expensive, less available food supplies. -From USDAs website, The Y2K Problem and the Food Supply Sector Our country and most others do not have a significant, on-hand supply of food. And since most of the food production is done by a handfulof food producers, it wouldnt take much to disrupt the supply. And further, if you cant get the food to the people who need it, it really doesnt matter how much you have. -Michael Hyatt, author, The Millenium Bug: How to Survive the Coming Chaos  Typical grocery store is restocked every 72 hours  Will farmers have access to information, seeds, fertilizer, feed, and credit?  Will disruptions in our energy supply chains hamper the ability of farmers to grow crops and feed livestock?  Will distribution channels operate without delays?  Can food supply chain cope with a wave of panic buying?  Will railroads be able to operate at full capacity?  Will ships move freely in and out of ports?  Can we provide food assistance to nations overseas?

Imported Data Even if an organization fixes all of its IT systems and embedded chips so that they recognize 00 as 2000 and not 1900, those systems can be instantly and severely impaired by bad data coming from external sources. -Edward Yardeni, Chief Economist, Deutsche Bank Research A program can fail in one of two ways. The first is simply when a program stops working and the failure is recognized immediately. The second, more insidious, is for the program to continue to run, generating false information, thus spreading the equivalent of a virus. -GartnerGroup, The Domino Effect of Hidden Year 2000 Problems  There is no agreed-upon date standard  How can systems and data integrity be maintained?  Federal agencies have 500,000 data exchanges with no filters or bridges  Beachs Law of Vulnerability

Embedded Chips/Systems There is another Year-2000 risk. It is distinct from the more widely reported risks concerning impending failures of computers and software... This risk involves embedded processors and logic arrays, dedicated electronic control and monitoring logic incorporated into larger systems. These are essential to the operation of a vast portfolio of infrastructures; from medical equipment, to buildings (phone, security, heating, plumbing and lighting), to transportation, to financial networks, to just-in-time delivery systems, and so on. -Mark A. Frautschi, Ph.D., Embedded Systems and the Year 2000 Problem The true nature of the Y2K story has been misunderstood. After all the effort put into chasing down those pesky little monkeys (mainframes and desktop computers), a Nine Hundred Pound Gorilla has emerged on the scene. He is called embedded processor and he looks like one very tough dude The embedded processor component of Y2K could be as much as two to four times as severe as the mainframe and desktop components COMBINED. -Jim Lord, retired software engineer; author, A Survival Guide For The Year 2000 Problem The list of Y2K challenges facing our society will be long unless industries operating our nations infrastructure take action. For example, communication, security and emergency services may be temporarily disabled - transportation may be disrupted and even water and sewage services may be suspended - all due to the failure of certain embedded systems, or the failure of connected systems to communicate. All of these effects will have a direct impact on the average American. -Robert Holleyman, President and CEO, Business Software Alliance (BSA) More than 50 million embedded-system devices worldwide will exhibit year 2000 date anomalies. -GartnerGroup It is very serious. And the reason is you dont know where the embedded chips are embedded. -Andy Grove, CEO, Intel (largest producer of chips in the US), when asked How serious is the Y2K problem? The failure of automated equipment and machinery controlled by embedded computer chips could result in serious injury or even death The risk is very real. -Andrew Lindberg, chief executive, WorkCover, an Australian workplace safety company Discovering problems with embedded systems is much harder than with software. Embedded timing devices have no visual display of date/time, nor any means of input to see that a date/time has been installed at factory creation time. -Roleigh Martin, founder, The Year 2000 Paul Revere Community Alert Campaign on the Y2K Threat to Core Infrastructures Testing of embedded systems is so complex, expensive, problematic, and unpredictable, we have adopted the following strategy: If the vendor says their embedded system is compliant, believe it and move on If the vendor doesnt know or will not/cannot answer the question, assume the system is not Y2K compliant. Retire, replace, or repair the system. -From the City of Albuquerque, NM, Y2K Project Monthly Status Report, August, 1998 The embedded system remediation problem is the key to understanding the economic consequences of the Year 2000. -Dennis Grabow, CEO, The Millennium Investment Corporation  1-4% of all embedded chips will fail  8 billion chips were made in 1997 alone, estimated 30-50 billion chips total  Many chips cant be replaced easily (underwater oil drilling) or at all (satellites)  GartnerGroup report: only 11% of companies had even begun to investigate potential Y2K-related problems in embedded systems in 1997

PCs [Microsoft] failed to grasp the importance of how its products are date-sensitive and critical to customers operations In the past, Microsoft has told customers that all of its products were Year 2000 compliant. Those statements wereinaccurate. -Jason Matusow, Microsofts Year 2000 strategy manager Computer companies had been marketing machines as Year 2000 compliant for several years in the knowledge that the machines could fail if they were left on overnight at the changeover to the new millennium. -Joseph Tomasi, consultant, Survive 2000, who also noted that 95% of PCs sold as compliant failed Y2K tests  Basic Input/Output System (BIOS): 93% of all PCs made before 1997 will produce incorrect dates in 2000; 47% made in first half of 97  Operating system  Software applications  User data  Data exchange capabilities  Only 2% of the worlds 300 million PCs have been checked for compliance as of 10/98

Testing Even if we fixed all of the systems on this planet, we would still have failure because all of the systems have to be tested one against the other. And we basically have glued this global computer network together over a 40-year period. -Edward Yardeni, Chief Economist, Deutsche Bank Research Testing is particularly laborious because the modified software must be tested in conjunction with all possible combinations of other software programs it interacts with to ensure functioning has not changed. -Congressional Research Service of the Library of Congress, The Year 2000 Challenge As one group of programmers works to make the system Y2K compliant, the far larger group maintains existing data and procedures. It updates data. But the two groups work will affect the performance of the repaired code. Disrupting changes can be introduced by either group. Thats why the final product must be tested. Thats why final testing and repairing takes 40% to 70% of the projects resources. Any large organization that doesnt test the final code product is doomed. -Gary North, author and historian The idea of using untested software represents more than just a risk; it is plain silly. -Graeme Inchley, CEO, Australian Y2K Industry Program  40-70% of any project is testing  Crucial industries (telecommunications, electric) cant perform real-time testing  GartnerGroup survey: Of 15,000 companies in 87 countries who are doing Y2K repairs, 50% of those surveyed wont perform a lick of Y2K testing!!

Does it ALL have to be fixed? We do not know or cannot really realistically make an evaluation of what the economic impact is as a consequence of the breakdowns that may occur. We do not know the size. We do not know the contagion and interaction within the system. And we do not know how rapidly we can resolve the problem Ninety-nine percent readiness for the Year 2000 will not be enough. It must be 100 percent. -Alan Greenspan, Federal Reserve Chairman  If 99.9% accuracy is good enough, then:  2 million documents would be lost by the IRS annually  650,000+ shares of stock would be mishandled daily  81,000 faulty rolls of film would be loaded annually  22,000 checks would be deducted from the wrong bank accounts hourly  18,322 pieces of mail would be mishandled hourly  1,212 phone calls would be misplaced every minute  12 babies would be given to the wrong parents daily  5 airplanes would crash daily

-- Steve Hartsman (hartsman@ticon.net), November 22, 1998

Answers

Sorry, I didn't realize everything would get jammed together...

Oh well. Most of you have seen it already. I provided this for those of you who don't have PowerPoint or Word.

If you would like the .ppt or .doc file, please e-mail me.

-- Steve Hartsman (hartsman@ticon.net), November 22, 1998.

Thanks Steve. Been meaning to ask for something.

-- Diane J. Squire (sacredspaces@yahoo.com), November 22, 1998.