New York Times--Studies Cite Lag in Year 2000 Projects

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5/6/99--today's New York Times newspaper, page C4 (Business sectiom). "The prevailing optimism that Year 2000 computer problems will not seriously affect American business is premature, according to two new studies of Government filings by the nation's largest companies..."

-- argh (argh@argh.com), May 06, 1999

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-- HTML Novice (HTML Novice@learningtocode.com), May 06, 1999.


Thanks for this cite.

-- Puddintame (achillesg@hotmail.com), May 06, 1999.

Studies Cite Lag in Year 2000 Projects

By BARNABY J. FEDER

he prevailing optimism that year 2000 computer problems will not seriously affect American business is premature, according to two new studies of Government filings by the nation's largest companies.

The studies focused on quarterly financial reports in which companies disclose to the Securities and Exchange Commission how much they had spent through the end of last year to deal with year 2000 computer malfunctions. The authors of both studies concluded that although the written descriptions of the corporate year 2000 projects are uniformly rosy, the actual spending figures suggest that many large companies had left themselves just one year to complete over half their work.

The filings also showed that estimates of the total cost of dealing with the year 2000 problem continued to rise in the last three months of last year, albeit at a slower pace.

"A significant number of companies in every industry sector started late and too much work remains for them to finish in 1999," said Steven Hock, president of Triaxsys Research, summarizing the findings of a report to be issued today on S.E.C. disclosure statements. The statements were filed from January through March by 647 of the 1,000 largest companies as listed by Fortune magazine.

"Some are just not going to make it in time and will be forced to rely heavily on contingency plans and crisis management to avoid serious business disruptions," Hock said.

Edward Yardeni, the chief economist at Deutsche Bank Securities in New York, said his analysis of the disclosure statements of 372 of the 500 companies making up the Standard & Poor's stock index, which he plans to release by the end of this week, is similarly troubling. Just 44 of the companies -- under 12 percent -- had spent as much as 75 percent of their projected budget by the end of last year, he said. "This doesn't mean that the others are not going to get the job done," said Yardeni, who has been Wall Street's most prominent pessimist on year 2000 issues. "It does mean that they aren't leaving themselves much time."

Companies rushing to catch up are more likely to make mistakes, cut corners on testing and prepare inadequate contingency plans, Yardeni and many year 2000 project managers said.

But year 2000 experts caution against putting too much weight on the budget data. The Government does not audit it for accuracy. The figures can move sharply for individual companies from quarter to quarter. Sun Microsystems Inc., a company identified as a laggard by Triaxsys with just 14 percent of its year 2000 budget having been spent through last year, jumped to 48 percent in the first three months of this year. And a conservative company like Sun, which has budgeted money to audit suppliers in the coming months, may take longer to complete its spending than a company setting aside little or nothing for such last-minute precautions.

Moreover, because the world has never experienced anything like the year 2000 computer problem, no one can be certain whether a company leaving much of its spending for this year is running major risks. Indeed, recent Government and industry reports of tests performed on renovated systems have been so successful that confidence is growing that major disruptions are unlikely, at least in the United States.

The year 2000 problem, often known as Y2K or the millennium bug, stems from the widespread use of just two digits to represent the year in dates, such as 99 for 1999. Some computers, software and electronic machinery read 00 as 1900 instead of 2000 while others do not recognize it as a valid date. Some faulty systems freeze while others continue operating but produce erroneous data or gibberish.

Comparisons of spending figures for individual companies can be tricky because there is no national standard. Most of the figures reported to the Government involve spending to fix the software and equipment a company needs for its daily operations, but the spending at some companies may also include efforts to update computer-based products the company sells to others or help key suppliers prepare.

Conservative budgets may include substantial contingency planning. The 3Com Corporation, a computer networking company in Santa Clara, Calif., has spent just $3 million out of a potential budget of $25 million to $35 million through the first three months of this year. Judy Bruner, the company's controller, said that 3Com was on schedule to complete its major remediation programs but that the company had also included money in its budget for contingency plans if year 2000 setbacks occurred.

But Hock and Yardeni said that while it might be mistaken to come to conclusions about any single company based on its spending reports, the collective figures underscore that so much work remains to be done that the country should guard against complacency.

-- a (a@a.a), May 06, 1999.


Yup. Still following the numbers...

-- Mike Lang (webflier@erols.com), May 06, 1999.

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