Thinking The Unthinkable; Y2K Disaster Plans

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Thinking The Unthinkable; Y2K Disaster Plans

By Neil Winton

LONDON (Reuters) - Big companies which have already fixed their own systems exposed to infection from the millennium computer bug are now busily hatching schemes to fight off disaster because of the failure of others.

"An increasing number of organizations are recognizing the inevitability of date change related problems occurring early in the new millennium," said Peter Barnes, general manager of Survive! International.

"In short, whatever the state of readiness and compliance you have achieved with your own applications and software, it is to be assumed that you will be affected by the failure of a trading partner somewhere up or down your supply chain or within the environment in which you operate," Barnes said.

Survive! is an independent international user group for business which advises on preparing for problems from unforeseen disasters such as computer failure, the loss of key personnel and infrastructure from fires, floods and terrorist attacks.

In the jargon this is known as Business Continuity Planning.

Computers are exposed to a problem arising from a 1970s and 1980s need to save space when programmers abbreviated years to two digits such as 97 or 85. There are fears that when clocks strike midnight on December 31, 1999 computers will be unable to make sense of the last two zeros and either crash or produce erroneous data.

Companies around the world are rushing to fix the problem in time.

COMPANIES MUST IDENTIFY CORE OF OPERATIONS

Fons Kuijpers of the PA Consulting Group said even companies which have completed millennium bug compliance programs must forswear complacency, go back to basics and analyze their businesses.

"They should switch to the final phase of business continuity planning now to counter the real threats to their business," Kuijpers said.

"Organizations must ensure that they know exactly what is critical to the success of their business and then prioritize their effort on that basis. They must focus on the real risks to their businesses, most of which will be outside their direct control, such as utilities or their supply chain."

Business continuity planning is being undertaken mainly by the biggest companies which have the time and resources, said Geoff Forage, partner at management consultants Ernst and Young.

SMALLER COMPANIES THE MOST VULNERABLE

"It is probably fair to say that the existence of continuity plans is likely to be more widespread among larger firms. That's not to say it shouldn't be done by smaller firms; they tend to fly by the seat of their pants. They hope there won't be a problem or if there is, somehow they will struggle through," Forage said.

Survive!'s Barnes agrees that smaller firms are more at risk.

"Smaller companies with a limited range of products or services are more prone to a catastrophic failure than a large corporation with strength in multiple products and channels," Barnes said.

He said it was inevitable that there would be many small crises after the New Year. Companies should concentrate on areas of their business which are critical to survival.

"Identify alternative ways to manage these critical operations. Consider manual solutions, the holding of increased stock to buy time and so on. Your problems with this strategy will probably relate to the availability of the people we used to employ who knew how to do things without computers. How many of those people do you still have? Maybe you should bring them out of retirement for the duration," Barnes said.

JUST IN CASE, DUMP JUST-IN-TIME

"If your business normally applies "just-in-time" procedures assume they will be "just-too-late" and consider increasing inventories during the transition," he said.

The just-in-time system of supply was introduced to cut costs by ending the build up of stocks of parts at assembly plants.

If suppliers could deliver just the amount of product when required, huge savings could be made. Stocks were effectively moved out of warehouses and on to suppliers' trucks. But this system, heavily dependent on computers, is looking vulnerable to the millennium bug.

Kuijpers said different industrial sectors will have a range of problems which can be addressed by Business Continuity Planning. Oil, gas and petrochemical industries face a huge safety issue. Big retail stores have large logistical operations in supplying many products across big distances.

PANIC COULD INDUCE CRISIS

A major problem was linked with public perception of the problem. If that runs out of control and people panic, there will be difficulties even if computers work perfectly.

"If everybody stocks up with a month's supply of goods and takes out 1,000 pounds ($1,617) in cash we will have a millennium computer problem without a computer failing anywhere," Kuijpers said.

But he was optimistic that millennium bug problems would not be catastrophic.

"Any talk of doomsday is totally out of kilter with the situation. Yes, there will be a number of hiccups, but not enough to stop the world going around," Kuijpers said.

Forage agrees. Does the fact that the world's biggest corporations are still seeking mitigation from the bug, even after they've fixed their own systems, signify they expect significant problems?

"No. There is a realization that there is a risk and it's prudent to do something about it," he said. "It doesn't mean that they think the world will end."

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-- Ray (ray@totacc.com), August 25, 1999

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Ray

-- Ray (ray@totacc.com), August 25, 1999.


What happened at Reuters I wonder?

Some really insightful articles have come out of them in the last few days. Hallelujia!!!

-- R (riversoma@aol.com), August 25, 1999.


I love this part of the "no problem here" group. Don't do anything to prepare because that will just make the problem worse. If they had been telling us prepare for the last year, everyone could have done a little each month and there would be no panic. Yeah, at this point, if everyone stockpiles 6 months to a year of food there will definitely be a crisis. Whose fault is that? It is the "don't worry, be happy crowd!" That is a self-fulfilling prophecy for the exact opposite. But yeah, I agree it is refreshing to start getting a straighter scoop from a mjor media outlet.

-- Porphyry (paladin456999@yahoo.com), August 25, 1999.

"If everybody stocks up with a month's supply of goods and takes out 1,000 pounds ($1,617) in cash we will have a millennium computer problem without a computer failing anywhere," Kuijpers said.

We will? Coulda sworn that the news media have been saying that there's plenty of supplies to go around and that the banks have truckloads o' cash standing by. A month's supplies is about $1K, plus that $1.6 in cash, call it $3K. This guy's saying that everyone hanging on to three grand would cause a problem?

The man obviously has no faith in the system. What a Doomer!

-- Mac (sneak@lurk.hid), August 25, 1999.


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