YEAR 2000 CHALLENGE: Countdown to Rollover

Has the world done enough to prevent Y2K?

YOU'RE DONE. YOU'VE FOUND and fixed the date fields, installed the new software and filed compliance letters from your suppliers. You've put contingency plans in place, documented all remediation efforts and held meetings with the company lawyers. But, still, are you ready? And if you are ready, are the other companies on which you depend ready? And will your customers act rationally?

On an individual company basis, the answers depend on myriad issues, including the age of the software code base, the diligence with which the Y2K problem has been attacked, the skills and methods of those addressing the problem, and, yes, probably a little luck. But on an aggregate basis, U.S. businesses look well prepared. What's more, that preparation will pay off.

These are the key findings of a research project currently underway at International Data Corp., a market researcher based in Framingham, Mass., and a sister company to CIO Communications Inc. Known as Project Magellan, the effort captures years of IDC research surveying IT professionals and CIOs on their Y2K remediation efforts. In the project, IDC uses its global research data to forecast the impact that the millennium bug will have on the economies of more than 50 countries, countries where most multinational companies do business. The outlook is not pretty. (For more information, see "Globetrotting with Project Magellan".)

But first, the good news. In the United States, we are well prepared. In the last five years, U.S. businesses have spent $109 billion to fix the Y2K problem. And this includes only spending on staff, software, hardware and services targeted specifically to Y2K. It excludes normal product upgrades or enhancements, unless they were rushed into place more than six months early.

As a result of that spending, 85 percent of the more than 1,000 companies responding to a recent IDC survey said they had completed Y2K remediation by Sept. 30; less than 3 percent expected to miss the deadline. Even better news:

Large companies with complex environments were even further along and had conducted more extensive testing. You have done your homework. Good job.

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Now the Bad News

That might be the end of it if many of us didn't work for international or global organizations. Here the story is a little different. While countries outside the United States have spent some $149 billion to fix the Y2K problem, as a percentage of their overall spending on information technology, they have spent considerably less than our country has spent. We compared the relative spending in 1999 on fixing Y2K bugs in seven major regions of the world and found that the United States spent more last year to fix Y2K problems than it did this year and spent the same amount in 1997 as it did in 1999. Not so in other regions.

In Western Europe, for instance, corporations have spent only 60 percent as much as their U.S. counterparts on fixing the problem when measured relative to IT budgets. Even lower on the charts were developing regions like Latin America (18 percent), Eastern Europe (16 percent), the Mideast and Africa (26 percent combined). Asia-Pacific's figure (62 percent) would look worse, except that that number represents only 1999 spending, and the region, particularly Japan, has been playing catch-up.

Particularly worrisome, as other studies and government advisories have pointed out, are activities in developing countries. In a global survey of 15,000 businesses around the world early in 1999, the Project Magellan team found that over 90 percent of the companies surveyed in the developed world expected to be done with Y2K remediation by the new year. In the developing countries, that percentage was just less than 20 percent. In addition, more than 25 percent said they didn't think they had a Y2K problem to begin with. If you are running a multinational with remote offices, you already know the rest of the world is not as prepared as the United States.

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