ITAA's Year 2000 Outlook May 8, 1998 Volume 3, No. 18 Published by the Information Technology Association of America, Arlington, VA Bob Cohen, Editor bcohen@itaa.org Read in over 60 countries around the world ITAA's Year 2000 Outlook is sponsored in part by CACI International Inc., DMR Consulting Group Inc., and Y2Kplus, Inc. IRS Commissioner: Y2K is Risky Business With the revenue behind 95 percent of the federal government's operations on the line, Internal Revenue Service (IRS) Commissioner Charles Rossotti told a House Ways and Means Subcommittee that major hurdles stand in the way of his agency completing its Y2K program, including Congressional proposals to restructure his agency and what he termed the need to perform what will be perhaps the largest end-to-end test of computer systems in business history. Rossotti said failure to fix IRS systems "could result in catastrophic disruption to taxpayers and the government; millions of erroneous tax notices, refunds, bills, taxpayer account adjustments, accounting transactions and financial reporting errors could be generated." He called the situation "dangerous and risky." Rossotti said that current legislative proposals to restructure the IRS could make it "virtually impossible" for the agency to ensure the Y2K compliance of its systems and create a "genuine risk of a catastrophic failure of the Nation's tax collection sys tem in the year 2000." Rossotti said he is concerned about the time required to implement these changes, not the changes themselves. Yesterday, the Senate passed the IRS reform bill with an amendment delaying the effective date of several provisions. Rossotti seemed to accentuate the positive in his agency's approach to the Year 2000 problem. The Commissioner said money is not an issue, at least not in the short term. With $454 million earmarked this year for the work, Rossotti indicated that the ag ency has adequate funds to pursue its Y2K program in FY 1998. He said the IRS has renovated 83 of its 127 mission critical systems and has tested 62. Fifty nine of these systems have been placed back into production, he said. He also stressed the extensive scrutiny the $1 billion conversion project is now receiving, with senior representatives from IRS, Treasury, the Government Accounting Office, and employee unions participating. He also said third party consultants, including Booze, Allen and Andersen Consulting, as well as in-house IRS auditors, are providing the agency with independent assessments. In the face of an information infrastructure composed of 80 mainframes, 1400 minicomputers, 130,000 personal computers and a telecommunications network with over 100,000 components, however, the agency's task is daunting. As a result, many of the questions directed at Rossotti concerned the agency's risk mitigation strategy. Rossotti indicated the agency has done limited work on contingency planning in certain areas, and he said some activities, such as issuing 90 million refund checks can have no realistic contingency plan. He said the agency has slipped its schedule for mainframe consolidation as one way to take the pressure off the date remediation program. Rossotti said the agency has also tried to move up its schedule for implementing 1997 tax l aw changes in order to clear the decks for Y2K work. He noted, however, that the programmers making system modifications to reflect changes in the law are the same people trying to perform the Year 2000 conversion. The Commissioner explained how one small Also testifying before the Oversight Subcommittee was a cadre of federal IT executives, all appearing confident that their Y2K programs will be completed on time. Treasury Deputy Assistant Secretary and CIO James Flyzik, testified that his agency is "on target" to complete the Year 2000 conversion of mission critical systems without major disruptions. Flyzik stressed that his agency has made significant progress in performing its repair work, but does not report its results until entire systems have bee n fully renovated and tested. Flyzik expressed concerns about the Y2K compliant status of third party products. Financial Management Service Assistant Commissioner Constance Craig said FMS will devote all possible resources to ensure uninterrupted servic e. Customs Service CFO Vincette Goerl also said the agency is on schedule to meet its Y2K program dates. Health and Human Services CIO John Callahan said his agency is taking the actions necessary to ensure Y2K compliance of all information systems. Appearing with a group of industry spokespersons, which included Prudential Insurance Vice President Irene Dec and Bank Boston Communications Manager Steven McManus, ITAA President Harris Miller said the earlier testimony had a strong "don’t worry, be ha ppy" flavor. "As a society, we are on the point of conceding [Y2K] failure," Miller said. "It’s crazy. It’s frustrating. It cannot be happening. But it is." He offered the Subcommittee a five-step plan for dealing with the situation. FTC Wants Y2K Comments The Federal Trade Commission published a notice in the Federal Register this week seeking public comment on the scope of the Year 2000 problem. The Commission wants feedback on the types of computer software and hardware apt to feel the bite of the Mille nnium bug as well as information on how software publishers, electronics manufacturers and others have been communicating the situation to consumers. The FTC is also considering public hearings on the issue. The deadline for comments is June 22, 1998. The notice is available at http://www.ftc.gov. Bennett Introduces Year 2000 Bill Sen. Bob Bennett (R-UT) has introduced a bill which would amend the Employee Retirement Income Security Act of 1974 to require pension fund fiduciaries to ascertain steps taken to assure the Y2K preparedness of securities prior to investing plan assets. The bill would also require such managers to determine the Y2K readiness of the exchange on which the securities trade. The legislation would also create the President’s Council on Year 2000 Conversion as a matter of statute, arguably strengthening the office now held by John Koskinen. CFOs Bank on Minor Date Disruptions With just 600 days to go, a new survey finds many Chief Financial Officers in a variety of industries seemingly unconcerned that the century rollover may flatten their financial futures. Conducted by RHI Management Resources, the survey polled responses from 1400 CFOs in companies with more than 20 employees. Overall, 49 percent of respondents said they are either "not too concerned" or "not concerned at all" about the financial implications of the world's Y2K conversion not being completed on time. W hile 70 percent of CFOs at firms with over 1000 employees said they are "somewhat" or "very" concerned, this number dropped back down to 51 percent of respondents in the overall survey. Those industry CFOs least inclined to break a sweat over a calendar crash work in business services (54 percent), construction (53 percent), retail and professional services (51 percent), and manufacturing (50 percent). Finance and transportation industry CFOs appear to have the most century-related concerns. Sixty-two per HCFA Supplemental Delivers New Dollars A $20 million supplemental appropriation is on its way to help the Health Care Financing Administration deal with its Medicare contractors on the Year 2000. Conference committee draft report language for the Departments of Labor, Health and Human Service s, and Education and Related Agencies Appropriations Act of 1998 includes both a carrot and a stick for HCFA contractors. "The conferees are very concerned that Medicare contractors will not be able to address their year 2000 computer requirements in tim e for the century change," the report notes. Noting that contractors have refused to sign contract amendments assuring that the necessary software changes will be made, the conferees order HCFA to report Y2K program status to the Congressional appropria tions committees on a regular basis in FY 1998 and 1999. Contractors are expected to complete the conversion by December 31, 1998. "If the process is not satisfactory, the Committees intend to provide additional enforcement tools to the Department to as sur FCC Makes Y2K Connection The Federal Communications Commission is asking the telecommunications industry to create an open channel on Y2K status information. A recent letter from FCC Chairman William Kennard and Defense Commissioner Michael Powell to major telecom companies poin ts up the agency's concerns with the action to date of "some telecommunications entities." According to the letter, "it is conceivable that some disruption to services may occur in 1999 and 2000, and government and industry must work together to ensure that whatever disruptions occur do not lead to outages and failures throughout the nation's telecommunications networks." Noting that government agencies cannot solve the problem "by administrative fiat," the FCC asks telecom CEOs to provide detailed inf ormation about the situation and to share it with "each other, with smaller entities throughout the industry, and with the public at large." The letter also says telecommunications carriers and manufacturers should commit to firm dates for system testing . IEEE Y2K Terminology Standard Advances The IEEE Standards Board will be reviewing a Y2K definitions standard at its June 26 meeting in Detroit. A draft definition of Year 2000 compliance holds that: "Year 2000 compliant technology shall correctly process date data within and between the 20th and 21st centuries, provided that: 1. The technology is used in accordance with its associated documentation, and 2. All other technology used with it properly exchanges date data with it." Board approval will make the definition an IEEE standard. The full draft standard, IEEE P2000.1, is available on the IEEE web site at http://grouper.ieee.org/groups/2000/ Intuit Tagged with Y2K Suit; Symantec Picks Up Second Complaint Intuit Inc. and Symantec Corporation are the targets of class action lawsuits. Issokson v. Intuit Inc., Case Number CV773646, California Superior Court, Santa Clara County, alleges that the software firm is making customers upgrade to Quicken 98 to achieve Y2K compliance. The suit was filed on April 29 by the Milberg Weiss law firm. According to an Intuit company spokesperson, "We do not believe the lawsuit has any merit. We plan on defending vigorously the company. Intuit has a strong and long standing commitment to meeting the needs of its customers, including Year 2000 readiness . Preparing computers for the Year 2000 is a significant issue, not only for Intuit but for all technology companies and for business in general. Intuit has been working, and continues to work, to assure that our products are Year 2000 ready. We have a process in place in conjunction with financial institutions that offer Quicken online financial services to provide Quicken online banking customers with Year 2000 ready software well in advance of the Year 2000." Cameron v. Symantec, filed March 4, in the California Superior Court, Santa Clara County, Case Number CV 772482, says, among other causes of action, the firm breached its implied warranty of merchantability by failing to certify Norton AntiVirus products prior to Version 4.0 as Y2K compliant and by failing to remedy the alleged Y2K defect at no charge. The suit was filed by Lake Oswego, Oregon attorneys Merrisa Coleman and Roy Thompson. Jacob Pankowski, an attorney with the Washington DC law firm of McKenna & Cuneo, suggests that such suits will rapidly become commonplace. "It's what I've been telling clients for months. It appears that plaintiffs' firms will use a form complaint. They will canvass software companies looking for those with Y2K upgrades. Then they will recruit plaintiffs willing to be named in a class action. This appears to be the tip of the iceberg, and I expect many more such class actions to follow." Business to Business Quality Consulting Services, Santa Clara, CA, has partnered with MatriDigm Corporation to provide Y2K services for a large privately held company in the transportation industry. Peritus Software Services, Inc., Billerica, MA, has announced the release of AutoEnhancer/2000 on Windows NT. Fiserv, Inc., Brookfield, WI, has announced the availability of version 9801.00 of its Comprehensive Banking System (CBS). Sponsor Advertising CACI International Inc. -- Restore 2000 CACI leverages 35 years of information technology experience and over 10 years of reengineering systems - solving the same problems Y2K poses - to offer a total solution to the Year 2000 challenge: Restore 2000SM. The Restore 2000 methodology applies a comprehensive three-phase process to your information systems: Assess, Plan, and Remediate. Furthermore, we give you the option of buying our methodology or our services - both backed by CACI experience and Y2K experts. The Restore 2000 methodology is ITAA*2000 certified. In addition, software development processes at CACI have been independently certified as being at Level 3 of the Software Engineering Institute (SEI) Capability Maturity Model. Achieving SEI Level 3 provides clients further assurance that CACI solutions successfully and effectively deliver Year 2000 compliance while allowing you to save money, reduce risk, and minimize systems disruption. With approximately 3700 employees worldwide and FY97 revenues in excess of $270 million, CACI provides a depth of experience and expertise you can rely on. We've performed Year 2000 conversions for many of America's biggest enterprises, including major he alth insurance providers, retail clothing manufactures, gas companies, airlines, and government agencies. Superior functionality backed by decades of experience - CACI's Restore 2000. Worldwide Headquarters 1100 North Glebe Rd. Arlington, VA 22201 http://www.caci.com e-mail:npeters@hq.caci.com DMR Consulting Group Inc. DMR Consulting Group Inc.(formerly DMR TRECOM), an Amdahl company, is a global consulting organization of nearly 8,000 employees providing a comprehensive range of information technology services. Our Year 2000 Practice comprises a comprehensive offering of consulting, assessment, remediation, testing, and implementation services utilizing a formal methodology (APM/2000), best-in-class software tools, and six global conversion centers. We have mul ti-disciplinary experience in most mainframe, mid-range, and client-server/desktop environments. APM/2000 includes: · Program Management · Enterprise-Wide Assessment · Impact Analysis · Conversion Delivery · Testing and Implementation Year 2000 Risk Management Consulting Services include: Program Review, Stakeholder Readiness Assessment, Risk Management and Vendor Compliance Research. Contact: Stephen Frycki Managing Director, Year 2000 Services - US Phone: 201-200-3923 Fax: 201-200-9046 Email: fryckis@dmr.com Websites: http://www.dmr.com Y2Kplus, Inc. Y2Kplus provides a portfolio of "best of class" software products and outsourcing services that address Year 2000 issues. These offerings are available both to IT Solution Providers and IT organizations. Y2Kplus has offerings that address the following needs: Our offerings include: * Year 2000 risk assessment * Mainframe inventory verification & code remediation (COBOL, Natural, Assembler & PL/1) * Midrange COBOL remediation (DEC, HP, UNISYS, Wang, DG, NCR, Bull & Tandem) * AS/400 remediation (RPG & COBOL) * Networked PC Year 2000 Analysis tools Applications: Access, Excel, Foxpro, Lotus 1-2-3 Languages: Basic, Visual Basic, C, C++, dBase, Clipper, Paradox PC Hardware, BIOS & Operating Systems * Testing: Tools: Data Commander for future date testing, TCS (Test Control System), Services: Test management & execution, Facilitated Test Planning, Test strategy. For more information, please send email to info@y2kplus.com, visit our web site at www.y2kplus.com or call Dave Ehlke at 781-863-8111. Calendar http://www.itaa.org/y2kcal.htm ITAA's Year 2000 Outlook is published every Friday to help all organizations deal more effectively with the Year 2000 software conversion. If you would like to receive this free publication, please sign up on the web at https://www.itaa.org/transact/2kout looksub.htm. Copyright ITAA 1998. All rights reserved. The Information Technology Association of America, 1616 N. Fort Myer Drive, Suite 1300, Arlington, VA 22209. Internet: http:\\www.itaa.org