ITAA's Year 2000 Outlook June 26, 1998 Volume 3, No. 24 Published by the Information Technology Association of America, Arlington, VA Bob Cohen, Editor bcohen@itaa.org Read in over 70 countries around the world ITAA's Year 2000 Outlook is published every Friday to help all organizations deal more effectively with the Year 2000 software conversion. To receive a subscription to this free publication, please sign up on the web at https://www.itaa.org/transact/2kout looksub.htm. ITAA's Year 2000 Outlook is sponsored in part by CACI International Inc., DMR Consulting Group Inc., and Y2Kplus House Denies Y2K Emergency Funds Lawmakers put the kibosh on federal Y2K emergency funding this week, at least temporarily. The House Rules Committee voted to strip out $2.25 billion in Y2K emergency appropriations previously included in the FY 1999 Treasury-Postal spending bill. Along w ith $1.6 billion in Y2K repair dollars trimmed from the Department of Defense funding bill, the emergency funds will now be incorporated in a separate measure. Making the task even more difficult, the dollars must now be offset by cuts in other governmen t programs. According to one industry observer: "It is very disheartening. The people who voted to strip the funds from the Treasury-Postal Service bill clearly do not understand the severity of the Y2K problem for federal agencies. It is a crisis and should be tre ated like other emergencies. This move could seriously hamper the ability to fund the federal government's Y2K repairs. Conservative economics prevailed over common sense. Extraordinary vision was required to respond to extraordinary events…and Congres s failed the test." Resolution to the funding issue will be delayed until after the Congressional July 4 recess. UN Resolution Calls for Global Cooperation on Y2K The United Nations will take up a resolution shortly calling on member states to raise the priority of the Year 2000 issue and forge global cooperation. Speaking at the World Congress on Information Technology in Fairfax, VA, Ambassador Ahmad Kamal, chai rman of the UN Working Group on Informatics, said the resolution calls on the Economic and Social Council to prepare action guidelines for member states at its meeting next month, and establishes a UN monitoring and reporting system. Briefing a series of wide-ranging UN actions in his remarks, Kamal said, "…we are far, very far, from being sanguine about results." He noted that common action, not finger-pointing, is the solution. "Y2K is obviously a challenge, but it is also an oppo rtunity," he said. "Great potential exists in several developing countries to assist in addressing the global dimensions of the problem…Many developing countries…have a large pool of software developers and engineers capable of analyzing and re-writing t he non-compliant programs, and doing so at a fractional comparative cost." Kamal, Permanent Ambassador to the UN from Pakistan, spoke on a Year 2000 panel which also included ITAA President Harris Miller, International Chamber of Commerce Secretary General Maria Cattaui, and IBM Year 2000 Global Initiatives General Manager David Cassano. Panelists' remarks are available at http://www.conferencecast.worldcongress1998.org/dflt_d3.htm. Vice President Al Gore participated in the World Congress via interactive video and urged conference attendees to get the Y2K job done. Perhaps responding to recent criticism by House Speaker New Gingrich and other Republicans in Congress, Gore referred to the rhetoric surrounding the Year 2000 issue. He urged high tech business leaders to action, particularly where big businesses are in a position to help their suppliers. International Banking Rates Mixed Reviews If not fireworks in advance of July 4, a hearing in the House this week produced a series of useful insights into the Y2K status of international banks and other institutions. U.S. ambassadors at diplomatic posts around the world report, for instance, th at just three percent of foreign banks they polled are "problematic" for Y2K compliance. Providing written testimony to the House Banking Committee, State Department Undersecretary Bonnie Cohen reported that a status check of banks in 157 countries found 17 percent compliant now and another 48 percent indicating compliance by the end of this year. Cohen also referred to a year-old State Department survey of Post, Telephone and Telegraph (PTT) companies indicating that 50 percent have active Y2K programs. "Because many responses were subjective," she indicated, "we are now updating the infor mation." Cohen reported that globally, the "public and private sectors are heroically addressing the Y2K problem," but time is not working in their favor. As a result, U.S. embassies are trying to get their plans in order for various "operational scenarios." Acc ording to Cohen, "These plans would range from the operations within our missions up to the crisis management required from the lack of essential services in a host country." Meanwhile, Cohen said the Bureau of Consular Affairs has begun meeting with its counterparts in Australia, Canada, the United Kingdom and New Zealand to discuss public safety and travel security topics. "Future meetings will focus on how to convey information to the public to keep them informed but not react in panic," Cohen indica ted. Y2K comatose countries may panic when they learn about the peer pressure plans of the Joint Year 2000 Council to create country by country Y2K status pages on the web. The Council is co-sponsored by the Basle Committee on Banking Supervision, the G-10 ce ntral bank governors' Committee on Payment and Settlement Systems and other groups. According to Ernest Patrikis, First Vice President, Federal Reserve Bank of New York and Chairman of the Council, each page would contain contact information for government officials; financial supervisors and regulators; financial industry associations; payment, settlement and trading systems; chambers of commerce; and major utility associations or supervisors. The pages will also contain Y2K related status information for these groups. Patrikis said the web-based approach will help create informal net working and better awareness. But a stick is part and parcel of the package. "…the presence of the country pages may exert pressure on those countries where more vigorous action is needed. A blank or uninformative country listing would probably not be seen as a good sign by some financial market participants," Patrikis told the Banking Committee. Patrikis said the Council is also collecting and posting information on the Y2K preparedness and testing of payment and settlement systems around the globe. He said 150 systems in 47 countries have cooperated to date, and his group intends to expand the scope of coverage to exchanges and trading systems as well as major financial information services providers. Patrikis said twin goals are to help organizations coordinate test schedules and identify anomalies. But again there is a stick: "Primarily, I see this as an exercise in peer pressure," Patrikis said. "If we list every country in the world on our web site and the public can see that some countries have scheduled mandatory external tests of their major trading and settlement system s, while other countries do not provide any information, that second country may come under greater pressure to organize an external testing program. This is our stated goal." Moody's Investors Service also rated noteworthy comments at the hearing. Managing Director Samuel Theodore told the Banking Committee that a majority of large international banks are "on track" for Y2K compliance. According to Theodore, "Such large inst itutions represent, in aggregate, a critical transmission belt for financial flows worldwide; therefore, we believe that Y2K-related systemic risk, while possible, may in fact be more remote than it is sometimes presented in the media." If prospects for large institutions are looking up, Theodore indicated that the sunny picture does extend to smaller, less internationally connected banks with less tested IT cultures. "Banks in Europe, Asia and the rest of the world appear to be less concerned about Y2K than banks in the United States," Theodore said, adding, "…with very few exceptions, bank regulators around the world-even in developed national banking markets-are far less assertive and detailed than their U.S. counterparts in guiding their banks towards Y2K compliance." In European Union member states, the Moody's executive said that the Euro conversion generally racks up several times the budget attributed to Y2K efforts. Y2K compliance, he said, is often viewed as a "necessary evil" in these countries. The Euro gra bs mindshare, he indicated, for political as well as economic reasons. Elsewhere in the world, Theodore said the present banking crisis in Japan is overshadowing Y2K concerns. "Many banks are currently focused on improving their financial condition in the short term, and tend to look at Y2K as a medium-term issue, less diff icult to deal with than their current problems. We have observed that the Y2K budgets of several large Japanese banks are noticeably thinner than those of their U.S. and European counterparts." And that's the good news. "In many emerging markets, both banks and many bank regulators are still utterly unprepared for Y2K-indeed, they are often even unaware of the real challenges of the process," Theodore said. Elsewhere, he indicated, language an d cultural differences may prove to be significant challenges to Y2K compliance. While litigation risk is more an issue in the U.S., reputation risk is a major concern for Y2K wayward banks overseas. "Important clients-both borrowers and depositors-will choose to move their business away from such banks," Theodore said, adding, "This inherently leads to funding, liquidity, and franchise problems for the Y2K--deficient bank, or for the bank being perceived as such." Legislation Aimed at Small Business Tax Relief Rep. Karen Thurman (D-FL) has introduced a bill to provide small businesses with tax relief in handling Y2K hardware and software conversion costs. HR 4134 would provide up to $20,000 in Y2K-related expense deductions for each of the 1998 and 1999 tax ye ars. The deduction would be in addition to any other costs deductible under section 179. Thurman sits on the House Ways and Means Committee Oversight Subcommittee. In a statement, Thurman said "Congress, in its quest to solve the Year 2000 problem for federal agencies, should not ignore the devastating impact the Millennium Bug will have on small businesses." 3M to Tape Y2K "Complete" on Critical Systems With 50,000 products, 3M is a company that knows how to get things done. They put the "Scotch" in tape, of course, but the firm also manufactures everything from stick-on notes and adhesives to overhead projectors and heart and lung machines. Invention rules within this far-flung enterprise, operating in over 60 countries around the world. Perhaps that is why the company must also be able to stick to the book when dealing with so much diversity. That philosophy extends to its Year 2000 project, where the company is using a core methodology to drive its conversion work. Next week, the results will come into focus. Over 100 of the company's most mission critical systems (termed "fatal" and "criti cal") are scheduled to be Y2K repaired, tested and returned to service. 3M is adept at working in spaces of 200 microns or less. Not surprising then that its Year 2000 conversion may seem like the most all-encompassing program it has ever undertaken. Just drawing the box around the size of the problem could take even these scientists and engineers a bit of doing. Like many companies, 3M has witnessed a proliferation of computing platforms, languages and tools within its information systems environment. On the business side, IBM mainframes and AS/400 mid-range computers p redominate. In the plants and factories, Unix reigns with HP 3000 and HP 9000 computers most commonly featured. The company has developed roughly 85 percent of its application software internally, with languages running the gamut from COBOL and Talon to Assembler, Ideal, RPG, Pl/1, Fortran, SAS, C, C++, and Java. Database holdings include DB2, IMS, SQL, Datacom and more. The Star Wars bar may have had a more homogeneous cast of characters. So like many companies, 3M has invented a working approach to Year 2000 which emphasizes a core conversion methodology and de-centralized implementation. Mary Cripe is the corporate Y 2K project manager. She oversees a group of 30 Y2K team members, representing major business areas of the company. Each of these individuals is, in turn, responsible for driving Year 2000 understanding within their respective organizations. In most instances, the company rolls out new software application releases from its headquarters in St. Paul, Minnesota. These versions are then implemented and maintained by on-site IT staff. Similarly, a central Y2K team performs date repairs and test ing, then works with IT staff in the field to assure that corrected software performs as intended. Ken Tibesar oversees the squad of 25 or so technical professionals making corrections on the manufacturing side of the house. Information systems here cover inventory, production management, orders, equipment maintenance, product "recipe" development a nd management, quality management and management reporting. According to Tibesar, the company quickly realized that date field expansion could gum up its works, particularly when passing data between facilities. The problem, he said, is synchronizing th e expansion of data in files with the programs commonly used in 3M's 50 manufacturing plants. Such a move would have forced the company to reinstall programs based on common program files--a coordination task he views as virtually impossible. That's bec ause all the work would need to be done during a down time period. Some of the more obscure programs would no doubt be missed in the conversion process, causing system failures. Instead, the company opted for a pivot year approach, requiring changes to code but leaving data files intact. According to Tibesar, windowing dramatically reduces the number of variables that need repairs. Only logic used for calculations and compariso ns is adjusted, Tibesar says, narrowing the scope of the remediation to 1/20th of the variables it might cover otherwise. Although Tibesar admits that the windowing approach is a bandage, bandages do have their place in the corporation (3M makes bandages too). By reducing the number of variables, Tibesar says scanning tools can concentrate on finding "calcs and compares." He cautions that such tools in a windowing environment should be able to achieve this level of granularity-not simply generate a list of all possible date fields in the code. He also allows that bandages will not cover every contingency. For instance, because date ranges in human resources and insurance applications often go beyond the pivot year boundaries, full date expansion is necessary. And Mary Cripe says that some AS/400 applications are also going their own way, taking a tack that rolls back the data in databases by 28 years. "Due diligence" documentation is the Rosetta stone holding 3M's Y2K efforts together. Year 2000 compliance declarations are not good enough, Cripe says. To be checked off the 3M list, organizations must document their decisions and the documentation its elf must be signed off by an IT rep, a business process owner and an appropriate manager. She says the company has established an LPAR to perform Y2K testing with clock simulation software. Next year, the company will conduct off-site testing at a disaster recovery facility. This testing will involve actually advancing the system clock to ga uge further the impact of software repairs. The company uses other tools to time warp data, analyze execution paths, observe test operations, record and playback keystrokes, and conduct file comparisons. 3M estimates it will spend $70 million to make its Y2K correction. The good news, according to Tibesar, is that the repair process appears to cost less than industry averages. Nor has the St. Paul site been racked by rampant wage inflation for Y2K worke rs. Unknowns include the embedded systems area, where Cripe says she is depending on engineers who are still in the process of determining the extent of the company's exposure; and contingency planning, which Cripe admits has taken a back seat to the Jul y conversion deadline. Closer to Home Almost one in four Americans believe that Year 2000 computer related failures may force them to undergo lifestyle changes, according to a recent Wirthlin Worldwide poll commissioned by the Information Technology Association of America. The survey finds half of those polled believe elected officials and business leaders are not doing enough to address the Year 2000 issue. The three top reasons cited by respondents for this are that the computer industry will fix the situation when the t ime comes; that businesses are too busy making money; and that there are too many other problems to solve. "That one in four Americans is now concerned about the Year 2000 is a compelling fact. Just one year ago, a reference to the Year 2000 would have brought blank stares or an image of Times Square at midnight. Americans are beginning to worry and it is t ime for our elected officials and business leaders to wake up," said ITAA President Harris Miller. Of those expecting Y2K-induced lifestyle changes, the ITAA/Wirthlin poll indicates: · 80 percent are concerned that their financial records may be distorted · 72 percent believe there will be business losses · 68 percent anticipate possible telephone disruptions · 64 percent fear power outages · 56 percent worry that they may lose their jobs · 42 percent foresee shortages of products or merchandise Poll data also suggests that those individuals with the most to lose as the result of Year 2000 failures appear to be the least interested. For instance, those individuals earning over $60,000 per year seem far less concerned about the issue than those e arning under $15,000. Eighteen percent of those in the highest wage category indicated concerns about lifestyle changes as compared to 34 percent in the lowest wage category. Those with a college education were similarly less likely to be concerned abou t the personal impacts of the computer date glitch. Similarly, 90 percent of the Y2K concerned group with some high school education fear business losses as compared to 52 percent of those with post graduate degrees; 73 percent of the former group expre ssed concerns about job losses versus 40 percent of the latter group. Better educated Americans also appear to be more satisfied that those in charge are taking the necessary steps to correct the problem. Fifty-two percent of those with postgraduate degrees and 48 percent of those with college degrees indicated enough is b eing done; only 20 percent of those with some high school agree. These results are drawn from the Wirthlin National Quorum. The Quorum is a telephone survey based on a representative random sample consisting of 1000 adults residing within the continental U.S. Business to Business NeoMedia Technologies, Inc., Chicago, IL, has announced the availability of ADAPT-PC/2000 1.1, part of their ADAPT/Enterprise suite of Y2K solutions for PC's. The Software Factory, South Boston, VA, has been chosen by James Martin Government Consulting as a subcontractor to provide Y2K programming services for the State of California. Reasoning, Inc., Mountain View, CA, has selected John Rodford as its UK Sales Director. Zitel Corporation, Fremont, CA, with partner FDC Technologies, has won a contract to provide Y2K remediation services for a government agency. ITAA Y2K Information Center Solution Providers Directory http://www.itaa.org/script/2000vend.cfm ITAA*2000 Certification Program http://www.itaa.org/2000cert.htm Outlook Archive http://www.itaa.org/script/get2klet.cfm Legislative and Litigation Table http://www.itaa.org/Y2Klaw.htm Calendar http://www.itaa.org/y2kcal.htm Vendor/User Status Questionnaires http://www.itaa.org/questmain1.htm 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 expe rts. 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 p rovides 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 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 http://www.y2kplus.com or call Dave Ehlke at 781-863-8111. 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