ITAA's Year 2000 Outlook July 26, 1998 Volume 3, No. 28 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 create or cancel a subscription to this free publication, please visit ITAA on the web at https://www.itaa.org/tr ansact/2koutlooksub.htm. ITAA's Year 2000 Outlook is sponsored in part by CACI International Inc., DMR Consulting Group Inc., and Y2Kplus Y2K Introduces Tricky New Step To Argentine Economic Tango As the world's eighth largest land mass country slowly comes to terms with its complex Year 2000 problems, success may be determined by the simplest financial equation of all: paying the bill. Argentines have had a front row seat on South America's economic roller coaster. The country hit a nearly 5000 percent inflation rate in 1989 and suffered a subsequent crisis of confidence when the Mexican peso collapsed in late 1994. Economic reforms i nstituted by the government of President Carlos Menem have brought the inflation rate from the stratosphere to terra firma--now virtually zero. But those reforms, including a move which pegged the Argentine peso to the U.S. dollar, have made bank liquidi ty a highly sensitive issue for the government and private sector alike, and failed to ameliorate an unemployment rate of over 10 percent. While no one in Buenos Aires wants Y2K related failures to start the roller coaster moving again, generally speaking, the country itself appears not to be moving on the century rollover issue. How so? Argentines share many of the familiar rationalizatio ns for Y2K inaction--as well as others which may be specific to this part of the world. These include disbelief in the severity of the problem; a feeling that the issue is technical and requires merely a technical correction; the dread CIOs or IT executi ves may experience in candidly discussing the situation with top corporate management; a government widely perceived as silent on the issue; and even a view that Y2K is just the next in a series of Global Warming-style "showboat" policy issues to blow dow n from the U.S., no doubt on a hot trade-wind. Cesar Doretti, a former bank president and industrialist in Argentina, now spends much of his time pondering the Year 2000 issue, and particularly how to get it funded. Doretti knows how to get things done. Not only did he run the Banco de Italia y Rio de la Plato (at one time Argentina's oldest bank since acquired and now defunct), he also built steel mills, as well as news pulp and fertilizer plants in his country. His 16-page vitae includes stints as board director of twelve companies, covering firm s in petrochemicals, metallurgy, textiles, agriculture and construction. He is, as the saying goes, a friend to people in high places--and Doretti says that when it comes to Year 2000, they aren't listening. "The lack of awareness is incredible," Doretti says. He notes that the government formed a committee on the Y2K issues eight months ago, but, since then, little information has emerged from its activities. The Banco Central has an oversight program in p lace for the Argentine banking industry, but even this, he says, is not stringently applied. Part of the problem some businessmen here suggest privately may be the federal elections in 1999, with elected officials perhaps preoccupied now and conceivably out of office when the rollover hits (this week President Menem announced his decision not to seek re-election). Regardless, Doretti suggests that elected officials in the Argentine Congress have so far shown little interest in the Y2K issue. But it's paying the Y2K tab which worries Doretti the most. "It's a tremendous financial problem," he says, with many companies already running on empty in terms of bank credits and loan guarantees. Doretti estimates that small and mid sized businesses in Argentina, 40 percent of the economy, are helpless in this respect. His conversations with companies indicate that they understand the Y2K problem, but cannot pay to get it fixed. Y2K-induced damage to the quality and productivity of Argentine business operations could undermine attempts to foster national economic recovery, improve the nation's trade surplus and attract foreign investment. Money remains a major issue. Doretti i s hoping that the country's existing lines of credit with international financial institutions can be diverted to fund Y2K repairs. He suggests that credits on the order of $1-$2.5 billion are required--a move which would not only shore up Argentine comp anies but reassure the international investors now pouring billions of dollars into the country. Until such help arrives (if ever), Argentines are left to cope with a difficult situation. Many in the private sector appear to share a gloomy assessment of the country's Year 2000 prospects. "We are in trouble," said one financial consultant. And stic ker shock is growing. Companies asked to pay upwards of 60 percent of their total IT budgets for Y2K repairs are driven to more affordable if less practical alternatives--like launching multimillion line repair projects with existing staff and manual rev iew approaches. Others are concerned that no matter what Argentina does, if the Y2K situation causes economic problems in the United States, those problems will ripple through South America. The difference, of course, is that a bug which may make the U.S. marketplace sniffle for a few months could make relatively fragile economies like Argentina ill for years to come. Argentine Bank Sets Y2K Example Few Follow Banco Credicoop is somewhat unique among banks in Buenos Aires. The bank is one of a vanishing breed--a "cooperative bank" in which depositors are partners in the bank, each with a vote on issues involving the organization and all with the opportunity to elect a local delegate to represent the interests of the branch to the company itself. The operation is also somewhat unique in that its Year 2000 project dates back to 1996. In a country struggling to stir itself to life on this confounding issue, a t wo year head start is an incredible advantage. Perhaps the bank's depositors should be thanking Systems Manager Gustavo Fracchia and his management superiors, IT experts who spent six months convincing executives at Banco Credicoop that the Y2K problem is the real thing. While many in both the Argent ine public and private sector question whether or not the Year 2000 may be the latest American fad, this 194-branch bank has been busy performing assessments and converting applications. "This is the biggest problem of the computer age," Fracchia says. A 25-year veteran of the IT industry, the systems manager says he realized the problems posed by two digits in 1990. At that point, he pushed forward an internal standard to recognize the century digits--a standard programmers routinely ignored. Eight years later, the programmers may be listening but the challenge is greater, with the bank not only operating a heterogeneous processing environment but also trying to rationalize the merger of other cooperative banks. What's in play? Banco Credicoop operates a VM/VSE mainframe environment with Windows NT servers in place at the branch level. Transactions at the local level are transmitted in realtime to a DL/1 database, which serves as an intelligent front-end to the system. Tracking the Y2K bug through the systems architecture has forced Fracchia and his hybrid team of company and contract personnel to review 3.5 million lines of COBOL; 800,000 lines of Assembler; 500,000 lines of NCL; desktop applications implemented in Cli pper, DB3, FoxPro and other applications; as well as to make side trips into the data logic of DL/1 database and CICS transaction processor. Another 2 million lines of 8-digit COBOL code are considered Y2K compliant. Banco Credicoop made its way through this program thicket with the help of automated tools provided by Sapiens, Argentina and that firm's Y2K solution methodology and toolkit for tasks such as assessment, configuration management and date simulation. Fra cchia says the bank is 35 percent done with its repairs, consisting of a windowing approach with a 50-year time interval. "Windowing was our most important decision," Fracchia maintains, "because by using this approach we do not have to administer bridge s. Like many organizations, the bank is taking a "most critical" first approach to the fix. Other applications have been deemed too expensive or high risk to fix, such as those in areas like inventory or import/export. These are being replaced. Fracchia a lso maintains that every line of code, every screen, every report will be tested, both in terms of mainframe systems and at the desktop level too. "I don't trust anybody," he says. In some sense, a large portfolio of application software may be the most manageable part of the project. Fracchia says the bank has identified 440 interfaces with external trading partners, including utilities, bank card companies and others. Banco Cred icoop has established a special office to cope with these often uncooperative partners. "We have sent many letters," Fracchia says, "but have received few answers." The Banco Credicoop may be positioned to help other banks in Argentina looking for Y2K answers. The organization belongs to a special Y2K group organized by the nation's Banco Central to interact on this issue. Interestingly, the central bank is attempt ing to conduct a series of inter-enterprise tests, starting with six banks and their ATM networks in October. A much larger 120 bank test is contemplated for April 1999. It's an ambitious undertaking, particularly in a country many in the business community there say is in massive Y2K-denial. How bad is the problem? Consider this. Banco Credicoop is the nation's 12th largest bank. Fracchia, with responsibility for a p rogramming and testing team of over 50, is often asked by other companies in Argentina what it takes to do this work. "They ask, 'is three people enough?'" GartnerGroup Poll Finds Y2K a Real Healthcare Bugaboo A GartnerGroup survey of over 300 healthcare "integrated delivery systems" finds firms underspending on Y2K and possible systems paralysis in their future. The research firm says "healthcare organizations lag behind other industries in addressing the yea r 2000 problem and that 87 percent of all healthcare organizations are in danger of systems failures within the next two years." By the Gartner definition, an integrated delivery system (IDS) combines several health care organizations, including hospital s, health maintenance organizations, clinics and group practices. These health care conglomerates seem to have the problem diagnosed, but the dollars required to administer a cure may be causing serious corporate coffer contractions: "In 1997, the year 2000 crisis was not even on the radar screen of the 340 IDSs we profiled; in 1998, it's overwhelmingly the No. 1 systems issue," said Dave Garets, GartnerGroup Research Director. "The good news is that IDSs are finally paying attention to the year 2000; the bad news is that their spending is totally inadequate to address the crisis. Our survey shows that the average IDS plans to spend $4.8 million on the year 2000 problem. We predict that they'll eventually pay closer to $10 million to $20 million when legal fees, contingency plans, business continuity expenses and project management costs are factored in," he added. Business to Business Viasoft, Inc., Phoenix, AZ, has entered into a licensing agreement with the State of Arizona. C2K Technology Group Ltd., Calgary, Canada, has introduced PC2000, a new Y2K tool for the PC, PC network and Client-Server Network. Complete Business Solutions, Inc., Farmington Hills, MI, has been awarded a Y2K contract by Lifespan. Forecross Corporation, San Francisco, CA, has won a Y2K contract with Brown Brothers Harriman & Co. 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 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