ITAA's Year 2000 Outlook February 19, 1999 Volume 4, No. 7 Published by the Information Technology Association of America, Arlington, VA Bob Cohen, Editor bcohen@itaa.org Read in over 80 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 a subscription to this free publication, please visit ITAA on the web at https://www.itaa.org/transact/2ko utlooksub.htm. To cancel an existing subscription, visit https://www.itaa.org/transact/2kremove.htm. ITAA's Year 2000 Outlook is sponsored in part by CACI International Inc., DMR Consulting Group Inc., and Y2Kplus. In this issue: - Koskinen Sees Federal Glass Filling - Economic Advisors Predict Few Big-Picture Problems from Y2K - California County Presses Y2K Program - D.C. Mayor Promises Strong Finish - Closer to Home - Business to Business - ITAA Y2K Info Center - Sponsor Advertising Koskinen Sees Federal Glass Filling The name is Koskinen. Perhaps it should be "Konfident." Confidence was served up with the eggs and bacon yesterday as Y2K Council Chairman John Koskinen met with industry to discuss the progress of federal agencies moving through the Year 2000 thicket. Appearing at a breakfast sponsored by ITAA, Federal Sources, IAC, PSC and AFCEA, Koskinen put the government's best face forward on the Y2K issue. If the date data crunch poses problems, Koskinen said he is increasingly confident that they will not sprin g from federal government systems. Running through the litany of agencies the Office of Management and Budget (OMB) classifies as farthest behind the date curve, Koskinen reported significant progress. The Department of Energy, he indicated, has achieve d 85 percent systems compliance and has a shot at full compliance by the government's March 31 deadline. Koskinen said the Department of Defense is "well over 70 percent" compliant and will be close to 90 percent by the deadline date. Koskinen also had reassuring words for some of the most criticized agency performers. The Health Care Financing Administration (HCFA), for instance, is on track for a March 31 completion of its conversion with the exception of "one cluster" of seven priv ate sector Medicare contractors. In this case, Koskinen said, the federal government is pushing these firms harder for Y2K compliance than their own commercial clients. The Federal Aviation Administration (FAA), he said, has completed 95 percent of its remediation and will complete its compliance work in the July timeframe. Koskinen said agencies like the FAA and DoD are slowed down by the fact that they must field systems in remote facilities, not just perform the repairs in highly concentrated geogr aphic locations. The Social Security Administration's Y2K-OK-ness was also clarified. Back in December, President Clinton declared the system safe and reassured the American public that date bugs would interfere with the delivery of social security checks. Critics count ered that while SSA might be done, other partners in the process, including the Treasury Department division that actually cuts the checks, are not. Koskinen said the social security system will function properly from beginning to end. The government's top calendar cop defended the federal agencies. Koskinen said the U.S. government alone provides Y2K status transparency and that the agency self-reporting must be honest or there would not be any "Ds" or "Fs" to report. Koskinen stressed the need to filter the noise on Year 2000 and focus on real threats. He also said that some approaches to the problem may initially sound reasonable but fall apart on further analysis. This includes the idea of making Monday, January 3 , 2000 a bank holiday. Such a move, he said, would force banks and insurance companies to reprogram their interest calculations. Making federal payments due the first week of January to the last week of December 1999, he said, would send a negative sign al about the status of the banking community. Economic Advisors Predict Few Big-Picture Problems from Y2K The President's Council of Economic Advisors this month concluded that even if Y2K-related disruptions turn out to be somewhat substantial, they will likely be near negligible in macroeconomic terms. In its annual Economic Report of the President submitted to Congress earlier this month, the Council emphasized the real dangers of Y2K complacency and acknowledged difficulty in predicting outcomes due to the pervasiveness of technology. However, the Co uncil predicted that if remediation efforts continue apace in industry and government, disruptions would likely be inconveniences or concentrated sector losses as opposed to economy-wide disturbances or recession. " A few Wall Street forecasters have assigned high odds to the likelihood that the Y2K problem will lead to a serious global recession. Such forecasts seem excessively dire," the report stated, adding, "…aggregate economic statistics such as GDP and empl oyment will probably not reflect Y2K effects to any noticeable extent." The report stops short of ruling out a Y2K recession. The Advisors outlined generally positive Y2K effects on the demand side, pointing to boosted hardware and software sales, and the demand for IT professionals. Indeed, the report cites a Federal Reserve Board estimate that Fortune 500 firms are well on th eir way to spending $50 billion on remediation. Likewise, the report concludes that uncertainty has a positive effect on inventory demand, with stockpiling of resources predicted to increase GDP in 4Q 1999. Acknowledging supply-side effects as more unpredictable, and lacking a formal economic modeling basis, the Council draws parallels to Y2K in historical precedents such as disruptions due to weather, strikes or technical breakdown. While not foolproof, the se comparisons are encouraging. Citing Hurricane Andrew's adverse impact in 1992 of one percent of GDP, and a loss in future consumption as funds were diverted for repair and replacement, the report noted that the disruption had little impact on sales, or national data on output, income or employment for that year. The bottom line, according to the government experts, is that while nothing is out of the realm of possibility, Americans are resilient, adaptable and tenacious and that alone may keep the country on a macroeconomic upswing, despite inevitable Y2K annoyan ces. Created by an Act of Congress in 1946, the Council is a government entity established to make recommendations to the President with respect to matters of Federal economic policy. The Council consists of Chairman Janet L. Yellen and two Members, Jeffrey F rankel and Rebecca Blank, supported by a staff of academics and professional economists. California County Presses Y2K Program Attention counties without a plan on Year 2000: California's Contra Costa County has been working this issue since 1995 and they are still not done. Located just to the east of San Francisco bay, Contra Costa County is both a bedroom community of 900,000 people and the site of several oil refinery operations. Not the largest California's county or home to a major metropolitan area, Contra Costa has s till managed to assign high priority to its Year 2000 program. Chief Information Officer Steve Steinbrecher heads up the county wide effort, spanning 35 agencies and the County data center. Steinbrecher has broken the project into several large chunks: the data center, wide area networks and external interfaces, em bedded chips, departmental computing, due diligence, and community awareness. The $3.5 million, 3 million lines of code data center conversion is done, and, Steinbrecher reports, the facility recently received a clean bill of health from an external auditor. He also says that the agencies themselves are over 85 percent through the remediation phase. The large agencies, he estimates, will spend twice as much money making their repairs. External interfaces enjoy the County's special attention. Steinbrecher says he has built an electronic fence around the jurisdiction to intercept all incoming digital traffic. He says physical contact has also been made with all interface partners to un derstand every transaction and understand date formats. Embedded systems issues, he indicates, are on-going challenge and will be worked up to day 365. The County's General Services Department has the lead on the issue, with vendor compliance verificati on support provided by both state and federal web-based databases. Like many Y2K program managers, Steinbrecher credits his team's success to the support received from County executives. A management team composed of the County executive, sheriff, health, general services, public works and other agencies form a Y2K resp onse team. While individual agencies are responsible for the date fixes to their in-house systems, an advisory council composed of representatives from all County agencies meets on a monthly basis. The County has divided its Y2K-impacted assets into sev eral categories: those necessary for life, health, and safety of citizens; those which could interrupt the County's revenue stream; systems with a direct interface to the public; and systems which could go down for a few weeks and not be missed. The fir st two groups are receiving the lion's share of attention. Steinbrecher says up to 100 people are working the Y2K program for the County, with 20 at the data center alone. He calls the work both tedious and requiring a high degree of analytical skill. In response, the County has formulated a virtual team approa ch. Programmers spend four to five weeks making Year 2000 corrections and enjoy a four to five week respite performing other kinds of work. The County CIO says he isn't surprised that a recent survey of U.S. counties found half not even holding a Year 2000 plan. "There are 58 counties in California," Steinbrecher says, "and 43 counties with IT managers. Fifteen have no IT professionals." H e says that fact alone puts ten percent of counties in the state at risk. Other factors contribute, including the belt tightening that has pinched many jurisdictions, including Contra Costa County. Steinbrecher says his department lost 20 percent of its staff in two years. Also of interest: Steinbrecher says his department will stop taking requests for IT project assistance after May 1 in the run up to the Year 2000. He would like to see the state legislature likewise place a freeze on the passage of legislation which the n requires changes to code. A six-word modification to a welfare bill, he says, can trigger a five-month programming effort. He also plans to bring down the County data center on New Year's Eve just in case problems occur so that they can be isolated an d identified as the facility boots back up. Despite all his preparations, Steinbrecher says he doesn't feel good about Year 2000-just proactive and prepared. D.C. Mayor Promises Strong Finish Acknowledging that the nation's capital is behind "almost every comparable municipality in its Y2K compliance," Washington D.C. Mayor Anthony Williams promised lawmakers a successful program completion. Williams said the District's efforts are aggressive and accelerated. The secret to the city's success, Williams indicated, is to perform work concurrently that other cities execute sequentially. The Mayor said D.C. will repair, test and return its 336 business applications to production mode by November . Eighty-four of these systems, he indicated, are already compliant. Williams appeared before the House D.C. Subcommittee, chaired by Rep. Tom Davis (R-VA). General Accounting Office official Jack Brock Jr. also testified, pointing out that while the D.C. government has made strides, it remains "far behind." Brock said th e city must move through four phases of its Year 2000 program in less than one year. He said the District is a full year behind the GAO's recommended schedule. Brock said less than five percent of the city's mission critical systems have been remediated and less than 1 percent of these systems have been validated. Closer to Home This week ITAA announced that Nortel Networks of Brampton, Ontario and The TriZettoSM Group, Applications Development Division of Newport Beach, California received ITAA*2000 certification. ITAA*2000 is the industry's century date change certification pr ogram. The program examines processes and methods used by companies to perform their Year 2000 software conversions. Both companies participated in a rigorous evaluation of their approaches to date conversion, with extensive analysis in eleven discrete process areas deemed necessary to a successful Year 2000 conversion. Business to Business EDS, Plano, TX, has been selected by the State of Texas to perform Y2K risk analysis interviews and assessments on selected insurance companies within the state. MERANT, Mountain View, CA, has been awarded a Y2K contract by Belk Inc., a major East Coast department store chain. Reasoning, Inc., Toronto, Canada, has won a Y2K service contract with the Canadian National Railway Company. SunGard Data Systems Inc., Wayne, PA, has acquired Sterling Wentworth Corp. IDX Systems Corporation, Burlington, VT, has appointed Jim Crook to serve as President and Chief Operating Officer. 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 1999. All rights reserved. The Information Technology Association of America, 1616 N. Fort Myer Drive, Suite 1300, Arlington, VA 22209. Internet: http:\\www.itaa.org