ITAA's Year 2000 Outlook May 7, 1999 Volume 4, No. 17 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: · Commerce Study Makes Global Y2K Connections · GAO Report to Congress: Y2K Costs Rising, Vague in Some Agencies · Poll Finds U.S. Writers Resourceful, Optimistic · Bill Seeks to Open Federal Schedules · Business to Business · ITAA Y2K Information Center · Sponsor Advertising Commerce Study Makes Global Y2K Connections Without pointing fingers, the Commerce Department's International Trade Administration issued a report last month on Y2K and the global economy which contains much food for thought. And some of it may become the stuff of economic indigestion. That's because one-fifth of global output involves international trade and could be put at risk by two-digit dates that won't translate from country to country. The stakes in this game are enormous. The U.S., for instance, exports over 20 percent of eve rything it makes, and counts on commerce with its trading partners to support 12 million American jobs. So significant date fumbling by important players could throw a large rock into the world's economic pond. But the new report, entitled The Year 2000 Problem and the Global Trading System, avoids discussions of individual country readiness, preferring in stead simply to depict the substantial set of trade relationships which bind one nation to the next: "The international trading system, with its complex web of suppliers, distributors, customers, and transportation links, is supported by a critical infrastructure of products and services," the report notes. "The most important components of the infrastru cture are energy production and distribution facilities, transportation modes, communications channels, and financial networks. These sectors are highly computerized and interdependent and are particularly sensitive to dates for the smooth exchange of goo ds and services. These characteristics render them especially susceptible to Y2K-related problems. Breakdowns in any part of the trade support structure could slow or halt shipments of key imports needed to keep factories working, hospitals functioning, f ood in continuous supply, and people employed." The report sets out what may be not so obvious facts about global trade and leaves readers to take heed--if not necessarily heart--from its deadpan, "just the facts" approach. For instance, Russia, Iran, Venezuela and Nigeria are among the world's top te n exporters of crude oil; leading exporters of natural gas are Russia, Algeria, Indonesia, Turkmenistan, Malaysia and Uzbekistan. Top ten petroleum product exporters to the U.S. include Venezuela, Nigeria, Angola, Columbia, and Algeria. According to ITA: "By the end of 1999, it is estimated that the United States will consume 19.3 million barrels of oil a day, about half of which is imported. Of this amount, 51 percent is imported from countries in the Western Hemisphere, 21 percent fro m the Middle East, 18 percent from Africa, and 11 percent from other countries. The petroleum industry is highly dependent upon information technologies in every aspect of its business operations, including production, maintenance, finance, communications , security, safety, and delivery. Embedded microchips are widely used in the industry's distributed control systems." Y2K could drill down to other U.S. trade vulnerabilities too. Like minerals. The report notes that the U.S. is "totally dependent" on imports for such commodities as bauxite and alumina, columbium, natural graphite, manganese, and mica. More than 50 pe rcent of minerals like platinum, tin, zinc, tungsten, and cobalt come from overseas. "Temporary disruptions in the supply of some of these materials could affect automobile manufacturing (catalytic converters and pollution control systems), the petroleum and construction industries (drill bits), and the electronics sector (cathode ray tubes and electronic capacitors)," the report says. Banking also yields interesting data. The U.S., with its aggressive regulatory oversight of the financial services industry, accounts for just two of the world's 25 largest banks. An equal number of large banks are Chinese. Japan dominates the world's largest list with eight, while France lays claim to three. Beyond banking, the report underscores how important Japan's Y2K readiness will be for U.S. firms. Japan is this nation's top overseas supplier of machine tools, information technology devices and scientific equipment. Check out the report at http://y2k.ita.doc.gov/y2k/y2k.nsf/. GAO Report to Congress: Y2K Costs Rising, Vague in Some Agencies In October of 1998, three members of Congress asked the federal government to provide an accounting of spending stemming from Y2K for all government agencies and organizations. Last week, House Majority Leader Dick Armey (R-TX), Rep. Stephen Horn (R-CA) and Rep. Connie Morella (R-MD) got their wish. Or did they? The U.S. General Accounting Office (GAO) submitted a report on Year 2000 spending which left some holes and some questions unanswered. The report shows that government compliance costs are rising and estimates are rising still as federal agencies prepare for Y2K. Based on February 1999 status reports to the Office of Management and Budget (OMB), the total estimated cost for Y2K expenses at 24 major federal agencies is about $7.5 billion, triple the estimate from two years earlier, which was $2.3 billion. In that number, cost estimates for FY 1999 were more than double the estimate from one year earlier, up to $2.8 billion from $1.1 bil lion. Estimated costs for FY 2000 have also risen dramatically, from about $124 million in February 1998 to $1.1 billion this year. In compiling the report, the GAO hit reporting roadblocks from many of the government agencies. First, OMB was asked to provide copies of reports obtained by all agencies outlining their plans and funding for Y2K compliance. After repeated requests, OMB failed to produce the copies, so GAO was forced to go directly to the 41 agencies that receive funds. Within the agencies, Y2K accounting for actual spending was irregular. Of 24 agencies surveyed, nine major agencies didn't keep track of Y2K spending a s a separate line item, three agencies never responded to the GAO requests and five other agencies' numbers were combinations of actual costs and estimates of their Y2K spending. The report looked at requests for emergency spending funds for Y2K compliance. The Omnibus Consolidated Emergency Supplemental Appropriations Act of 1999 appropriated $2.25 billion for civilian agencies and $1.1billion for the Defense Department for emer gency expenses related to Y2K. When queried on spending the funds, agencies reported a variety of areas to which emergency funding is being directed. According to the report, the civil agencies proposed spending $607 million on renovation, validation and implementation; $87 million on outreach; $86 million for independent verification and validation; $50 million for contingency planning; $32 million for assessing and replacing embedded systems. In addition, the agencies indicated they needed $571 millio n for other activities, described by the report as "primarily replacement of non-compliant personal computers and network hardware and software." When justifying the need for the emergency spending, agencies gave reasons including new requirements not planned for, cost increases for ongoing Y2K plans, and lack of regular appropriations. In the case of the Treasury Department, $92 million was reques ted in emergency Y2K funding for non-Y2K related IT spending. Finally, the report looked at Y2K spending by the agencies for FY 2000. With twenty-eight agencies expecting to incur Y2K costs in the next fiscal year, only the Health and Human Services Department said their costs may exceed their current projections. Poll Finds U.S. Writers Resourceful, Optimistic Muddling through Y2K disruptions may be a matter of having the write stuff. Literally. A poll released this week by Paper Mate finds that 56 percent of Americans will use pens and paper to do business should computers and telephones go down. Just 17 pe rcent would revert to typewriters. Fifty-five percent of respondents said they are either "not too concerned" or "not at all concerned" about the Year 2000 issue. The Gillette Company conducted the omnibus survey, using a nationally representative samp le of over 1000 consumers. Bill Seeks to Open Federal Schedules Reps. Tom Davis (R-VA) and Connie Morella (R-MD) have introduced legislation to allow state and local governments to purchase information technology related to the Year 2000 conversion through Federal supply schedules. H.R. 1599 would amend the Federal P roperty and Administrative Services Act of 1949. The change would relate to hardware, software, support equipment, services and supplies. Closer to Home This week ITAA announced Citicorp Information Technology Industries Limited, Products Division with production facilities in Mumbai and Bangalore, India received ITAA*2000 Certification. ITAA*2000 is the industry's century date change certification progr am. The program examines processes and methods used by companies to perform their Year 2000 software conversions. Citicorp Information Technology Industries Limited, Products Division participated in a rigorous evaluation of its approach to date conversi on, with extensive analysis in eleven discrete process areas deemed necessary to a successful Year 2000 conversion. Business to Business Forecross Corporation, San Francisco, CA, has signed an IV&V contract with a large Canadian bank and its U.S. subsidiary. Solutions Plus, San Jose, CA, has been selected as a Certified Y2K Contractor by the state of Connecticut Department of Information Technology. Infoliant Corporation, Pittsburgh, PA, has released MS-Access Edition v1.1, an updated version of the Year 2000 Network Advisor MS-Access Edition. 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/year2000/legis.htm Calendar http://www.itaa.org/y2kcal.htm Vendor/User Status Questionnaires http://www.itaa.org/questmain1.htm Alternate Dispute Resolution (ADR) http://www.itaa.org/year2000/adr.htm Statement of Intention to Use ADR http://www.itaa.org/year2000/soi.htm, Y2K Mediators Seminar http://www.technologymediation.com/Y2K_seminar.htm Copyright ITAA 1999. All rights reserved. The Information Technology Association of America, 1616 N. Fort Myer Drive, Suite 1300