focus topic: Seizing the Opportunities of a Post-Y2K World
In the process of preparing for the century rollover, many have invested heavily in enterprise systems and other new technology, such as AS/400e-series servers, that provide value well beyond century date fixes. Others have developed methodologies and management styles that will help them to deftly implement new technologies. Then there are those who have achieved new levels of cooperation and understanding with business partners and customers.
While some shops are simply taking a one-time Y2K hit, Y2K has fueled a management revolution in others. The bottom line is that after Year 2000, IT organizations may never be the same.
Recent surveys by the Society for Information Management Year 2000 Working Group are showing improvements in IS development and management practices. "That's a good sign and likely a result of adopting practices to help them cope with large and complicated Y2K projects," says Leon Kappelman, associate professor at the University of North Texas (Dallas), and co-chair of SIM Year 2000 Working Group.
While Kappelman cautions that "it's too early to say if this
trend will continue," he notes that as a direct result of Y2K, there has been a rise in standardization, good quality practices, and independent verification and validation.
Year 2000 may have brought benefits beyond simply just staying in business. "For the first time, people are realizing what runs their business, and what their key business processes are," agrees Carl Griener, VP of Meta Group (Stamford, Conn.).
Another advantage incurred from Y2K efforts is a more accurate picture and methodology for tracking IT assets. This is particularly true in distributed environments, says Charles Aquilina, director of the Resolve 2000 practice for Keane Inc. (Boston). "With Y2K, for the first time, people finally understood exactly the size of their investment," he says.
At a minimum, many organizations have had to open up their communications processes and seek input regarding IT strategies. "Forward-looking organizations realize that hardware and software remediation won't be enough," says Lisa Marshall, senior VP of Syntax Communication Modeling Corp. (Los Gatos, Calif.), and speaker and writer on Y2K issues. "They need to link with employees, customers, suppliers, and the critical infrastructure in their communities. As they do so, they can gain a net value-add rather than the losses that are feared from the date change itself."
"You cannot be successful in wrestling the Y2K monster to the ground if you ignore your business strategy," says Leeland Freeman, VP, strategic relationships, Source Recovery Co., LLC, and Year 2000 consultant and author. "Likewise, you cannot have a successful business strategy if you ignore your IT strategy."
Then, the Clean Up
Analysts project that only a small portion of all Year 2000 disruptions will actually occur on New Year’s Day or the first business day thereafter. Problems will occur throughout the Year 2000, and continue into 2001. "Year 2000 is going to have a very long tail, and it may be difficult to know when the tail stops," says Freeman.
"We're still going to be cleaning up from messes until mid-Year 2000," agrees Griener. "Some fixes are temporary at best, and we'll have to go back and fix some of it." Add to that secondary systems "that weren't important enough to fix by the Year 2000, but still need remediation," adds Vivek Wadhwa, CEO and co-founder of Relativity Technologies (Cary, N.C.). "The opportunity lies in being able to take these systems and begin to harvest the value out of them. At the end of the day, you're going to see a lot of housecleaning."
As Y2K winds down, IT managers will face pent-up demand for infrastructure upgrades and new application deployment. This demand will be further exacerbated during Y2K's "lock-out" of application deployment and updates during the final quarter of 1999 and first quarter of 2000. As a result, this pent-up demand will lead to "post-Y2K application wish-list frenzy." IT managers must include the strains of these demands in their contingency plans.
"The half-life between mass-change projects is getting shorter and shorter -- and each one requires a wave of effort," Freeman points out. "Year 2000 will fold into something else of equal dimensions, such as e-commerce or ERP." That means plenty of work for IT departments, even after Y2K becomes a distant memory. "I don't think there's a CIO who will ever come up for air again," says Freeman. "This is the way life is going to be now in IT organizations."
Positioning for Post-Y2K Growth
Beyond clearly being a heavy maintenance project, Year 2000 work also has underpinned new growth strategies for many companies. As businesses prepare plans for the event of Year 2000 failures, "they begin to understand what their business really is, and where their weaknesses are within the business chain," says Griener. Companies that successfully plan for and pull through Y2K will benefit from increased business since competitors may still be bogged down in the issue, Griener says. "We even go so far as to say a 30 percent increase in market share will not be unusual. It's just a question of how far you can push your current infrastructure."
For example, ERP implementations are evolving out of the greater sense of organization gained through the Y2K experience, Griener observes. In turn, this is helping the growth prospects of companies that have been through the Y2K process.
Mack Trucks Australia (Sydney) took advantage of a needed Year 2000 fix to take on worldwide production challenges. With a nine-month lead-time for many of its overseas suppliers, the company recognized that its Year 2000 problem would arise in March 1999. To address Y2K, and expand its capabilities to handle increased production, the company implemented a new AS/400-based ERP system. The system, J.D. Edwards WorldSoftware, is expected to go live in March.
Leveraging Year 2000 work for growth was also a lesson learned by Collins and Aikman Corp. (Charlotte, N.C.), a leading automotive supplier, which needed to address Year 2000 issues, as well as manage rapid international acquisitions and growth.
As new companies came on board, they often brought along different information systems, most of which were not Y2K compliant. The company had 60 plants requiring Y2K remediation work. "None were Year 2000 compliant or offered equivalent functionality, says Gary Hoskins, VP of information services at Collins & Aikman.
The company decided to consolidate all of its manufacturing operations on an AS/400-based MRP system. The new system, BPCS Version 6 software from SSA (Chicago), "gives us clear information about the efficiency and quality of our manufacturing operations, including the allocation of raw materials," says Hoskins.
Exide Electronics also needed to support a growing international presence, as well as move from custom to high-volume manufacturing. Exide installed an ERP package on multiple AS/400 servers to "better manage the inventory process and to control our working capital, particularly inventory," says Marty Kittrell, CFO of Exide.
Exide runs PRMS software from Acacia Technologies (Lisle, Ill.) on its primary AS/400, and links three AS/400 systems worldwide in support of accounts receivable, customer service and manufacturing. Other benefits include improved material requirements planning management and cutting master production schedules generation time from 36 hours to 1.5 hours. In addition, Kittrell notes an improved linkage between order entry and manufacturing systems.
Y2K is also providing a valuable proving ground for other initiatives such as e-commerce and supply chain management. "Year 2000 has boosted understanding of the mechanics of business-to-business relationships," says Freeman. "Companies are finding they can only achieve Year 2000 compliance up and down the supply chain if they have a thorough understanding of their suppliers and customers. Relationships have been modified or changed, and scrutinized as a result."
Even without Y2K, this would truly be the era of systems overhauls, as businesses move to network-centric architectures and e-commerce. Therefore, many such projects have been joined at the hip with Y2K, says Griener. This results in what he calls "e-legacy" architectures – legacy applications that are updated or wrapped to support new electronic channels.
A number of midrange sites have made linkages between mass-change projects in their Y2K work. For example, Barth & Dreyfuss (Los Angeles), a manufacturer and distributor of textile products, seized upon Year 2000 work to streamline its supply chain, facilitate EDI transactions and provide an IT architecture for future growth.
Along with addressing year 2000 issues, the company is "reducing paper-based processing, improving EDI capabilities, and moving to a client/server-based computing platform," says Jim Castleberry, COO and CFO for Barth & Dreyfuss.
Eighty percent of Barth & Dreyfuss' orders are handled through EDI with partners such as Wal-Mart and K-Mart. The company is installing J.D. Edwards OneWorld software in conjunction with Harbinger's EDI/400 solution on an AS/400e custom server, allowing measured moves to a networked environment.
Throwing in the Towel?
In some cases, companies are abandoning systems rather than remediating – another lesson in streamlining. Wadhwa cites the case in which a large financial institution shut down a multimillion-dollar system, rather than remediate its code. "When the bank's IS department estimated that it needed an additional $3 million to upgrade the system, the users threw up their hands, and decided to discontinue the system. They could perform the process manually for less cost."
Some organizations have even chosen to back away from the AS/400 altogether. North Carolina's Department of Transportation was faced with the decision of upgrading its 10-year-old AS/400 applications or moving to Windows NT, which is also deployed throughout the agency. Department managers felt it would cost too much money to update the AS/400.
"Of the approximately 100 AS/400 legacy applications at the Department of Transportation, only 15 will be remediated for the Year 2000. All others will either be replaced or retired within the next two years," says Jason MacEntee, new technology officer, North Carolina Department of Transportation, based in Raleigh. The department employed RescueWare from Relativity Technologies to migrate its code to Visual Basic and C++ to run on the new platforms. The department recently converted its state and federal grant system from COBOL to a Web-based system along with Year 2000 remediation.
However, for many Year 2000-challenged companies, the AS/400 offers a safe haven, as well as an entree into integrated client/server configurations. For example, Newfoundland & Labrador Hydro (St. Johns, Newfoundland) saw no benefit to updating the code of its mainframe-based business systems. Lack of integration hampered applications in financials, purchasing and inventory, says Carl Hynes, manager of application development at Newfoundland & Labrador Hydro.
"We spent a lot of time just keeping systems talking to each other," he explains. A Year 2000 upgrade of the mainframe system would still have left the utility with "the same inherent integration problems."
Rather than attempt a date fix, the utility migrated to an AS/400-based ERP solution. The company implemented J.D. Edwards WorldVision ERP solution to gradually tie its business systems together – user by user in some cases – as part of a gradual migration from a host-based system to distributed client/server.
New York Presbyterian Health Healthcare System also used Y2K as an opportunity to bail out of the mainframe world and move to a more open client/server platform. The organization recently scrapped its mainframe in favor of an RS/6000 server running Lawson software on an Oracle database.
Along with Year 2000 compliance, the health system was looking for "a system that would enable our materials management department to eliminate 'non-value added' services," says Martin Deane, director of materials management for Presbyterian. "The system needed to be flexible in controlling the supply chain management process and offer a user-friendly way for our departments to order supplies."
Institutionalizing Y2K Gains
One outgrowth of Year 2000 has been the growth of project offices within companies, which bring massive resources to bear on Year 2000 and other IT challenges. "The Y2K program office is an organizational entity that will have a life beyond Y2K," says Freeman. "The office has the ability to do enterprise-wide mass change, such as implementing ERP or e-commerce."
That was the experience gained when Consolidated Freightways (CF, Menlo Park, Calif.) established its Y2K program office, which is helping the organization leverage its Y2K work with a host of new initiatives.
"We built a Year 2000 department which is crossing over all department lines to analyze, create and implement solutions," says Matt Saikkonen, chief information officer of Consolidated Freightways. "We're not treating Y2K as just another project. It's a challenge we're using as an opportunity to improve our systems to serve our customers."
To this end, the company is replacing older systems with new Y2K-compliant systems enabling electronic data interchange (EDI), Internet and customer service reporting processes.
With the establishment of a Year 2000 program office, a company will have an infrastructure in place to deal with these ongoing massive efforts, Freeman notes. "Organizations are going to have to constantly throw the right kinds of cross-organizational resources of these problems."
Another byproduct of the Y2K process has been new approaches to IT staffing altogether, says Freeman. "How do you make certain that your best IT resources don't go walking out the door, for greener pastures? Companies are going to have to think that through, and this thinking will only help them develop better staffing models in the future."
Options companies offer include performance bonuses to stem attrition, along with the judicious deployment of contractors and vendors.
New and proactive human resource practices have been developed as organizations struggle to staff Year 2000 projects. Y2K has served as a training ground for recruiting, organizing and motivating IT professionals, says Kappelman.
Thus, companies may well remember who pulled them through this crisis.
"In America, we love winners," says Aquilina. "If you've got somebody who's done well on a tough project like Y2K, you're going to take care of them."
Companies will value the skills of a general manager that can manage both technical and business issues, Freeman agrees. They will be looked upon as "orchestra leaders, which could look at all the musicians at once and figure out how to manage them. The heroes and heroines of Y2K program offices are going to be sought after as a new cadre of exceptional managers."