Big Blue is a Big Spender on Y2K

IBM recently disclosed that it is spending up to $575 million to bring its own systems into Year 2000 compliance, making Big Blue one of the big spenders on the Y2K crisis. The company also revealed in its annual report that it has initiated a global contingency planning effort to prepare for uncertainties that may occur during the century rollover.

Much of the company's huge Y2K budget is devoted to code conversion, testing and contingency planning. The company reports that it has also been scrutinizing manufacturing systems, development systems, and physical facilities. IBM's own stable of AS/400s in Rochester was converted with windowing tools in 1996.

IBM reports that is has completed most conversion and testing efforts across its other units, "with extended system integration testing and contingency planning projects scheduled throughout 1999." The company claims all of its hardware and software offerings to customers have been Year 2000 ready since 1996.

IBM also reports that it is closely monitoring the progress of business partners and vendors, and has identified alternate sources or strategies.

However, Y2K may dampen IBM's sales over the remainder of the year. IBM warns that Y2K may "soften demand" for its applications and systems. "Efforts by customers to address Year 2000 issues may absorb a substantial part of their information technology budgets in the near term," the company predicts.

"The hardest hit in the 1999 IT market slowdown will be sellers of larger general-purpose systems and software, such as IBM, Compaq, Oracle and PeopleSoft, who will feel the short-term effects of buying decisions deferred as a result of Y2K expenditures," agrees Dick Carlson, chairman of SPS/Spectrum Economics (Palo Alto, Calif.). He warns that IT product and services markets are facing a "miserable second half of 1999." "Purveyors of new IT products and services are anything but welcome at this time."