Small Businesses Smell Y2K Coffee

Despite several years of warning about the impact of Y2K on their systems, many small businesses are just getting around to preparing or remediating, a new report from IDC (Framingham, Mass.) finds.

"Many small business Cinderellas now realize that it’s getting toward midnight and it’s time to take steps to avoid trouble," says Raymond Boggs, VP of small business research for IDC. He notes that a growing number of small firms are finally starting to move on Y2K. Small businesses have already spent an estimated $10.6 billion on hardware and software upgrades for Y2K. IDC estimates that small firms will spend an additional $6.9 billion before New Year’s Eve.

However, small businesses’ Y2K preparations are far from finished. A majority of small firms surveyed by IDC, (53%), have yet to undertake a formal assessment of their Y2K compliance. While small businesses with the biggest investment in technology are furthest along in their preparations, IDC estimates that 3.3 million firms have waited until the last minute to prepare for the millennium.

Ironically, most small businesses have little to worry about in the year 2000 because they rely on standard software packages with upgrades and "software patches" readily available over the Internet. Of course, firms still have to examine the programs that they use and decide to upgrade. "Y2K inactives" have only just started looking at the problem and have spent some money on upgrades, but most of their spending is still to come, notes IDC.

These 3.3 million small businesses are beginning to realize they must take formal steps to evaluate how ready they really are for the millennium. Although many of these firms have invested in new hardware and software in the past 12 months that will contribute to their Y2K readiness, they have not yet made a formal assessment of what steps they need to complete in order to be truly Y2K compliant.

In contrast, the "Y2K actives" are further along in the upgrade process, although their total spending and their potential problems are greater because of greater reliance on customized software and proprietary solutions. These 2.9 million small businesses have already reviewed their hardware and software formally to ensure Y2K compliance. Although a minority of small firms, they will account for about 57% of all small business Y2K spending