The Y2K Bug Has Already Struck En Masse

Where the Y2K Bug is Striking
  • Financial miscalculation or loss 92 percent
  • Processing disruptions 84 percent
  • Customer service problems 38 percent
  • Logistics/supply chain problems 34 percent
  • Business disruptions 2 percent
Source: Cap Gemini America Inc.

A chilling new survey reveals that not only are systems at most of the nation's largest corporations already failing due to Y2K glitches, but that few companies are optimistic they'll be ready in time for the century rollover.

The survey, conducted by Cap Gemini America Inc. (New York), finds that 75 percent of the largest U.S. companies have already experienced a Year 2000-related date failure in their systems. Only about half of these companies (48 percent) expect to have all their critical systems ready when the Year 2000 hits, so they're preparing for the worst.

Similar surveys conducted last winter and spring found the number of large corporations reporting Y2K-related failures jumped from 55 percent to 72 percent. The most frequent failures involved financial miscalculation or loss, followed closely by "processing disruptions." More than one-third of the companies experienced Y2K-related customer service and logistics/supply chain problems. Virtually every respondent (99 percent) anticipates "an increase in systems failures into the remainder of 1999 and beyond."

More than nine out of 10 major corporations (92 percent) will sever ties with non-Year 2000-compliant suppliers of services and products, up from 82 percent in the last survey conducted in the spring. Firms "very likely" to stop doing business with non-compliant partners leapt from 21 percent to 36 percent since May.

Independent verification and validation (IV&V) of remediated code is now the key Y2K initiative underway at most companies. Nearly nine of 10 major firms (89 percent) rank their need for IV&V services as "high," compared with 52 percent last December. "Many firms handled much of their Year 2000 work in-house, and now recognize that their results need outside verification," says Jim Woodward, senior VP of Cap Gemini America. "IT executives want to show top management that the job was done right."

The survey also finds CEOs getting more involved in the Y2K process, signaling that, "Top management views the Year 2000 challenge as a business problem and not merely a technology problem," says Woodward. In fact, only 12 percent of top managers are delegating Year 2000 contingency planning to IT managers--down from 35 percent last year.

Ninety-six percent of top companies are establishing Year 2000 crisis management centers, up from 85 percent in the spring. In just about all cases, top executives will be taking charge of the centers.