The Final Stretch: Management Looks Beyond Y2K

While Y2K panic in corporate America seems to have subsided, there has been considerable fallout on funding for new IT projects. A recent survey finds 82 percent of America's largest corporations believe that "no significant business risk" will arise as their computer systems roll over to the new millennium. The survey of 156 large companies, sponsored by Cap Gemini America Inc. (New York), finds a majority of large corporations (56 percent) expect 100 percent of their critical systems to be compliant by year's end, up from 48 percent in August. More than a third (38 percent) expect at least three-quarters of their systems will be compliant.

However, Year 2000 work has "inhibited progress" in a number of areas, the survey confirms. The largest percentage of firms (82 percent) have deferred ERP projects, while 78 percent experienced disruptions in applications management. Other deferred IT programs include customer relationship management (25 percent), sales force automation (22 percent), business-to-business e-commerce (18 percent), and business-to-customer e-commerce (15 percent). Primary IT efforts in the coming year include e-business, ERP, sales force automation, CRM and applications management.

The survey also finds that 82 percent of large firms have already experienced a "Year 2000-related failure," up from 75 percent in the previous quarter. Fifty-six percent of the failures were caused by systems that had not yet been upgraded or replaced, and 44 percent were caused by systems that had already been remediated. The most common failures have involved "financial miscalculation or loss" (95 percent ), followed by "processing disruptions" (92 percent ), "logistics/supply-chain problems" (36 percent) and "customer service problems" (33 percent ). Two percent report Year 2000-related "business disruptions."

"We experienced a couple of failures that were quickly detected," says John Ogens, director of the Year 2000 program for St. Louis-based Monsanto Corp. "One was related to expiration dates into the future, and another one was related to very long-term production planning. These were easily resolved, because they happened at such a low rate of frequency." Ogens notes that his company has addressed 85,000 separate systems since it began work on Year 2000 in 1996. "Only two percent [of Monsanto's systems] are traditional IT business systems," he adds. "The remainder are largely embedded systems and IT infrastructure components." This effort was wrapped up by the end of September, he says. Supply-chain partners have also demonstrated Y2K readiness at this time.

"Addressing the Year 2000 challenge has really succeeded in capturing the attention of top business management in a big way," says Howard Rubin, CEO of Rubin Systems Inc. (New York) and author of the survey. "This new involvement of business management in IT has long-term implications for the way corporate America pursues its strategic objectives."

Rubin observes that "America's largest firms are definitely feeling confident they'll weather the date change. This is in no small part due to the work they've done in testing and contingency planning and continuity planning. Now, more than ever, it's clear that management understands the value of IT. Business and IT are inseparable."