The Year 2000 Quandary

The millennium is coming, bringing with it a host of potential computer problems. Here’s an overview of the Y2K dilemma and what it means for you.

By Kristina Rundquist

Kristina Rundquist is an associate editor for Scrap.

Get ready—Armageddon is coming. No, not the movie, but the end of the modern world as we know it. Come Jan. 1, 2000, clocks will stop ticking, elevators will freeze between floors, cars will sit idle, ATMs will cease to dispense cash, and medical devices such as pacemakers will flat-line. In fact, just about anything that’s run by computer will crash. To paraphrase Chicken Little, “The sky will be falling.”

Of course, that’s just one scenario. It’s also possible that life will continue pretty much as usual. Clocks will keep time, elevators will shuttle people from basement to penthouse, the freeways will be jammed, the cash-strapped will be able to hit the local ATM for a fix, and patients will continue to get the best medical care available with fully operational equipment. Come Jan. 1, 2000, we might experience a few glitches, but nothing too major.

What’s going on? Will the world end or won’t it? 

In answer to the first question, the issue is the Year 2000—or Y2K—problem, and how it’s going to affect networks, PCs, software programs, and just about anything that’s microprocessor-driven. As for the second question, the answer depends on whom you ask.

A Shortsighted Problem

The problem, it seems, is that back in the 1960s and 1970s when computer programming was in its infancy, programmers decided to save memory space by shortening the year field from four to two digits. Despite the fact that a single computer back then could fill an entire room, memory space was in critically short supply and even two extra digits were deemed too valuable to waste on designating a century. Thus 1973 became 73 and so on.

As the years passed, this two-digit system was perpetuated for a variety of reasons, one being that memory was still in short supply, another was simply habit, and perhaps most importantly, no one actually believed that early programming efforts would survive as long as they have. As the millennium approaches, however, the basics of early programming have not only survived, they’re also creating problems. Most computer systems developed before the mid- to late-1980s didn’t take into account the fact that, without the century designator, 00 would be interpreted as 1900. And while that might not be a problem for playing computer solitaire, it’s a considerable obstacle to forecasting loan payments 30 years hence.

“Dates are used in relation to other dates,” says Mark Valdés-Dapena, customer service and sales manager for Systems Alternatives Inc. (Maumee, Ohio), “so if you’re doing a calculation that involves comparing 99 to 00, instead of calculating 1999 to 2000, it will be seen as 99 years in the wrong direction.”

The problem won’t just affect loan payment amortization, of course. It also hits anything that relies on dates to calculate or process information, such as cost accounting systems, order processing software, and the like. What’s more, other electronic tools that have become commonplace in the modern business world—including voicemail, automatic call distributors, pager and paging systems, and interactive voice-response systems—may all experience problems. Ditto for time-lock vaults, computer-controlled security and sprinkler systems, and emergency communication networks. And don’t forget your electronic scales, cautions ReMA First Vice President Sam Hummelstein, president of Hummelstein Iron & Metal Inc. (Jonesboro, Ark.). Moreover, some equipment with built-in maintenance notification systems may simply shut down come Jan. 1, 2000, believing that they haven’t been serviced in 100 years.

The Clock Is Ticking

While the importance of preparing for and achieving Y2K compliance can’t be overstated (a recent test of the Sacramento, Calif., city jail system found cell doors springing open when the clock was advanced), the business world seems slow to react. A recent survey by Wells Fargo Bank shows that nearly half of the 500 U.S. small businesses polled haven’t even begun to check their systems for Y2K compliance problems, and 20 percent don’t even know what the problem is.

Nor is the United States alone in its unpreparedness. The GartnerGroup (Stamford, Conn.), a consulting firm, asked 6,000 companies in 47 countries about compliance efforts. About half said they won’t have 20 percent of their mission-critical systems fixed and tested in time for 2000. Venezuela hasn’t done a thing to address the issue, while 70 percent of France’s more than 1 million small businesses don’t even believe they’ll be affected by the problem. And in Germany, slightly more than half of 387 midsize firms said they’ve done nothing yet to address the problem.

This trend toward complacency rather than compliance is troubling, for computer and technology industry experts predict that time is running out. Soon, the technical help needed to fix the Y2K bug could be in such high demand that some companies may find they can’t find enough programmers or time to get the job done. And the pool of programmers familiar with older computer languages, such as COBOL, is dwindling at an especially rapid pace that will only accelerate as the millennium approaches.

Panicked, business owners may turn to companies promising a fix they can’t really provide.

Says Larry Galbraith, vice president of Klarmann & Partner Inc. (Audubon, Pa.), “Anyone who waits to the end is in for a nasty surprise. If a company came in today and said, ‘We want you to inspect our system,’ there are still enough consultants to do it. But over the next 15 months, it may get a little dicey.” Galbraith worries that unqualified consultants “will be coming out of the woodwork.”

Curing the Y2K Bug

Fixing the problem sounds simple, and in theory it is. All you need to do is change or modify every instance where a date is used within a program. Unfortunately, there are thousands and perhaps millions of lines of code in even the simplest programs. And while there are several modifications that can be tried, experts say none is the “proverbial silver bullet” that many small businesses seek.

The two most popular approaches are windowing and date expansion. In the first, a 50-year “window of opportunity” would be added to a program so that the numbers 00 to 49 would be interpreted as 2000 to 2049, while 50 to 99 would represent 1950 to 1999, thus buying at least a temporary reprieve from Y2K problems.

Date expansion requires expanding every two-digit year field to four, an inordinately time-consuming and expensive process if you’re talking about millions of lines of code. Cost estimates range from 75 cents to $2 a line.

A variation on the theme, and what Hummelstein has chosen to do, is install a century code, whereby although users will still type in a two-digit year, “with every record that’s entered, the information will go in and the computer will ask what century it should fall in. Then it will get written directly into the record.”

Because few small business owners have programming expertise, they’ll probably need to call in computer professionals to handle their Y2K issues. Hummelstein, who expects to be fully compliant by the end of 1998, went to his original software programmer to begin the compliance process. “He was the obvious choice—he wrote most of our software and knew it intimately as opposed to someone who would have had to come in, learn the programs, and then make them compliant,” notes Hummelstein, who began the process a year ago after sitting down with his banker. “He said, ‘This is real, it’s coming, and if you can’t prove to us that you have the problem under control, we might have some problems,’” he says.

But before hiring an expensive consultant, there are some things you can do to make compliance a bit more stress-free.

Taking Stock. First, figure out what needs fixing—it’s really a to-do list, says Hummelstein. Start by taking an inventory of all computer-based systems in your business, including all software programs, computers and hardware, and any systems you developed or modified in-house. Remember to list equipment such as balers, shredders, and even trucks that use microchips or programmable logic controllers. Make this inventory as detailed as possible and include vendor information, product make and model, and serial numbers. Collect all supporting paperwork as well.

Once you’ve completed this inventory, rank each item in order of importance—what absolutely must be operating on Jan. 1, 2000, and what can wait a bit. For example, you’ll want your equipment running as well as your order processing software. Something that creates interoffice memos, however, can wait.

“Not every piece of equipment in the yard needs a stem date”—the date set by the internal clock, explains Joseph R. Floam, president of ScrapWare Corp. and Con Res Inc. (Gaithersburg, Md.). “When starting up a truck or a baler, who cares what day it thinks it is. But for internal software systems, that’s a different matter.”

Calling All Vendors. With the necessary backup information collected, start calling vendors to find out if their product is Y2K- compliant. If it isn’t, ask how they intend to repair it. For instance, some companies have disks and CD-ROMs that can be installed either by the customer or a vendor representative to rectify the problem.

And don’t forget to find out what your customers plan to do about their Y2K problems. “I’d look at your trading partners—people who are buying and selling you scrap and that you have contractual commitments with—and start asking questions about Y2K,” Floam notes. “For a while at least, people will be living in two worlds—those that are compliant and those that aren’t.”

Moreover, since no computer exists in a vacuum, problems may still arise despite your best efforts. “If you’re receiving electronic information from another source and that source isn’t compliant, even if you are, you’ll have problems,” says Galbraith.

Damage Control. If you find that most of your programs and equipment will be affected by the Y2K bug, you must then decide how to proceed—repair a system, replace it, or even retire it.

As Larry Smith, vice president of Shared Logic Group Inc. (Holland, Ohio), explains, “Find out what the replacement cost will be because in some cases it will be less than the cost of having a third party come in and fix the system. It gets down then to finding out what the cost is and making a business decision.”

Frank Giglia Jr., president of Allied Scrap Processors Inc. (Lakeland, Fla.), agrees: “It’s a very individual problem. You need to make a decision based on cost and what’s best for your company.” Giglia’s computer system is fully compliant thanks to an investment he made two years ago in a Windows NT Client Server network from Microsoft. “We were using an old DOS-based unit and since we saw this problem coming, we went ahead and changed over,” he explains. “I thought it would be foolish to hodgepodge a legacy system together when it would be cheaper in the long run to get something new that actually will work in 10 years.”

If you need to contract out your Y2K compliance work, shop around a bit before picking a service provider. Find out exactly what remedies they offer and within what time frame. And keep looking if you’re not certain they can bring you into compliance in time to test the new systems and make any needed alterations. “Shop around and ask to see a company’s checklist so you’ll feel comfortable that they’ve done their homework,” says Galbraith. But don’t try to hunt for bargains—it’s already too late for that, he warns.

Of course, that doesn’t mean you should sign up with the first service provider you contact. Unscrupulous firms are out there, and all too eager to take your money. Smith has “heard horror stories about what companies are charging. Some are charging more for correcting the Y2K problem at a small company than the actual license fees we charge for our software.”

Giglia, for example, spent about $60,000 in totally overhauling his system. While this may sound costly to some, the price included “the server, individual computers, everything,” he says.

Hummelstein, on the other hand, has spent $10,000 to $15,000 upgrading his system. “It doesn’t have to be as expensive as some people will tell you,” he notes. “If I’d used the national average just to convert software, based on the number of lines of code we have, it would have bankrupted my company. We are, after all, negotiators. So if you need to, explain that an estimate is out of your range and see if you can work with the person.”

To minimize your chances of being taken to the Y2K cleaners, consider checking with the Information Technology Association of America (Arlington, Va.) for a listing of qualified consulting firms. You can call the group at 703/522-5055 or visit its Web site at http://www.itaa.org.

Testing and Correcting. Remember that verbal assurances of Y2K compliance from software vendors aren’t reassuring at all. You need to test the product. “Anyone can produce a document saying they’re compliant. It’s nice, but what does it really mean?” asks Floam.

What’s more, even though many software vendors are notifying clients about their compliance status, you shouldn’t wait for that contact. “Everyone is going to have to take the initiative for their equipment,” says Valdés-Dapena. His company, like the others interviewed for this story, has taken an active approach to notifying clients of whether or not their systems are Y2K-compliant. Still, he explains, “As the number of conversions begins to snowball, some companies will only be able to address problems as they arise.”

Carl Williamson, president of Four Lakes Business Systems Inc. (Madison, Wis.), adds, “Bill Gates isn’t going to call all his customers and neither are the 200,000 people that work under him. Like anything else, if you’re a responsible business person, you’ll have to take initiative.”

Whoever does conduct tests on the newly installed or modified system should do more than just see if it will work come the millennium. Among a lengthy list of critical dates to test, say Y2K experts, here are seven to consider: Jan. 3 and 4, the first and second regular working days of 2000; Feb. 15, W2 forms are due; Feb. 29, it’s a leap year, you know; April 15, taxes are due; May 1, tax withholding reports are due; and Oct. 10, the first time in 2000 when six digits will be used for storing the date as MMDDYY.

Be forewarned that testing your system isn’t something to be undertaken lightly. So, unless you have a systems expert on staff who understands the Y2K problem, you probably shouldn’t try setting your computers’ clocks ahead to see what happens. That’s because once the clocks are turned forward on some systems it’s impossible to turn them back, caution computer professionals.

Online Help

If any of this information seems confusing, you’re not alone—it is confusing. But instead of panicking, you can turn to the many sources of available help. Start out with your vendors and move from there. And don’t overlook the Web in your research efforts. The Small Business Administration has an excellent Web site at http://www.sba.gov/y2k that addresses both the problem and possible solutions, while also providing a wealth of interesting and useful information. Other resources include http://www.year2000.com, which provides numerous links to other Y2K sites, and http://www.gartner.com, the GartnerGroup’s site—good information, legal and otherwise. And if you need sample contact form letters to send out to either your vendors or clients, check out http://www.y2kexperts.com.

The resources are out there to help make your Y2K transition relatively painless. Just keep in mind the words of Carl Williamson: “You have to be responsible for making sure your equipment does what you want it to do. In the end, you’re responsible for it—keep on top of it and know exactly what’s happening.” 

Millennial myths

You don’t have to test a system or software package if the vendor says it’s compliant.

 If you test individual system components, you don’t have to test the system as a whole.

You can test by simply changing the date.

You have until Dec. 31, 1999, to make any corrections.

Only computers are affected.

All new systems will be compliant.

Vendor service agreements cover Y2K compliance, and if not, vendors have liability 
coverage.

It will all be over on Jan. 1, 2000.

What's Law got to do with it?

Not unexpectedly, Congress is also concerned about Y2K (it’s an election year, after all).

Sen. Robert Bennett (R-Utah) plans to propose legislation requiring publicly traded companies to disclose their progress on Y2K compliance in their quarterly reports and initial offering statements. Currently, many companies decline to talk about the subject, partly out of fear of litigation down the road should any information they share come back to haunt them.

To help ease that concern, President Clinton wants Congress to adopt a “Good Samaritan” law protecting businesses that share their Y2K information and solutions from future lawsuits.

Meanwhile, Y2K litigation is becoming almost a cottage industry, with law firms and lawyers specializing in protecting and prosecuting Y2K-related problems springing up across the country. Experts also warn that the resulting problems might not be limited just to computers—time-released safes, automatic call distributors, pagers, and the like may also be affected. Total cost estimates hover near the $1 trillion mark. With that in mind, it’s probably smart to keep your customers abreast of your own compliance status.

After all, “five years after the millennium, the glitches will all be over, but the litigation will go on for decades,” predicts Joseph R. Floam, president of ScrapWare Corp. and Con Res Inc. (Gaithersburg, Md.). —K.R.•