Counting the cost of the new millennium

The Anglo-Saxons were full of doom and gloom about the impending arrival of the year 1000, identifying phenomenon such as comets as portents of the end of the world. Today, the primary fear is that the coming millennium signals death to some computer systems, and could prove fatal to many business operations. Now time is running out for finding ways of handling this impending IT catastrophe, with many companies hoping to hand the whole problem over to someone else to solve.

The computer difficulties caused by the dawn of a new century are deceptively simple. Back in the 60s and 70s, when commercial applications were first written, dates were commonly recorded in a six digit format (YY/MM/DD) in order to conserve storage space and processing power. By the 80s, when the price of memory had dropped significantly, most software developers switched to an eight digit format, CC/YY/MM/DD, indicating the century in full.

However, the life expectancy of many of the older programs has far exceeded the anticipations of their early developers, with the result that many millions are still in use, or have become the basis of various upgrades and patches to new systems with their date format unchanged.

The problems then start once such systems are required to process the date in 2000 and beyond. Unable to make sense of a date which appears as “02” rather than “2002”, the computer will reject the calculation or produce a wholly inaccurate answer. The result could be widespread chaos.

“We’re looking at the next great economic depression,” says Peter de Jager, an adviser to the government’s Task Force 2000, which has been set up by the Department of Trade and Industry (DTI) and co-sponsored by the Confederation of British Industry (CBI) in an effort to encourage businesses to take action.

Tales are emerging of the kinds of disaster ahead – Marks & Spencer’s computers rejected all tins of corned beef stamped with a sell-by date in the next century, thinking the food was almost 100 years old, while hospital blood bank systems have been telling doctors that some supplies have run out because the 00 (zero zero) date makes the computer think the blood has passed its expiry date.

“You don’t need to be a rocket scientist in order to grasp the technical details. The real difficulty is working out the scale of the problem.

One file might be used in many applications, all of which need to be checked, and there is also the question of interfaces between the company’s own systems and those of suppliers – are they year 2000 compliant?” Warns Tony Hill, managing director of recruitment specialists Interskill.

Testifying before a US government sub-committee on the severity of the issue, the Gartner Group estimated the total cost of correcting the millennium date change at between $300bn and $600bn. Here, the UK government’s Central Computer and Telecommunications Agency (CCTA) calculates it could cost up to #160m for a large organisation and around #50m to #70m for a medium-sized enterprise.

Computer services group Cap Gemini Sogeti (CGS), formerly known in the UK as Hoskyns, estimates that such companies can reckon to take a minimum of three days to change, test and implement each program. So a company with 20,000 to 30,000 programs will require 60,000 man days of effort or over 300 man years.

Many organisations are still having trouble digesting this news. The DTI recently sponsored a survey conducted by the CCTA, the Computing Services and Software Association (CSSA) and the PA Consulting Group. This quizzed 535 UK organisations on how the millennium time bomb would affect them.

While the majority of IT managers polled (70%) claimed to be fully aware of the difficulties, only a tiny proportion (just 8%) had actually carried out a proper audit of the situation. Most had no idea of how much it would cost to put systems right, with 39% unable to volunteer a figure at all and a further 52% only able to offer a rough guess.

“In the third quarter of 1996, people really need to be doing some assessment work to understand just how big the problem is for them, so that by January next year the budget is in place to fund what needs to be done,” cautions Elaine Eustace, who heads up the year 2000 unit at computer services group CMG.

“It’s not necessarily the older systems which are an issue. The biggest problems come if all the company’s systems run on one mainframe, because everything is interactive. You can’t change one bit without affecting the others. On top of that, some organisations have thousands of PCs in lots of departments – who knows what people are doing on them?” she added.

Finding out what needs to be done is only the start. The code then has to be altered and, most importantly, checked and tested to make sure it will work. System testing represents 40% of the effort, compared with just 20% spent on code conversion. The biggest stumbling block of all is the non-negotiable deadline. There simply cannot be any project extensions.

Automated software tools can help with some of the code conversion and some testing routines. But in many instances, flotillas of programmers are still needed to eyeball the code. “There’s no silver bullet which will magically solve all this,” Hill warned.

Many of these programmers need distinctly old-fashioned skills, such as Cobol, in contrast to the client/server and object oriented skills most companies expect to hire in today. Skills shortages are starting to appear, with reports of Cobol rates going through the roof.

“Even for the companies who have the necessary skills, year 2000 work is a huge overhead. We have one client who calculated making all the changes required 80 man years of effort, which meant everyone working on it solidly for the next two years. During that time the IT department wouldn’t be able to do anything else – no new development projects, no support work, nothing,” explains Melvyn Burgoyne, sales director with Information Management Resources (IMR).

All these pressures have combined to make many companies look at outsourcing all or some of the processes involved in making systems year 2000 compliant.

“This approach solves several problems. It gets rid of the legacy maintenance work which in-house staff traditionally don’t like and means you can motivate them by giving them the new projects. It gets round the resourcing issues, since the supplier has to find the expertise. And essentially it’s a project management problem, and traditionally software houses are better at those than end users because they do more of them,” Eustace pointed out.

Outsourcing is not ideal for every company. Organisations who find they have very few date sensitive systems may well be able to cope on their own. And Jacky Olivier, director of year 2000 services at CGS, warns companies to be on their guard against current media hype of the issues.

“If a company’s sized the problem, has got good business sponsorship at board level and if it’s got a budget, then the project is manageable,” she points out.

“For companies who haven’t started yet, it may well be worth outsourcing just the assessment and strategy phase in order to get an idea of where they stand. But companies who haven’t done any planning and then find they have a large inventory of date-intensive systems haven’t really got any choice but to outsource,” Olivier maintained.

In addition to the traditional outsourcing specialists such as CGS and CMG, there is a rapidly growing number of companies who handle software development work overseas, usually in India. Here software quality is as high as in the UK but the cost base is much lower.

“It’s very difficult to positively cost justify a year 2000 conversion.

You’re going to the finance director asking for #10m purely so the computer systems can handle the date in the next century. There’s no business benefit, so it’s a very cost sensitive issue. Offshore programming typically delivers about a 40% saving on what customers would take to do it themselves,” Burgoyne said.

Only a handful of Indian software houses had UK representation at the start of this decade. Now more than fifty are actively seeking business here, either through a tie-up with a UK software house or via middlemen who chose the best partner for a client from among India’s 400 or so software companies. Improved satellite communication links, a strong emphasis on structured methods and the use of a UK project manager all help reduce the risks of taking a project to the other side of the world.

Outsourcing remains risky if the buyer fails to put the right kind of controls in place. “It’s all very well saying you’ll manage the risks involved in making systems year 2000 compliant by putting them on to a third party, but should they fail to deliver the nature of the problem is such that you still go out of business,” points out John Little, a member of the management group at PA Consulting.

Many companies run software which was written by suppliers to whom they continue to pay a fee for maintenance and upgrades. Others have already outsourced key systems to external suppliers. Now there is a questionmark over who is responsible for making sure those systems can cope with the date change.

“There are two separate issues. Who fixes it and who pays for it? There’s no simple answer, because it all depends on the contract the companies signed,” Olivier stated.

Some outsourcing suppliers have taken over systems for clients where the software was based on a commercial package but then modified by someone else. The question of who should then pay for it to be converted is already interesting several lawyers.

It has taken a long time for the message about the year 2000 to get across.

Little describes the current interest levels as “defrosting” rather than “hotting up”, with people becoming more aware of the issues but still slow to do something concrete about them.

“Some companies still don’t see it as a big problem. That may change if one trend which has ignited in the US is adopted here. Over there auditors are starting to qualify a company’s accounts if they haven’t made clear how they intend to address the issue and made some provision to pay for the cost of the work,” he warned.

Those few companies who have their year 2000 plans well in hand should not be complacent. Software suppliers are now warning that the effort required to revise existing computer systems in order to handle a single currency in the wake of European Monetary Union (EMU) could be three times as great as that needed to handle the date change.

Pat Sweet is a freelance journalist.

Year 2000, Core Business Showstopper or Costly Irritant? The Spikes Cavell research report into the year 2000 problem is available through VNU at a cost 0f #175 (#125 per copy for multiples). To order copies call Amanda Cowler on 0171 316-9272 or e-mail her at [email protected].