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Great equalizer: Y2K bug affects small business just as much as big ones
Saturday, October 24, 1998 By Michael Newman, Post-Gazette Staff Writer
The year 2000 is several hundred days away on the calendar. But the Year 2000 computer bug has already arrived - as a business priority, as a government issue and, not incidentally, as a media phenomenon.
If there were any doubt about that last qualification, Larry Olson removed it yesterday at a special U.S. Senate hearing on the issue at the City-County Building.
Holding up a copy of the supermarket tabloid Weekly World News, the state's deputy secretary for information technology pointed to the headline, "World Collapse in Year 2000!" It shared the cover with an exclusive about Monica Lewinsky's pregnancy.
Of course, so-called "Y2K" computer bug is a serious issue, as yesterday's hearing indicated. Convened by Republican Sen. Rick Santorum, it featured testimony from eight business and government experts.
Their message: While America is better prepared for the problem than the rest of the world, and while Pennsylvania may be better prepared than the rest of America, there will be problems when the calendar rolls over to Jan. 1, 2000 - particularly among small businesses.
More than half of the nation's small- to medium-sized businesses have yet to address the problem, said Ronald Spear, a staff member of a special Senate committee on the Y2K problem.
Big business has "to some extent grasped how a Y2K failure could severely impact their future," he said. "Smaller firms seem to be more focused on their day-to-day operational problems," a complacency he called "dangerous."
The great equalizer
The so-called Y2K problem, in which computers are unable to distinguish between the 20th and 21st centuries, is a great equalizer, affecting governments and businesses of all sizes. Most governments and large businesses have formed task forces and action plans to face the issue.
That's not the case with small businesses. "A lot of small- to medium-sized companies just don't have the staff" to deal with the bug, says Tim Kelly, a network consultant who works Downtown. He has written a book about the problem and last month started his own business to assist smaller companies "that need some short-term consulting to jump-start their Y2K work."
This week, officially designated "National Y2K Action Week" by the federal government, was part of a concerted effort to get small businesses to focus on the issue. And while government officials and technology experts say the problem is acute, they also emphasize that it's not too late to do something about it.
The Small Business Administration mailed 6.5 million pamphlets last week on the Y2K problem, covering everything from tax issues to strategies to fix the computer bug.
The bug stems from the fact that many older computers measure dates in two-digit increments, such as 10/27/98, and are thus unable to distinguish between 1900 and 2000. Both are 00. This failure could cause payroll, inventory or other programs to misread data or simply stop working.
Fixing the problem is not particularly challenging, but it is amazingly time-consuming. Total costs could reach $40 billion or $200 billion in the United States, depending on whose estimates are to be believed.
In Pennsylvania, the situation appears to be somewhat better. The state, for example, is spending about $40 million to solve the problem, less than Ohio's budget of $61 million and far less than the $250 million budgeted by New York. Fully 98 percent of the computer systems that support Pennsylvania's essential government services were certified as "Y2K compliant" last summer.
At PNC, the figure for Y2K-related expenses is a mere $30 million - far less than at many other similar-sized banks. The company has been upgrading its computer systems over the last decade and created a task force way back in 1995, said Tracy Merrick, head of the bank's Y2K project. Almost all of its systems will be ready by the end of this year.
Even so, he said, the bank cannot know for certain what will happen 14 months from now.
"Most organizations depend upon a multitude of service partners in order to transact business," Merrick said. If its partners and customers aren't ready for Y2K, PNC's systems could be affected.
Kevin Weaver is the executive vice president and co-founder of Infoliant, a South Side firm that helps businesses and governments understand the Y2K problem.
Recently he was asked to test a local law firm for its Y2K readiness. "Much to my surprise," he said - "and the law firm's as well" - the 75-member firm used more than 600 software programs that were affected by the bug.
No doom necessary
Still, Weaver said he is "not a prophet of doom and gloom as the new millennium approaches." There's no reason to be scared or intimidated by the problem, experts say.
The first step is a kind of Information Technology (called "IT") inventory. "I would strongly urge small businesses to evaluate your IT infrastructure," said Kelly, the network consultant who started his own business, Network Technology Services, last month. "That includes all electronic components - not just computers."
That's because so-called "embedded systems," the small chips in everything from cell phones to fax machines, could also be affected by the bug. "Anything electronic can have an embedded chip," Kelly said. "That's where there's going to be problems, if we have any."
Olson, the state's deputy secretary for information technology, stressed that there are many resources available to small businesses. He cited the state's special Web site, at www.y2k.org, and waved a copy of an "Executive Survival Guide for the Year 2000" brochure at the hearing.
On the federal level, the Small Business Administration also has a special site, at www.sba.gov/y2k, which features a "self-assessment test." The agency plans to hold more than 450 information sessions on the problem by the end of the month.
Once the evaluation is complete, experts say, there are plenty of options for companies that need to upgrade or replace their systems - which is to say, there are plenty of companies willing to sell them hardware and software that's supposed to be compliant.
At a conference at the David L. Lawrence Convention Center earlier this month, several hundred small-business owners gathered to discuss ways to get their networks ready for the year 2000.
The seminar was sponsored by Novell, the Utah-based software company, and was designed primarily to promote the latest version of NetWare, the company's networking software. The latest version is Y2K compliant, a feature that Novell executives say is one of its strongest selling points.
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