Debunking Year 2000’s Computer Disaster

One after another, the speakers stood before rapt audiences and conjured images of millennial Armageddon.

“This is a national emergency,” said one. “I’m very worried about the ability of a country to defend itself when it has no electricity.”

“Everything is going to fall apart,” said another. “I’m going to the bank to take out all my money, buy wood because the heat won’t work, go home and lock myself in.”

A doomsday religious cult? A paranoid militia movement? No, technology professionals at a recent San Francisco conference on the Year 2000 computer problem.

Apocalyptic scenarios permeate speeches, news coverage and even casual conversation about the monumental computer glitch. The forecasts are gripping, frightening--and probably way off.

Ask the experts combing the millions of lines of code that course through the nation’s businesses and government agencies. They will tell you that the Year 2000 problem--the inability of some computers to handle 21st century dates--is both real and daunting.

But they also will tell you it is awash in hype: Planes will not drop from the sky. Nuclear reactors will not melt down. Financial institutions will not freeze.

“It’s going to be a dud,” said David Starr, the chief information officer at Reader’s Digest and a former technology officer at General Motors, ITT and Citicorp. “The fuse is going to go down to 2000, and we’re going to wake up and nothing will have happened.”

Starr’s optimism is jarring in the face of headlines, such as a recent news magazine cover that predicted Jan. 1, 2000, would be “The Day the World Shuts Down.”

But Starr’s outlook is shared by others in similar positions at some of the nation’s largest companies--including banks, car makers and utilities--as well as trade associations, regulatory offices and government agencies.

Confronting presumed disaster, they are calm and collected. Few expect more than minor disruptions for customers and employees. Many say their crucial computer systems don’t pay attention to the date and are the least susceptible. Most have been working on the Year 2000 problem for years and expect to finish early.

None of the executives, analysts and experts interviewed for this article would say the problem is a myth. On the contrary, the world’s computer resources are being strained like never before.

But they all agreed that software companies, consultants, speakers, authors and even some computer systems managers stand to benefit from the Year 2000 problem, and have an incentive to exaggerate the threat. As one executive put it, “It’s in some people’s interest to say the sky is falling.”

Date Fields Buried in Code

All this over two lousy digits.

The Year 2000 problem stems from a space-saving technique adopted by programmers decades ago, when computer memory was a precious commodity. Instead of using four spaces to record a year, they used two: 1968, for example, was recorded as 68.

Unless fixed, these programs won’t know what to do on Jan. 1, 2000. Some may assume time has skipped back to 1900 and spit out erroneous data. Others may gag on the incomprehensible date and lock up.

Individually, the date fields are easy to repair. But they are buried in billions of lines of code around the world.

“It’s like weeding a garden,” said Sally Katzen, who oversees federal Year 2000 efforts for the Office of Management and Budget. “You just have to get in there and pull the weeds.”

The weed-pulling started two years ago at Pacific Gas & Electric, one of the state’s largest utilities. John Greer, manager of computer systems, said the San Francisco-based company is on schedule to finish by the end of 1998.

“We had a magazine call us, and they were milking us to tell them that everything would turn black,” he said. “But it’s not going to happen.”

That’s partly because the computer systems that manage the delivery of electricity are the least vulnerable.

“Our automated systems tell power plants to come on or off to meet demand,” Greer said. “All of that is based on monitoring physical conditions--current, voltage and frequency. They’re not looking at what day of the year it is.”

Most nuclear reactors aren’t even operated by computer, said Jared Wermiel, chief of the controls branch at the Nuclear Regulatory Commission. Like hospitals, nuclear plants have backup systems that use diesel generators. And safety mechanisms respond to changes in temperature, pressure or power, not the instructions of a computer.

Like most companies, Pacific Gas & Electric’s Year 2000 problems are centered in its mainframe computer systems that track bills, payroll and other financial documents that depend on dates. But even that repair work is proceeding better than expected.

Early estimates that the project would cost $42 million have been lowered to about $30 million, partly because in searching for Year 2000 glitches, PG&E; has stumbled onto many aging computer systems it can scrap altogether.

Southern California Edison also is ahead of the game. “There will be no impact on Edison’s power grid,” said Eric Trapp, manager of its Year 2000 effort.

Cost Estimates Vary Widely

Fixing the problem will never be considered cheap, especially because it offers little payoff other than the privilege of continued existence.

Some worldwide cost estimates for reprogramming or replacing affected computers are as low as $50 billion. But most are in the $200 billion range, or about seven times the estimated damage from the Northridge earthquake. That’s what International Data Corp. concluded, for example, after surveying 500 companies last year on their Year 200 spending plans.

But the estimates that get the most attention are substantially higher, and are provided by two consulting firms that stand to profit from the Year 2000 problem: the Gartner Group and Software Productivity Research.

Gartner, which helps design repair strategies, predicts the total bill for Year 2000 problems worldwide could approach $600 billion. That number has been cited repeatedly by the media, industry pundits and members of Congress.

But the Gartner analysts who produced the estimate acknowledge that it is little more than a guess, one they believe has about a 70% chance of being right.

“All of this stuff is thumbnail,” said Matt Hotle, a Gartner analyst. “If you’re trying to use the information for anything more than that, you’re putting too much into it.”

Gartner’s forecast was made two years ago, and does not account for new software tools that automatically comb through programs to find the problem date fields. Further, it includes the cost of replacing hardware and software that companies and governments planned to replace anyway.

Gartner’s estimate seems downright threadbare compared to others. Capers Jones, chairman of Software Productivity Research in Burlington, Mass., is about to publish a book that puts the total bill at $3.6 trillion.

Such huge numbers are hard to fathom considering that most companies say they are not allocating any extra money to fix the Year 2000 problem, and are earmarking less than 10% of their annual technology budgets.

But Jones said much of the bill will come after the turn of the century, when he predicts that businesses will spend $880 billion undoing Year 2000 screw-ups and fending off lawsuits.

Big numbers with lots of zeros generate publicity, help sell books and drive business.

Laura Lederman, an analyst at William Blair & Co. in Chicago, said the Year 2000 problem has boosted Gartner’s consulting revenues by millions.

“It’s clearly good for business,” Lederman said.

Hotle declined to discuss the impact of the Year 2000 glitch on Gartner’s business.

Jones acknowledged that his firm helps companies calculate Year 2000 costs, but said business considerations didn’t influence his estimates.

“If I’m wrong, I will be embarrassed and nobody will buy my book,” he said, adding with a chuckle, “Of course, nobody will be buying it after the Year 2000 anyway.”

Hotle and Jones both insist that the worst they are doing is scaring the world’s executives into taking the problem seriously.

Playing the ‘Chicken Little Card’

It seems to be working. Technology bosses at dozens of companies said that for the first time they have the full attention of their senior executives, partly because the problem is one that even techno-dunces can comprehend.

For that reason, many consulting firms are bypassing technology departments and pitching their Year 2000 fixes directly to top executives.

“I get letters forwarded to me on a weekly basis from the chief executive,” Starr said. “They say, ‘Are you ready to face your stockholders if your company comes crashing down? We’ll analyze everything for $1.25 a line.’ ”

The more frightened executives become, the easier it is for computer managers to play, as one called it, “the Chicken Little card.”

Starr said he knows of three colleagues using the crisis as an excuse to replace entire systems at their companies. For that reason, the huge cost estimates are self-fulfilling prophecies, he said.

Turnover in top technology posts is at an all-time high. Managers are either retiring early to avoid the Year 2000 crunch or leaping at more lucrative offers from more desperate companies.

Among the 250 largest companies in the United States, 40% have replaced their top technology executive this year, said Paul Strassman, an industry researcher who was formerly the top technology official with the Pentagon.

The irony, Strassman said, is that technology executives are cashing in on a crisis for which they are partly responsible. After all, they must have known the Year 2000 was coming, and should have known whether their systems were vulnerable.

“The Year 2000 should be seen as a symbolic moment of truth,” Strassman said, “an event where management says, ‘My God, how did we ever get into this mess?’ ”

Businesses Predict Few Problems

Few industries are as vulnerable to the Year 2000 problem as the financial sector, which these days practically exists within the flowing digits of computer networks.

Bank of America, for instance, depends on gargantuan computer systems to process 2.6 million ATM transactions a day, not to mention millions of other withdrawals, deposits, loans and credit card transactions.

But banks were among the first alerted to the problem. B of A has been fixing Year 2000 problems since the 1970s, when 30-year mortgages started triggering errors. The effort is at full steam now, occupying about 1,000 employees a day, and is on schedule to be done by December 1998.

The Year 2000 “will be a nonevent,” said Cheryl Kane, executive vice president of technology at B of A. “I’m not planning to take my money out.”

Most personal computers will not be affected. But Kane admits that she does fret about the other, nearly invisible computer systems that surround us all. “My lawn sprinklers,” she said. “My outside lights, my heater.”

Many of these devices use embedded chips, microchips that control functions and typically can’t be reprogrammed, only replaced.

Giga Information Group estimates that perhaps 5% of the embedded chips used in elevator systems, automobiles, toys and almost any modern day appliance could fail.

Even if that’s true, the consequences will probably be mild. Faxes might have an incorrect date stamped across them, and elevators might sit idle waiting for a technician to reset the maintenance schedule.

But electronics experts doubt that even 5% of embedded chips will have problems. Most everyday appliances won’t be affected because they don’t pay attention to the date, said Tom Mock, director of engineering at the Consumer Electronics Manufacturers Assn.

A VCR, for example, can be programmed to record shows weeks in advance. But most count down the days and hours to the requested time. “There’s no internal calendar,” Mock said, “no reason to store that type of information.”

Questions About the Government

Even among the most extreme Year 2000 optimists, clouds of doubt appear when the topic turns to the preparedness of the federal government.

In a report card issued in August, the Office of Management and Budget deemed some agencies, such as the Social Security Administration, ahead of most private industry. Others, including the Agriculture, Energy and Transportation departments, are woefully behind.

The Defense Department didn’t score the highest marks but is on schedule to complete repair of its critical systems by 1998.

But Sally Katzen, the official tracking federal Year 2000 efforts, still promises that “the services American people expect from their government will continue uninterrupted.”

The total cost to the government will be about $5 billion, she said, not the $30 billion cited by Gartner.

To nudge the laggards along, Katzen recently raised the threat of withholding all but Year 2000-related funding from agencies not showing adequate progress.

Agencies with crucial public safety roles seem to be on schedule. The Federal Aviation Administration, for instance, is on target to finish repair work by the end of next year, and wrap up testing mid-way through 1999.

Computers don’t affect the real backbone of air safety--radar and radio systems--anyway, said Raymond Long, manager of the Air Traffic Services’ Year 2000 office.

“Armageddon isn’t going to happen,” said Long, who is so confident that he plans to set a personal example on Dec. 31, 1999.

“That night,” he said, “I’m going to be at National Airport boarding a plane that goes through four time zones and lands on the West Coast. And then I’ll have a beer.”

Then Long and the legions of others battling the Year 2000 bug can take a nice, long break. At least until the Year 10000.

* BUSINESS OPPORTUNITY

Firms race to profit from the Year 2000 problem. D1