Ready or Not? Some Shrug Off Problem, Others Fear Worst

Despite fears the world over that the year 2000 is a ticking time bomb, there is no survivalist run on generators or stockpiling of canned food in the bastion of engineering excellence that is modern Germany.

In fact, the only visible signs of the so-called millennium bug are the burgeoning sales revenues of high-tech industries selling Y2K solutions.

Germans view Y2K as an overrated “technical problem.” And with the nearly problem-free launch of a common currency comfortably behind them, Germans argue that this year’s much more daunting conversion of European society to the new euro currency proves they can handle a simple turn of a computerized calendar page.

“The euro affected everything. I think people in America don’t realize what a huge change this was for us. All of a sudden, we had this big new marketplace where 11 separatecountries used to be, affecting business, taxes, transport, borders--everything changed overnight,” says Michael Klemen, director of European sales marketing for SAP, the world’s leading business-management software provider, which has transformed the erstwhile wheat fields of this town near Heidelberg into Germany’s answer to Silicon Valley.

Klemen, like others in the low-profile army of German Y2K trouble-shooters, insists this country is being unjustly marked down on millennium readiness because the analysts have mistaken the euro conversion for a distraction when it really was a dry run.

But the warnings emanating from global consulting firms such as GartnerGroup and Cap Gemini that Germany is woefully behind in the worldwide effort to avert a Jan. 1, 2000, catastrophe raise the question of whether Germany is not just calm but complacent.

Britain, France and Italy--the other European members of the Group of 7 industrialized nations--also have been rated as wanting in readiness for the rash of computer breakdowns that might occur when systems designed to read the year as two digits misinterpret the change as 1999 to 1900.

French officials have jokingly expressed as much concern about the adequacy of champagne supplies for the New Year as for high-tech preparedness. Britain’s more visible activity on Y2K concerns can probably be attributed to its having opted out of the European Monetary Union--and with it, the experience of weathering a major conversion.

“I’m quite confident that we won’t have an economic crisis,” says Deutsche Bank’s Gerhard Singer, Germany’s chief expert and trouble-shooter on Y2K problems. “I think people who talk about an economic crisis of such magnitude have an interest in selling survival products.”

As Germany’s representative on the steering committee of Global 2000--an initiative of 250 private financial institutions operating in international markets aimed at heading off Y2K breakdowns--Singer believes he has a better view of this country’s preparation than do the doomsayers evaluating individual indicators in a vacuum. For instance, he notes, GartnerGroup’s determination that Germany’s banking sector was “as badly prepared as Russia’s” was an erroneous conclusion based on interpreting the absence of information technology projects at hundreds of smaller savings and loans to mean there was no review underway to ensure their operations were Y2K-compliant. In fact, Singer insists, the computer systems for those banks are managed by collective data centers that have extensive information technology teams tackling potential millennium glitches.

German government agencies especially are lagging, but the biggest risks are being overcome by private sector initiatives. Most federal and local government agencies have at least some SAP software, so each has benefited from the company’s customized Y2K reviews, advisories and “hot packages” mailed out to help product users identify risks in their systems.

Frank Sempert of SEC Sempert Consulting in Frankfurt, spokesman for Initiative 2000, a German private-sector Y2K effort, says a big fear is the finance industry, because of its tightly connected information systems governing trade and transactions. But the euro experience has gone far in boosting confidence in that sector’s ability to foresee and forestall problems, he says.

More worrisome is the industrial supply chain. The failure of the smallest parts-provider to a major manufacturer could bring production to a screeching and costly halt. Munich-based BMW already has invested about $118 million to avert Y2K problems, and most of the spending has been aimed at ensuring suppliers are ready, says Winfried Schmidt, BMW’s head of technology and infrastructure.

Nuclear power plants have been proclaimed Y2K-invulnerable by the Environment Ministry, and military weapons systems have been checked and declared ready by the Defense Ministry.

The most risk-prone sector, where lives might hang in the balance, Sempert says, is the health-care industry, as modern hospitals are “like a giant computerized factory where the equipment is not run by IT specialists but by doctors.”

Despite the prevailing calm, warnings like that of the Federal Assn. of Producers of Medical Products that describes Germany’s largest hospitals as alarmingly unprepared have given rise to a small force urging hibernation as the best hedge against disaster.

“Stay home and keep enough cash and food to get along for several days without a supermarket,” advises Wilhelm Schaefer, a computer science professor at the University of Paderborn who believes the worst-case scenario is highly unlikely, but that there’s nothing to lose in hiding out.

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Christian Retzlaff in Berlin, Janet Stobart in London and Christine Winner in Paris contributed to this report.

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As the World Turns 2000

When the internal time clocks of automated systems worldwide turn over to year 2000, the consequences seem dire for countries that have not prepared. Even those that have done their Y2k homework may suffer minor disruptions, but the less ready could experience widespread and severe interruption of vital services. This map shows the Y2K readiness of various countries, based on a survey released in March.

Level 1: Mostly isolated cases, minor severity

Level 2: Mostly isolated cases, moderate severity

Level 3: A mixture of isolated and regional problems of generally moderate severity

Level 4: A full range of problems, from those that are isolated and minor to those that are widespread and severe

Level 5: No information available

Potential Year 2000 Problems

Power loss/brownouts

Telephone operation disruptions

Natural gas disruptions

Air transportation disruptions

Oil shortages

Shortages of certain foods

Water shortages or service disruptions

Government service disruptions

Bank disruptions or panics

Unrest

Import/export disruptions

Source: GartnerGroup survey of nearly 15,000 companies in 87 countries.