From: nnburk <nnburk@cobain.hdc.net>
Date: Sat, 26 Sep 1998 15:14:32 +0800
To: cypherpunks@cyberpass.net
Subject: The Year 2000 Problem: The Good News and the Bad
Message-ID: <360D5DD0.1F2D@yankton.com>
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>From THE FUTURIST (May 1998) 

                              The Year 2000 Problem:
                              The Good News and the Bad

                              The Year 2000 computer glitch has proved surprisingly 
troublesome.
                              Opportunities as well as dangers lie ahead.


             By Cynthia G. Wagner

             Four years ago, an author named Peter de Jager submitted to THE
             FUTURIST a reprint of an article he had published in a computer magazine.
             Entitled "Doomsday," the article warned of what will happen to the 
world's
             computers when 2000 rolls around.

             We editors rejected the article because it had already been published in
             another magazine and because it had already found its proper
             audience_computer programmers. We also felt that the "Year 2000
             Problem" was a minor technical glitch that would probably be fixed long
             before the year 2000.

             We were wrong: The Year 2000 Problem (or Y2K) was more serious than
             we thought. Very soon, what seemed like a minor technical problem to
             us_and to most other people at the time_had set off a furor and even
             created a new industry for consultants and programmers.

             Peter de Jager went on to co-write (with Richard Bergeon) a very useful
             book called Managing 00: Surviving the Year 2000 Computing Crisis [see
             box on page 19]. And as the year 2000 approaches, this book has been
             joined by multitudes of books, articles, reports, and Web sites 
addressing
             the problem.

             For our part, the editors of THE FUTURIST are doing penance by
             presenting this overview of the problem and its possible consequences. We
             also will summarize some ideas on how to prepare to cope with it.

             The Problem and What It Will Cost to Fix

             In the early days of computer programming, dates were entered as a
             six-digit configuration: two digits for the month, two digits for the 
day, and
             two digits for the year, or MMDDYY.

             Now, every date-relevant program in every computer needs to be Y2K
             compliant_that is, able to recognize eight-digit dates with four-digit 
years as
             opposed to two. Otherwise, the computer will not understand that life 
goes
             forward after the year "99" rather than magically skipping back in time 
to
             "00."

             Experts say that it's not exactly clear what problems non-compliant
             computers will create over the next few years. They may make lots of
             mistakes, such as paroling prisoners years early or sending Gen X'ers
             pension checks many decades too soon. Humans may catch many of the
             computers' mistakes, but most humans are too busy. That's why we have
             computers keeping track of things and telling us what to do, like taking
             expired foods and medicines off the shelf.

             Most sources say it is costing businesses between 50 and $2 a line to 
fix the
             codes. It may not sound like much, but all told, it will add up to many
             billions of dollars. Chase Manhattan Bank estimates that it will spend 
$200
             million to $250 million to fix its Y2K problems, and commercial banking 
as
             an industry may spend $9 billion or more, according to the Wall Street
             Journal. The U.S. government will need to spend about $30 billion, says 
the
             Gartner Group, a market-research firm in Stamford, Connecticut.

             Some organizations will decide to replace the millennium-unready systems
             altogether, perhaps spending more at the outset but avoiding costly 
problems
             later. The University of Chicago Hospital System, for example, figured it
             would cost $1.5 million to fix the Y2K problem on a patient-accounting
             system that needed to be replaced anyhow, so it decided to buy a new
             software system for $3 million to $7 million.

             Bottom line: We're looking at a repair/replacement bill of up to $600 
billion
             worldwide by the end of 1999, according to the Gartner Group. That's more
             than the gross national product of Canada.

             Interconnectivity: Passing the Bug

             The Year 2000 Problem affects not only computers (mainframes, minis,
             and micros), but the myriad of microchips embedded in many of our
             products, including airplanes, cars, microwave ovens, etc., points out 
Y2K
             authority John Whitehouse, president of ChangeWise, Inc., in 
Jacksonville,
             Florida. Furthermore, as he notes in his recent audiobook The Year 2000 
Is
             Coming: What Do I Do?, the year 2000 is a leap year, a circumstance that
             also will have at least some consequences: Banks, for example, would fail 
to
             calculate one day's worth of interest (February 29), which is significant
             when you are dealing with billions of dollars.

             Y2K problems are sometimes deeply embedded in "legacy" programs,
             which are the products of the old programming days. Some such programs
             will begin automatically deleting data that is more than two years old, 
warns
             Whitehouse. The work you do on programs such as Excel may be at risk
             unless you get upgraded software.

             Even if you don't think you have a big problem with your own computers,
             or if you solve your own Y2K problems, you will still have to deal with
             countless other individuals, businesses, agencies, and governments who 
may
             not have solved the problem in their systems. Computers, businesses, and
             governments are highly interconnected today: A problem anywhere has the
             potential for global consequences, and there may be many, many problems
             emerging as 2000 arrives.

             Still, there is a potential bright side:

             "For those who come to understand and accept the issues, for those who
             take decisive action, this can be the opportunity of a lifetime," says
             Whitehouse. "As we approach the most catastrophic event the modern
             world has yet faced, proactive companies can gain a significant strategic
             advantage while others fail. And knowledgeable investors can post
             monumental gains while others lose."

             Getting Rich from the Glitch

             A disaster almost always presents profitable opportunities. The hundreds 
of
             billions of dollars spent on fixing the Y2K Problem will wind up in
             somebody's pocket. One pocket could be yours. Expected Y2K winners
             include:

                  Programmers and consultants. Anyone with the technical skills to
                  solve the problem is now in high demand. Y2K guru Peter de Jager
                  identifies a wide variety of consultants ready to provide services,
                  including planning consultants for tools assessment, testing 
consultants,
                  contract service consultants to estimate the costs and plan and
                  implement the code redesign, legal consultants, and recovery
                  consultants. 
                  Information providers, including publishers and Web site
                  developers. The Wall Street Journal, for example, recently sold 
eight
                  pages of advertising in a special section devoted to companies 
offering
                  "Year 2000 Solutions" (February 19, 1998). A variety of consultants
                  and subscription-based Y2K assistance can be found on de Jager's
                  Year 2000 Web site (www.year2000.com). 
                  Investors. Wherever new businesses bloom, investors are sure to see
                  prospects for fast growth. Unfortunately, it's already late in the 
game
                  to invest in Y2K companies: You'd be "buying high," and it's always
                  risky to chase headlines for ideas on short-term speculation. As 
Wall
                  Street Journal writer John R. Dorfman warns about these so-called
                  story stocks, "That's an investment method that has often led 
investors
                  to grief in the past." 
                  Lawyers and litigators. Individuals and businesses stand to lose a 
lot
                  of money and time because of the Y2K Problem; therefore, they will
                  want to sue anybody they consider responsible for creating the
                  problem. If, for example, your life insurance policy is canceled
                  because a computer thinks you're too old, you'll probably want to 
sue
                  someone. 

             Worst-Case Scenarios: Chaos and Crashes

             Pundits have warned of potential disasters IF the Year 2000 Problem is 
not
             fixed in time. It's not clear how seriously to take them, but these 
possibilities
             have been mentioned:

             Food shortages may occur because stores will discard all products that 
have
             passed their freshness expiration dates.

             Some patients may die because medicines and lifesaving devices are
             unavailable. Drugs, like foods, have expiration dates and may be 
discarded
             upon the command of non-Y2K-compliant computers. Medical devices
             such as heart defibrillators are programmed to cease functioning if the 
date
             for maintenance checks has passed.

             Borrowers could default on loans and mortgages as computers add on a
             century's worth of interest rates. Consumers may find they can't make
             purchases because credit-card verification systems misinterpret 
expiration
             dates. Similarly, there may be a cash crisis as automatic teller machines
             freeze up.

             Stock markets could crash because investors fearing Y2K fiscal chaos may
             take their money out of the markets_perhaps in November or December
             1999_as Y2K impends. On the other hand, the crash might create a golden
             opportunity for investors ready to jump into the market when others run 
for
             the hills.

             Crime waves may occur as a general financial crisis creates economic
             hardship and jailed criminals are mistakenly released. One prison has
             already reportedly released criminals prematurely because parole dates 
were
             misinterpreted by computers.

             Other problems and inconveniences could include elevators getting stuck
             and airplanes being grounded, as the dates for maintenance checks appear 
to
             be missed and computers shut the systems down entirely. Date-sensitive
             computer-controlled security systems may fail, causing factories to shut 
and
             bank vaults to lock up. Drivers' licenses could seem to have expired, 
making
             it hard for people to rent cars. Voter registration records may be 
disrupted,
             creating havoc for the 2000 U.S. presidential and congressional 
elections.

             What Should We Do?

             To get started in solving your Y2K problems, John Whitehouse of
             ChangeWise recommends building a "systems inventory." Analyze your
             computer dependency_what do you use to get through the day, what
             outside systems do you depend on? What alternative sources of goods and
             services are there?

             Similar procedures need to be done at home and at work; specifically,
             Whitehouse suggests:

             Individuals and family heads should check out personal items that contain
             computer chips. Examples include heating and air conditioning systems,
             home-security systems, telephone-answering machines, TVs, VCRs, cell
             phones, cars. And of course, your home PC: The operating system itself
             may not work.

             Now test the devices. Enter 2000 in your VCR, or change the system date
             on your PC (after backing up the data). Send letters to manufacturers to 
see
             if their systems are Y2K compliant. Record on inventories where you still
             have risks, and develop a course of action, such as identifying 
alternative
             providers.

             You should also check software such as Access 95, Excel, personal
             schedulers, financial programs like Quicken or Money, communications
             software, etc. And remember that you could experience problems with
             outside services you use: the phone company, utilities, supermarkets, 
banks,
             gas stations, airports.

             "Forget flying to see Grandma on January 1, 2000," warns Whitehouse.
             "Two major airlines have already said they won't be flying." And the
             Federal Aviation Administration has admitted it will be late in meeting 
Y2K
             compliance.

             If you are an investor, your money is in places you can't control, so you
             should inventory all your assets (equity, debt, and fixed tangible). 
Check
             with the companies to find out their Y2K status and record the results.
             Perhaps less than half of U.S. companies have begun addressing the
             problem, and movement is lagging even farther in other countries,
             particularly Third World companies.

             One worry is that there may be runs on banks when people fear the Y2K
             impacts. Whitehouse goes so far as to suggest that investors begin 
hedging
             with fixed tangible assets: "Buy some gold and silver." Businesses should 
set
             up an organizational task force to address the issue, including managers
             from each area of the enterprise. "Problem ownership" should lie with the
             chief financial officer because of the many financial and legal 
implications.
             The task force should consider questions like cost, impacts on daily
             activities, competitors' actions, opportunities, effects on stock prices, 
etc.

             The CFO might ask how the company will be affected, where the money
             will come from to fix it, how cash flow will be impacted, and how
             customers will be impacted. Sales managers might ask what new products
             can be offered. Human-resources directors might ask whether new skills 
will
             be needed and whether the firm's best people will leave. The U.S.
             government, for example, is already concerned about a "brain drain" of
             technology experts leaving the Internal Revenue Service and the Pentagon.
             Each division must then do a systems inventory, find alternatives to 
systems
             and programs that are not compliant, test those alternatives, and affirm 
that
             all trading partners are compliant. "This will enable you to succeed 
where
             your competitors will fail," reassures Whitehouse. De Jager and Bergeon,
             authors of Managing 00, emphasize the need to test applications for their
             ability to handle the year 2000, but recognize that time is running short 
and
             that workloads for the reprogrammers are already overwhelming. They
             recommend giving priority to the applications that are most required for
             your survival, followed by those that give you a competitive edge.

             "Only you can determine whether you will allow yourself to be 'forced' 
not
             to test," write de Jager and Bergeon. "Forgoing testing is never 
acceptable,
             but in the real world, it happens."

             Learning from Y2K

             The lesson of the Year 2000 Problem is obvious: Most of the problems we
             face in the present are the result of someone (or everyone) in the past 
failing
             to think about the future. Y2K is a problem basically because mainframe
             computer programmers paid little attention to the long-term future. While
             saving money by using two-digit codes to enter years instead of four
             (computer memory was expensive in those days), either they never thought
             their programs would still be in use by the year 2000 or they never 
realized
             that computers, unlike fuzzy-thinking humans, would literally interpret 
years
             as having only two digits.

             We can smugly congratulate ourselves for being smarter than our
             technologies, but meanwhile, technology is biting us back.


             About the Author

             Cynthia G. Wagner is managing editor of THE FUTURIST.

             (c) 1998 World Future Society 

<http://www.wfs.org/y2kwag.htm>