Nearly a quarter of all companies worldwide have not started work on their year 2000 program fixes yet, industry analysts The Gartner Group claim in a new survey. According to the group’s millennium research director, Lou Marcoccio, some 23% of the 15,000 companies and government agencies surveyed have not even started their year 2000 projects. And of those, a worrying 86% are small companies who Marcoccio says won’t have a chance of putting things right unless they begin immediately. Even more worrying, said Marcoccio, was the fact that only 50% of companies that had projects underway said they planned to test their corrected systems. The rest will simply rely on supply-chain vendors’ to make the changes or they simply won’t have enough money to instigate a testing program. In terms of industry sectors, the study found the insurance, investment services and banking industries are most ahead, many of them having fixed all their mission-critical systems already. Companies in the healthcare, education, semiconductors, chemical processing, agriculture, food processing, medical and law practices, construction and government agencies were most behind while those companies on which the world’s economic infrastructure relies, telecoms, utilities and transportation, were barely ahead of the furthest-behind efforts, the report said. Marcoccio did concede it was typically the smaller firms in the supply chain, rather than the larger businesses, which were responsible for bringing many of the poorly-performing sectors down. Companies are beginning to catch onto this, he added, so rather than relying on ‘paper surveys’ to question suppliers about Y2K readiness (97% said they did this a year ago compared to 71% in 1998), many are demanding face-to-face audits for mission critical systems; a shift Marcoccio recommended since only 20% to 40% were getting any written response back. Only 11% of companies have started to research embedded system risk. The survey also reveals huge geographical splits. The United States continues to lead the way in preparedness among businesses and government agencies, followed closely by Holland, Belgium, Sweden, Canada, and Australia. Western European countries are generally making good progress, with the exception of Germany, which is quite a bit behind other nations in the region. Two- thirds of the companies in Russia, China, India, the Middle East excluding Israel, Argentina, and Venezuela and half of the companies in Japan, Germany, Mexico, and Malaysia are expected to have one major mission-critical failure, Marcoccio said. One area of particular concern was insurance coverage. The analyst said many companies have started adding exclusion clauses, which exempt them from providing cover for millennium-related losses, without telling their customers. Already 40 states in the US have allowed insurance companies to alter their policies in this way even though, technically, the year 2000 should come under standard business losses. And personal accident/life insurance for employees could also be affected, he said. He knew of three companies who have said they will not make any payments for accidents or injuries that have been caused as a result of year 2000 problems. Marcoccio advised customers to immediately contact their insurers and request written clarification of coverage in the event that millennium bug related losses are incurred or the enterprise is litigated against because of a year 2000 related issue. If in doubt, he recommended users seek advice from legal counsel with year 2000 and insurance coverage expertise. But there is increased awareness of and spending on year-2000 issues, the survey found. In 1997, just 5% of IT budgets were being used to deal with the problem. That figure jumped to 18% for the first two quarters of this year and is expected to jump to 29% by the end of the year. While that might be viewed as good news in one sense, it’s bad news for other areas of IT budgets where companies are foregoing spending.
