GartnerGroup didn't use the word "bleak" in describing the worldwide prospects of making it into the new millennium and through 2000 without significant disruption, but it's hard not to draw that conclusion from its latest data.
The leading Y2K researcher again surveyed 15,000 companies and government agencies in 87 countries, and found that big companies in the United States and scattered other developed countries -- Canada, the Netherlands, Australia, Belgium, and Sweden -- were doing "relatively well." But much of the rest of the world is far behind, and "many of the companies and government agencies outside the US will start so late they will not be able to finish in time," GartnerGroup research director Lou Marcoccio said Wednesday.
With 513 days to go, Marcoccio labeled Eastern Europe, Russia, India, Pakistan, Southeast Asia, Japan, China, most of South America, most of the Middle East, and central Africa as particularly slow to act, lagging at least 12 months behind the United States in their efforts. There was a surprising slowpoke in the heart of industrialized Europe: Germany, where "companies ... are just getting started," Marcoccio said.
It may be too late. "Typically it averages about 30 months for a mid-sized company (2,000 to 20,000 employees) to get their mission-critical systems compliant," Marcoccio said.
GartnerGroup's implied pessimism was not a surprise. The company's forecast of a possible US$600 billion price tag for Y2K fixes has dwarfed other estimates and has been frequently cited. Its stance has led some to note that many of Gartner's clients are companies that sell Y2K solutions, so a tenor of terror may be in the company's best interest.
Nonetheless, GartnerGroup, which has been called to give Y2K testimony to Congress, insists it has not succumbed to what may appear to be of a conflict of interest, and points out that to do so would be to risk its reputation on what is a relatively small part of its business.
As most people now know, the Year 2000 problem is a result of the longtime programming practice of using a two-digit date field to indicate the year. Systems unprepared for the new century rollover may read 2000 as 1900, resulting in malfunction or shut-down.
One shocking conclusion Marcoccio reached, especially given that companies have tended to be unduly optimistic in their projections, was that fully half of those surveyed won't perform a lick of Y2K testing. Their day of reckoning will arrive and they won't know what will happen. It's a circumstance that Marcoccio compared to developing a software application and shipping it to customers without doing any quality assurance work.
GartnerGroup didn't release all of its data Wednesday, and instead dangled juicy tidbits to the media ahead of the GartnerGroup Symposium/ITxpo 98 in October. At that time, Marcoccio said, more detailed predictions of the breadth and depth of failures will be discussed.
Still, Marcoccio did say Wednesday that while "catastrophic failures will not occur everywhere in January 2000 ... failures in less developed countries, smaller companies, and companies with high global dependencies will cause a negative impact to the world economy."
One potential trouble spot: the oil industry. The Middle East is far behind in addressing Y2K and half of the oil companies expected to experience at least one mission-critical failure. Problems were also noted in health care, education, semiconductor, chemical processing, agriculture, food processing, medical and law practices, construction, and government agencies. "The industries on which the world's economic infrastructure relies -- telecom, utilities, and transportation," Marcoccio said, are faring only slightly better.
The GartnerGroup research also suggests that even if Y2K-related computer meltdowns don't do damage to the world economy, the price of fixing it is likely to slow growth. Y2K is grabbing an increasingly large portion of IT budgets, Marcoccio said, up from 5 percent in 1997 to 18 percent in the first two months of 1998, to a projected 29 percent by the end of the year.
Marcoccio also had warnings for companies counting on insurance against losses due to business disruption, noting that about 40 states have already granted insurers exclusions from covering Y2K-related losses. He also warned investors that new Securities and Exchange Commission disclosure requirements, while a noble effort by regulators, will largely yield "window-dressing" from companies.
