Solution Providers Eye New Programs, Partners
Large and small companies are striking alliances to vie for a slice of the lucrative 2000 pie
As the federal government scrambles to assess its year 2000 software conversion needs, solution providers are creating programs and strategic alliances to position themselves for a stake in what promises to be a difficult challenge -- with a huge payoff.
The year 2000 software problem has sparked a boomlet of activity in the information technology market, spawning numerous studies, dedicated organizations and a new batch of technology specialists. The looming year 2000 problem has prompted information technology firms, ranging from upstarts to the nation's largest, to develop services and tools to convert the system dates.
The government's share of the problem, estimated to cost about $30 billion, is likely to create opportunities for virtually all of its infotech contractors. Often lacking software conversion tools or methodologies, these firms are, in turn, forming alliances with smaller companies, such as Viasoft, Phoenix; Alydaar, Charlotte, N.C.; and Computer Horizons, Mountain Lakes, N.J., all of which have the conversion tools and methodologies. Facing a multifaceted task, these alliances are increasingly multitiered, matching different software tools or services to the various phases of the correction.
"There is no tool that will fix everything," said Kathleen Adams, associate commissioner for systems design and development, Social Security Administration.
Predicting that eventually the need will outstrip the source of providers, many industry observers believe the job will eventually be handled by a consortium.
Even before much of the work begins, the firms offering solutions already face significant time and money issues. The government has gotten off to a slow start with most departments still lacking a plan of action.
One of the difficulties has been that "it is so easy to understand the problem," suggesting an easy answer, said Adams, who heads an interagency committee formed to spur the government's year 2000 efforts. However, there is no easy answer, stressed Mark Sokol, vice president of advanced technology at Computer Associates International Inc., Islandia, N.Y., warning that those who have not taken steps to correct their systems by Jan. 1, 1999, will be in trouble because it will take about a year to test.
In addition, Congress has refused to appropriate new funds for the effort, sparking worries that there won't be enough money.
Complicating matters is the Office of Management and Budget's Nov. 1 deadline for an overall cost estimate for the project. "It does not allow for enough time to conduct an impact analysis," said Paul Barbosa, director of business development for Year 2000-Federal at CTA Inc., Austin, Texas. The result will be that the costs will be underestimated or inaccurate, he added.
Even the government systems pose challenges for solution providers. "It's not just the volume but the complexity [of the systems] with information that may go back and forth between various agencies, forcing you to try to fix them at the same time," said Dale Vecchio, Viasoft's director of marketing/Year 2000.
An early entrant in the year 2000 market, the 13-year-old Viasoft has seen its fortunes soar since it became involved in the effort three years ago. In March 1995, the company, which offers a variety of infotech business solutions, went public at $8 a share, said Vecchio. At the end of August 1996, with the stock valued at more than $70 per share, the company gave a two-for-one split. The stock is currently hovering around $45 per share.
At the same time, Viasoft's revenues shot up 41 percent from $31 million in fiscal 1995 to $43.6 million in the fiscal 1996 ending July 31. The company expects that number will increase to $60 million in 1997, said Vecchio. Roughly 30 to 40 percent of the company's revenue is coming from year 2000 professional services, he said.
Viasoft offers widely used workbench tools in its Enterprise 2000 program that identify the problems and facilitate the fix. The company is teaming with several federal contractors, including Keane Inc., Boston; CACI, Arlington, Va.; Andersen Consulting, Chicago; and CTA Inc. Viasoft also struck an agreement with Comdisco Disaster Recovery to collaborate on the testing of the year 2000 project. In these relationships, Viasoft provides tools and training to its partner's personnel who do the conversion.
CTA works with Viasoft because "we thought it had the best tools out there for COBOL and assembler," said CTA's Barbosa. His company began offering year 2000 solutions about two years ago when it began a date conversion project for the Department of Veterans Affairs' Austin Automation Center and the Austin Finance Center in Texas. Since then, the company has completed VA projects, which involved conversions of more than 1 million lines of COBOL legacy code, and has entered into smaller contracts with the Air Force and General Services Administration.
In addition, CTA will provide the conversion solution using the Viasoft tools for the state of Nebraska, a contract valued at more than $20 million, and is competing for a similar contract for the state of Kansas. Held up in court by a challenge from a competitor, CTA has been unable to start work on the Nebraska contract.
Working alone and with partners such as El Segundo, Calif.-based Computer Sciences Corp. and Electronic Data Systems Corp., Herndon, Va., Computer Associates' program, Discovery 2000, combines tools and services to address the overall problem. It covers the entire conversion process "from soup to nuts," said Sokol. The company has "dozens of contracts underway" with the National Guard, the Department of Defense and civilian agencies," said Mike Miller, senior vice president, federal sales, at Computer Associates.
San Diego-based Scientific Applications International Corp. has joined with Alydaar Software Corp. in its year 2000 effort. "We have contracted for or are near contracting to translate well over 1 billion lines of code," said Alydaar President Robert Gruder. Alydaar's Smartcode is an automated tool that can be used to analyze the date conversion process.
In its effort, Software AG of North America, Reston, Va., has created a two-tiered alliance arrangement. Its alliance with its top-tier partner Computer Horizons Corp. is a better fit for the federal market, said Michelle Perry, general manager, federal systems at Software AG, noting that its second-tier relationship with Insight Consulting Inc., Denver, is directed at private industry.
In the first-tier alliance, the companies will offer Computer Horizon's Signature 2000 program, which uses a proprietary tool kit and methodologies to identify, document and manipulate programs containing date fields and database definitions affected by the century change.
"We're looking at three major potential [projects] beginning in February," said Arthur Quinlan, senior vice president of Horizons Consulting, a subsidiary of CHC. To reduce the cost of the date conversion, CHC is "developing more and more technologies to automate renovation and the upfront assessment or inventory as well," Quinlan added.
In its year 2000 effort "Transformation 2000" IBM's Integrated Systems Solutions Corp., White Plains, N.Y., has adopted a phased approach comprising assessment, planning, implementation and clean management, said Barbara McDuffie, director of IBM's year 2000 initiative.
The company is currently engaged in 60 contracts, she said, adding that none has yet gotten beyond phase two. The company has already used many different tools and is likely to use more, she said. In addition to its own proprietary tools, it has used Mainware Inc.'s Hourglass 2000 and Peritus Software Service's AutoEnhancer/2000, which automates the code and data-conversion tasks.
Based in Billerica, Mass., Peritus has also formed a strategic alliance with Computer Sciences Corp. Under the arrangement, Peritus has licensed to CSC its Automate:2000 technologies including the AutoEnhancer/2000 and the Mass Change Factory, which provides for large transformations of code and data. In turn, CSC is combining Automate:2000 with its own Catalyst2000 to conduct the date conversions.