Overseas Governments Play Catch-Up

Overseas Governments Play Catch-Up

By Neil Munro

As U.S. government officials struggle to correct their extensive year 2000 software problem, many overseas governments have yet to fully recognize the danger it poses, industry executives say.

Foreign countries where governments have taken a leading role in publicizing and solving the problem include Australia, Canada, New Zealand and the United Kingdom, according to more than a half-dozen industry executives and consultants. Other countries making strides in dealing with the problem include Ireland, Holland and the Scandinavian countries, these officials said.

However, much of Asia, Latin America, South America and Eastern Europe have barely begun taking any steps to deal with the problem, they said.

"We hear very little about it from Germany and France ... [while Japan] is arguably further along than other East Asian countries," such as China, Taiwan or South Korea, in making repairs, said Bob Cohen, vice president for communications at the industry-funded Information Technology Association of America, based in Arlington, Va.

"Governments throughout the world are way behind in becoming year 2000 compliant," mostly because of poor management and limited funding, according to a November 1997 research paper prepared by the Gartner Group, a market research firm based in Stamford, Conn. The report did not include estimates on exactly how far those countries are behind in fixing the problem.

The Year 2000 Problem

The widespread year 2000 software flaw, which threatens to tangle government operations in 1999 and 2000, exists because software often labels data with the last two digits of each calendar year. Thus data from 2001 would be labeled with "01" and then be mistakenly interpreted by a computer in 2001 as data from 1901.

The scale of the problem and the potential market for fixes is vast, said industry officials. The U.S. government alone pegs its repair cost at almost $4 billion, while the Gartner Group estimates the true government cost at up to $30 billion.

Consider the year 2000 work needed by just the U.S. Internal Revenue Service. The IRS handles 200 million tax returns every year - containing total payments of $1.4 trillion - with software running on 80 powerful mainframe computers. Besides its 80 mainframes, the IRS also must fix the software used in 2,000 minicomputers, 120,000 desktop computers and 127,000 communications devices - a total of 70 million lines of software code and 95,000 discrete high-tech components.

Beyond the short-term pain caused by a crashed network, government officials need to worry about the impact of the year 2000 problem on their nation's economic activity and on international trade, said industry executives.

Failure to fix government and business computers, including air traffic control systems, telephone networks, currency trading systems and banking computers, could have a major impact on economic growth in 1999. It also could cause a shock to international trading systems that might prompt a sudden tumble in stock prices or currency values, said industry officials.

"These are the kind of stories that will be played out," Kevin Schick, director of the c.era division of the Answer Think Consulting Group, based in Miami. The c.era division offers U.S. and overseas clients a core group of consultants and an array of vendors with year 2000-proof products.

Moreover, the recent market turmoil in Asia has hurt the year 2000 repair effort, he said. "As the business community has to grapple with those [economic] issues, they are not going to be concerned with these kinds of issues in the technological bowels" of their corporation, said Schick.

Also, government and industry officials are not truly taking the time to investigate the vulnerability of their highly complex software-dependent networks, said Barry Ingram, chief technology officer at the Herndon, Va.-based government sector of Electronic Data Systems Corp., Plano, Texas.

Jacky Olivier, director of year 2000 for Cap Gemini of Paris, said few people appreciate the critical role played by information technology. "The problem is that people don't have any understanding of the link between systems failure and business failure," she said.

A November 1997 study by Cap Gemini indicated that 10 percent of the major companies in the United Kingdom won't get all their critical computer systems repaired by the end of 1999. The resulting confusion could hit the United Kingdom's economy quite hard, said the report, titled "The Cap Gemini Millennium Index."

The Cap Gemini survey of 300 U.K. companies predicts the failure rate will rise to 25 percent of companies - comprising 37 percent of the nation's gross domestic product - if computer repair work is delayed by an average of only three months. The survey also says the total repair effort will cost 23 billion pounds sterling (roughly $40 billion) and will absorb all available experts by April 1998.

Governments "around the world are still getting their arms around the cost" of the year 2000 problem, partly because it can be difficult to determine which systems and applications are most important and most deserving of repair, said Tony Hampell, group manager for worldwide year 2000 for Sun Microsystems Inc., Mountain View, Calif.

Faced with this common problem, governments need to cooperate, said Olivier. However, "there's no sign that they are doing that," she said.

Building Awareness

To gin up awareness, U.S. and overseas industry associations are holding press conferences, arranging industry meetings and briefing officials in national and international government bodies. "Industry is working to try to convince them that this is something they should be embracing," said Cohen. "That is an uphill fight."

Government awareness and action is especially important, he said, because it helps to stimulate action by private companies. "If [companies] look around and don't see governments doing anything, they'll assume they don't need to be doing anything."

But government-backed awareness campaigns are not enough, warned Olivier. "The United Kingdom has been very active [in raising awareness, but] that does not mean they have been successful in translating that into action" to fix the problem, she said.

One factor that has slowed awareness, said industry executives, is the limited use of the Internet outside the United States and the dominance of English on the Internet. "That puts some countries at a disadvantage," said Cohen, because most of the discussion about the year 2000 problem by experts has been online and in English.

Some countries also are reluctant to listen to warnings from other countries, such as the United Kingdom, said Karl Fielder, chief executive officer of Greenwich Mean Time UTA, a year 2000 repair company based outside London.

Those countries that have identified the problem and graded their agencies, such as the United States, are in the best position to actually fix it, said Hampell.

However, "there is a lot of activity in other countries [such as China] ... but perhaps we in the West have not seen the fruits of labor," said Hampell.

It takes time for governments to analyze the year 2000 problem, determine their needs, develop plans and begin promoting public awareness, he said, adding, "there is a lot of activity going on that is not public."

Countries such as Australia and the United Kingdom have formed small, government-funded groups to publicize the problem, while international groups such as the European Commission in Brussels, Belgium, and the Paris-based Organization for Economic Cooperation and Development also are discussing the problem and urging action by member governments.

Industry groups, such as Cohen's ITAA, are working with allied industry groups in other countries to promote awareness and repair efforts, while companies are advertising their capabilities to fix the problem.


In the end, the repair effort will cost many billions of dollars. But, new software tools promise to cut the cost dramatically, said Ingram. The tools, such as software that can scan through a source code for two-digit dates, "can do in a few minutes what it would take a very skilled person days or weeks to do, he said.

However, companies and government must still set aside half of their time for testing their year 2000 fixes, he warned.

Complicating matters is a predicted shortage of skilled high-tech labor, said Olivier. Too many companies are trying to hire too few information technology experts, ensuring that even the most forward-thinking companies and governments will run into labor shortages, likely causing them to fall behind schedule in 1998 and 1999, she said.

Fortunately, not every system needs to be upgraded or repaired, said Hampell. As a result, "nobody really knows" the true cost in time, opportunities lost and cash spent on the year 2000 problem, he said.

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