From the August 1998 issue of Startups

In a wired world where computers control everything from coffee makers to electric-power grids, and businesses, government agencies and public utilities are meshed in a complex, increasingly interdependent network of relationships, computer malfunctions related to the year 2000 (Y2K) could conceivably impact every business on earth, regardless of technological sophistication.

For a homebased business owner, preparing for the new millennium means ensuring that systems supporting the daily operations of your business, such as PCs and credit card verification readers, are Y2K-compliant. You need to make sure the microcomputer chips or software programs that control these devices won't malfunction at the turn of the century.

At the same time, you should understand that the source of most post-millennial business interruptions will be outside your business as a result of the Y2K bug's effect on infrastructure: telephone communications, power and other services vital to the survival of a business. Ed Yourdon, co-author of Time Bomb 2000: What the Year 2000 Computer Crisis Means to You! (Prentice Hall Computer Books), cautions that the practical issues of preparing a business for the year 2000 can obscure a business owner's view of the big picture. "Problems with PCs are irrelevant if the lights go out, you don't get a dial tone or the [banks' computers] go down," says Yourdon. "You're out of business--it's as simple as that. It doesn't matter if your PC works or not."

Imagine this scenario: You run a homebased mail order business equipped with a handful of fairly new PCs that you've tested and found to be Y2K-compliant. When you open for business on the first Monday of the new millennium, you find your phones are dead, presumably as a result of a Y2K-related malfunction affecting the phone company's computer system. Without a phone, you have no way of accepting orders from customers, contacting vendors to restock, using your credit card terminal, accessing the Internet, or even ordering a pizza. That's not to say phones are more vulnerable to the Y2K bug than other utilities, but the example demonstrates that a small or homebased business is very much like a house of cards: Remove one card from the wrong place, and the whole structure can come tumbling down.

Once Upon A Time . . .

So what exactly is a Y2K bug, and why is it so worrisome? It all began as a shortsighted business decision in the late 1950s, when large corporations and government agencies began using mainframe computers for such tasks as calculating interest on bank accounts. Disk space on the older machines was expensive and extremely limited, prompting programmers to use abbreviated date codes (590415 for April 15,1959, for example) to save bytes. When January 1, 2000, rolls around, computers will read the date as 000101, which automatically translates to January 1, 1900, throwing off innumerable calculations, from expiration dates on yogurt to interest yields on bearer bonds. Systems that rely on calendars, such as maintenance and production schedules, will likely be affected by this type of miscalculation, as will automatic elevator programs and building security systems.

Programmers knew from the beginning that this would happen if the date codes weren't changed from two to four digits before the 21st century, but were under a lot of pressure to complete their tasks quickly and cheaply. Besides, they had little reason to predict their programs would still be in use at the turn of the century. Even if the programs were in use, it was reasonable to assume the date codes would be fixed before a malfunction could occur.

Fast-forward to 1998. The problem of the incomplete date codes hasn't been solved. In fact, it's been compounded by the millions of lines of code added to the original programming as companies demanded more and more capabilities from the same machines. If the original code had 100 dates to correct, the 1998 version may well have 1,000, making the correction process tedious, time-consuming and very costly. According to Software Productivity Research Inc., businesses worldwide will have to spend $3.6 trillion to solve Y2K-related problems including software and hardware upgrades, lost productivity and resulting litigation. Achieveing Y2K compliance will require an investment in additional IT staff and thousands of hours of overtime to audit every line of a business' software code or, in some extreme cases, the purchase of brand-new Y2K-compliant hardware and software.

Many large companies have already begun Y2K compliance projects to head off malfunctions. According to Reuters News Service, Union Carbide has spent more than $50 million updating its systems, and Citicorp has spent $600 million on Y2K-related issues.

Recent testimony before Congress by the General Accounting Office and Y2K experts has a number of government officials concerned about the possible effects of the Y2K bug on the U.S. economy. Sen. Bob Bennett (R-UT) has introduced a bill that would require all publicly traded companies to disclose details of their preparations for the year 2000, including their insurance policies and contingency plans. Additionally, an admission by the Federal Aviation Administration that its air traffic control computer systems aren't likely to be ready in time has prompted President Clinton to form the President's Council on the Year 2000 Conversion, which is charged with ensuring that government services aren't affected by the bug.

Tick, Tick, Tick

While homebased computer users work on a much smaller scale than big businesses and government agencies, in some cases, PCs are just as vulnerable to the Y2K bug as their larger and more expensive mainframe brethren. In Time Bomb 2000, Yourdon warns that PCs built before 1996 may contain internal clocks that aren't Y2K compliant; when this incorrect date information is accessed by a PC's operating systems and software applications, it could adversely affect the system's performance. As if that weren't bad enough, PCs using pre-Windows 95 operating systems like MS-DOS 5.0 and Windows 3.1 are likely to experience a Y2K "rollover" to January 4, 1980, causing major inaccuracies in date-based calculations performed by the PCs' software.

To check your PC for Y2K compliance, there's a simple test you can perform. Before you do anything else, back up all your files to a tape or disk drive. Then manually reset the PC's clock to 11:59 p.m. on December 31, 1999. If, after a minute has passed, the clock reads anything other than 12:00 a.m. on January 1, 2000, your PC is vulnerable to the Y2K bug. If it passes this test, try again--but this time shut your PC down after manually resetting the time. Give it a minute, then power back up and see whether it has made the change correctly.

The good news, ac-cording to Yourdon, is that the new PCs and operating systems, including Windows 95/98, Windows NT 4.0 and Apple MAC OS, were designed with the Y2K bug in mind. "There's a reasonably good chance the hardware and the BIOS and operating system are Y2K-compliant and that whatever problems exist will probably be very minor," says Yourdon. "The biggest risk for PC [users] is that they may be using home-grown soft-ware or some proprietary billing pack-age that was developed five years ago by someone who has since disappeared. You could very well have Y2K problems in that application."

Because the lack of vendor support and documentation makes it difficult to predict how these applications will react to the date change, PC users who rely on such "orphan" software applications produced by companies or individuals no longer in business may want to replace those packages with new software that's guaranteed by the vendor to be Y2K-compliant.

Still, just because you've been conscientious about making your business Y2K-compliant doesn't mean your customers and vendors are doing the same. Gill Wagner, president of St. Louis-based Y2KExperts.Com, believes the vital links between businesses, suppliers and customers may become strained by the effects of the Y2K bug. "The external supply chain is the small-business owner's biggest concern," says Wagner. "Our estimate is that 40 percent of the small businesses in the world haven't addressed the Y2K issue. So potentially 40 percent of your customers will stop buying your products and services because they'll have their own problems and won't be able to afford to buy your stuff anymore. And 40 percent of your vendors will also be unable to supply you with what you need to do business."

Wagner, who has written and self-published a Y2K survival guide for businesses called Certified Y2K-Ready, says that while you can't force your vendors to get to work on the problem, you can nudge them in the right direction by sending a letter informing them of the dangers of the Y2K bug and offering help in the form of relevant articles, Web sites and referrals to Y2K consultants. Even if a business partner takes no heed of your warnings, it can still serve a useful purpose. "The longer the paper trail you have, the better off you'll be if you have a problem fulfilling a contract because a vendor failed you as a result of the Y2K bug," says Joel Fleiss, president of Millennium Solutions Inc., a Y2K solution provider in Los Angeles. "If you can demonstrate a serious paper trail that shows you've done your very best to address this issue, you have a much better chance of surviving a lawsuit."

The Day After

Even if your business partners achieve compliance and are able to continue operating, running a business after January 1, 2000, may still be a bit nerve-wracking for all involved. If a calculation performed by a business's computer is soiled by the Y2K bug in the system, it might unknowingly send the result (corrupted data) on to you; you could, in turn, use this corrupted data for your own calculations. Yourdon suggests implementing "sanity checks" in your systems to protect yourself. "Program in protective measures such as checking logic that double-checks dates and numeric fields," he says. "If you get a bill for $13,000,000, you want the system to catch that. The problem is, most small-business owners don't write their own software programs, and if they're using an old package that doesn't have a lot of really aggressive error-checking stuff, they run the risk of being corrupted."

Outwardly, fax machines, coffee makers and VCRs may seem to have little in common, but each of these devices is controlled by an "embedded chip," a tiny microcomputer that makes it intelligent enough to turn itself on and off at a particular time or date. According to Wagner, 15 percent of these chips, which are made by various manufacturers, may fail as a result of the Y2K bug. Frighteningly, these same chips are used to monitor electric power distribution on the nation's (and the world's) power grids.

Another device that may be vulnerable to the Y2K bug is the credit card verification terminal used by many merchants to process credit card transactions. Some terminals, particularly older models, may reject valid credit cards with expiration dates of 2000 or later. Visa USA, in conjunction with the National Retail Federation and other credit card issuers, has launched a program to replace older terminals with newer, programmable models that can handle the 2000 expiration date. Called the Terminal Replacement Incentive Program 2000, or TRIP 2000, the program helps merchants purchase the newer terminals. "A small number of merchants who had not updated their terminal hardware in many years had to buy new terminals," says Greg Jones of Visa USA. "So we worked with the leading terminal manufacturers, and at our request, they developed lower pricing structures." Visa is also distributing brochures explaining Y2K issues to help merchants reduce the impact of Y2K-related malfunctions on their businesses.

American Express began looking at Y2K problems in 1995, hoping to prevent any major database corruption. The company's assessment has been completed, and many internal computer systems have already been converted. According to a company spokesperson, American Express will assist merchants who are having difficulty getting their terminals to verify cards with 2000 expiration dates.

Fleiss believes that while life after the year 2000 may not be business as usual, most businesspeople are intelligent and motivated enough to adapt to changing conditions. "Life went on before computers," Fleiss says. "We used to do everything by hand. Now, people and businesses have become dependent on their computers. The question is, can people take a step back for a while--still use their computers, but take the time to slow down and verify the work?"

Without the budget to hire Y2K experts and an IT staff or to purchase new hardware, dealing with the Y2K bug and its effects on your business may seem like an overwhelming task. But as you prepare for the crisis, keep in mind the saying: Adversity breeds character.

"Look at this as survival of the fittest," says Yourdon. "Only the most nimble, flexible, best-prepared organizations are going to survive, so a small business that takes this seriously and plans for any eventuality will probably [fare] better than its ill-prepared counterpart."

Survival Kit

Software: Check 2000 PC from Greenwich Mean Time (http://www.gmt-2000.com) performs a hardware and software audit on your PC, alerting you to possible problems and giving practical advice to help you solve them. Cost: $75. A client/server version of Check 2000 PC is also available for $350.

Book:The Computer Time Bomb: How to Keep The Century Date Change From Killing Your Organization (Amacom) by Minda Zetlin explains the Y2K situation in clear, nontechnical terms. Zetlin also presents a step-by-step plan to prepare businesses for meeting the technical challenges posed by the new millennium.

Insurance: Aon Risk Services Companies Inc. (http://www.aon.com) offers ARM2000, a millennium risk-management service designed to protect businesses that face possible interruption as a result of Y2K-related computer malfunctions.

Consultants: MillenniumPlus Consulting (http://www.millenniumplus.com) works with small and medium-sized businesses to determine their susceptibility to the Y2K bug and provides a range of services to ensure all systems are compliant.

Web Sites:

  • http://www.microsoft.com/year2000 --The world's largest software maker, Microsoft, backs up its products with an extensive listing of Y2K-related services and tools.
  • http://www.year2000.com --This is a clearinghouse for millennium bug information, offering e-mail updates, a list of Y2K vendors, a Usenet forum and a series of articles on the subject by renowned experts in the field.

Contact Sources

Millennium Solutions Inc., (877) 720-2000, jfmsi@gte.net

Y2KExperts.Com, (888) 416-1440, http://www.y2kexperts.com