Y2K: Survey Finds Firms Gearing Up on Contingency Planning - Industry Trend or Event

Edge: Work-Group Computing Report, Jan 25, 1999

Results of a survey released Wednesday by the Information Technology Association of America (ITAA) find many companies well on the road to contingency planning for Year 2000, although the depth of their activity remains a question mark. With less than a year before such plans may actually have to be put in place, 42 percent of companies say they are more than 50 percent done in creating their Y2K work around strategies.

ITAA's Software Division conducted the email-based IndustryPulse survey in December of last year, sending electronic questionnaires to 6200 readers of the association's weekly electronic newsletter dedicated to Y2K coverage -- Year 2000 Outlook. Almost 400 respondents (six percent) drawn from 15 industries participated in the study. Fifty-one percent of companies in the survey have over 1000 employees; 43 percent generated gross revenues in 1998 of $100 million or more. Among the more encouraging results, contingency planning for the Year 2000 appears to have the attention of business executives, not just computer professionals. Seventy-eight percent say this work stretches across the enterprise. Forty-three percent include key suppliers within the scope of contingency planning; 11 percent extend contingency planning to all suppliers. Seventy-one percent say contingency planning is a top corporate priority; 14 percent disagree. Another 71 percent of respondents say contingency planning is being conducted with the direct involvement and support of the CEO. While contingency planning appears to have the buy-in of top executives, the actual depth and substance of this work raises questions. Survey results suggest that in many firms contingency planning is just one more job for their IT shops. Fifty-seven percent of respondents say their organizations perform contingency planning from the Y2K program office, primarily using IT managers and professionals. This even though 71 percent of respondents define contingency planning as including risk management, 77 percent say it covers business continuity, 69 percent include backup business procedures, and 55 percent cite supply chain management. Only 18 percent of respondents say their organizations have appointed a key executive to perform this role on a full time basis; 39 percent have no such executive in place. Supply chain management is often seen as a key consideration for assuring business continuity. Again, however, the survey seems to generate questions about the how aggressively companies are pursuing the contingency planning process. Although 44 percent said they would stop doing business with companies found to be non-compliant, only 33 percent said they would actually visit suppliers to ascertain their Y2K status. Only three percent of respondents say their firms have completed contingency planning, while five percent indicate that their organizations are yet to begin. Almost 25 percent of the sample have 10 percent or less of their plans complete. More generally, respondents registered on-going concerns about the gravity of the Year 2000 situation. Eighty-seven percent of survey respondents said the Year 2000 problem is a crisis for the nation and the world. Fifty-two percent think the Millennium bug will hurt their companies; 29 percent disagree with this notion. Over one-third said the bug has already started to bite, triggering failures under actual operating conditions. Of those reporting specific failures, these included data exchange errors (34 percent), accounting errors (27 percent), errors in "Y2K ready" commercial software (28 percent), errors in tested software causing rework (25 percent), data base file corruption (21 percent), and computer crashes (18 percent). In test mode, 71 percent of respondents are finding failures. "The good news is that 'actual errors' rates appear to be going down," said ITAA President Harris Miller, "With 34 percent experiencing problems in this survey and 44 percent reporting errors in an IndustryPulse survey last March. We believe that companies are responding to the situation as they should and we hope to see these numbers continue to drop. We hope that other surveys will look at the extent to which Y2K failures are causing material problems. The reality of failures serious in nature will no doubt drive home for companies the extra layer of protection provided by good contingency plans." ITAA will post a summary of the full survey on its website at www.itaa.org on or before February 1. ITAA is the IT industry's leading trade group on the Year 2000 software conversion issue. The ITAA Year 2000 Task Force conducts a full program of Year 2000-related activities, all aimed at helping customers in government and the private sector respond quickly and effectively to the software conversion challenge. A separate white paper, vendor directory, buyer's guide, certification program, alternative dispute resolution program, vendor/customer questionnaires, and other materials on the Year 2000 issue are available on the ITAA web site. ITAA's Year 2000 Outlook is available at http://www.itaa.org/script/get2klet.cfm . ITAA consists of 11,000 direct and affiliate members throughout the U.S. which produce products and services in the IT industry. The Association plays a leading role in public policy issues of concern to the IT industry, including taxes, intellectual property, telecommunications law, encryption, securities litigation reform, and human resources policy. ITAA members range from the smallest IT start ups to industry leaders in the software, services, systems integration, telecommunications, Internet, and computer consulting fields. Learn more about ITAA and its positions on the issues by connecting to its web site at http://www.itaa.org.