With 100 Days Remaining, 82 Percent of Major Firms Say Year 2000 Poses "No Significant Business Risk" - Industry Trend or Event

Edge: Work-Group Computing Report, Sept 27, 1999

With one hundred days remaining before the Year 2000, a new survey finds that more than eight out of ten of America's largest corporations believe that "no significant business risk" will arise as their computer systems roll over to the new millennium.

Conducting final tests of their computer systems and completing contingency planning to guard against potential disruptions, management is also preparing to refocus information technology (IT) resources to address new, strategic business challenges in the post-Y2K environment.

Anticipated levels of Year 2000 compliance The survey, sponsored by Cap Gemini America, Inc., a leading information technology and management consulting company, finds a majority of large corporations - 56 percent -- now expect 100 percent of their critical systems to be compliant by year's end, up from 48 percent in August. More than a third (38 percent) expect that 76 percent to 99 percent of their systems will be compliant. The remaining six percent expect to complete between one half and three-quarters of their systems by the end of the year

One of the longest-running corporate polls to systematically monitor Year 2000 preparedness, the survey includes responses from information technology directors and managers of 156 major U.S. corporations across all major industrial sectors. It is carried out by Rubin Systems, Inc. for Cap Gemini America.

Eighty-two percent of the respondents do not expect non-compliant systems to pose a "significant business risk." Only 12 percent report that non-compliance does pose such a risk, and six percent say they are not sure of the potential impact.

IT priorities after Y2K

"While Year 2000 contingency planning and testing remain a priority over the next 100 days, major firms are also poised to launch new strategic IT programs in the new year," said Jim Woodward, senior vice president of Cap Gemini America and head of its Information Systems Management group. "After January 1, a company's resources previously dedicated to Y2K preparations will be redirected to strategic, IT-based business initiatives."

Asked to rank their company's top IT-related business priorities in the Year 2000, the greatest percentage of respondents cite customer relationship management, followed by e-business, sales force automation, enterprise resource planning, and applications management.

Year 2000 work has "inhibited progress" in a number of "IT initiative areas," according to the survey. The largest percentage of firms (82 percent) has deferred projects in the area of enterprise resource planning (ERP), which helps businesses use software to manage such activities as human resources, accounting, planning, tracking orders, and maintaining inventories. The second-greatest area of deferred IT activity -- cited by 78 percent of large firms -- has been applications management (AM), which involves outsourcing the ongoing management, maintenance, and enhancement of applications.

Other deferred IT programs cited by respondents include customer relationship management (25 percent), sales force automation (22 percent), business-to-business e-commerce (18 percent), and business-to-customer e-commerce (15 percent).

Asked where they expected to focus their primary IT workforce efforts in the coming year, the greatest number of respondents cited the building of infrastructure to support e-business, followed by ERP implementation, sales force automation and customer relationship management (which were tied), and applications management.

Stronger role for business management

The survey finds that the percentage of top corporate managers planning to take charge of Year 2000 "crisis management centers" rose from 62 percent in May to 88 percent. Such command centers - designed to address potential date change problems -- are now planned by 98 percent of the nation's largest corporations.

"The Year 2000 challenge helped top management understand the strategic role information technology plays in their business," said Woodward. "These very same corporate leaders who stepped up their role in Year 2000 contingency planning will soon be devoting their energy and resources to critical IT projects put on the back burner because of the date change challenge."

Y2K failures persist The Cap Gemini America survey finds that more than four out of five (82 percent) of large firms have experienced a "Year 2000-related failure," up from 75 percent last quarter. Fifty-six percent of the failures were caused by systems that had not yet been upgraded or replaced, and 44 percent were caused by systems that had already been remediated.

The most common failures have involved "financial miscalculation or loss" (95 percent), followed by "processing disruptions" (92 percent), "logistics/supply chain problems" (36 percent) and "customer service problems" (33 percent). Two percent report Year 2000-related "business disruptions."

Reflecting the ongoing incidence of Y2K failures, the survey finds that independent verification and validation (IV&V) -- the process used to check the quality of renovated code -- continues to be a standard industry practice as the millennium deadline approaches. More than nine out of ten major firms (92 percent) rank their need for IV&V services as "high," up from 89 percent last month and 52 percent in December.