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Time...It's not on your side

April 1, 2003
What a difference two digits can make! Some distributors will end up selling their companies or going out of business because of the Year-2000 computer

What a difference two digits can make! Some distributors will end up selling their companies or going out of business because of the Year-2000 computer problem. Will you?

Whenever Miss Scarlett O'Hara became a little overwhelmed with events down at Tara, she would turn those Southern-belle eyes away from the latest problem and say, "I just can't think about that today. If I do I'll go crazy. I'll think about that tomorrow."

Not real proactive thinking, but apparently, that's how a lot of businesses are handling the year-2000 bug-even companies as enmeshed in computers as Microsoft Corp. According to a recent article in Computerworld magazine, Microsoft acknowledged that it had been slow in responding to the issue and conceded that it had "failed to grasp the importance of how its products are date-sensitive." Duh!

Microsoft is in good company. Cap Gemini, an international computer consulting firm based in the United Kingdom, has predicted that one in 10 organizations worldwide will fail to meet the timeline for converting their computer systems to handle dates after the year 2000. Figures are a little more reassuring in the United States, but not much.

Here in the electrical industry, Doug Levin, vice president of sales for Yardley, Pa.-based Prophet 21, estimates that less than 50% of distributors are on top of this. "Probably only about 10% or 15% are taking a proactive role," he says. "But there are more than that who are prepared because they have vendors who are on top of it. Distribution in general has a history of procrastinating on issues like that."

With this particular issue, procrastinating could land you in a larger-than- average world of hurt. Jeff Whitney, Prophet 21's vice president of marketing and project management, says that about 20% are prepared, have really attacked it and are confident. "The other 80% are hoping," he adds. "And what every industry expert out there is saying is that if you're just hoping, you'd better start doing something-now."

A lot of businesses that have come to terms with how important the problem is don't realize the scope of fixing it. The federal government's Office of Management and Budget originally estimated a cost of $3.9 billion to fix the problem throughout its 24 major agencies. That estimate has been revised up to almost $5 billion less than a year later--some experts are saying the actual cost could exceed $15 billion.

"Distributors are actually selling their businesses over this," says Levin. "One distributor I know of sold his business to a company that was already year-2000 compliant, rather than having to change his whole infrastructure."

Whitney says it's not just electrical distributors taking this tack. "CoreStates Bank sold out to First Union Bank (both of which are major East Coast banking firms) and one of the big reasons given was that CoreStates' systems were not year-2000 compliant and First Union's were," says Whitney. "They just felt they were going to run into major problems trying to comply, and there you're talking about a multi-billion dollar company with huge IT (information technology) resources. But the impact is the same. It can put a distributor out of business."

The impact can be that dramatic because, with the date coding left uncorrected, a business won't run right--not necessarily because their computer system will come to a crashing halt, but because it might not do anything at all in some instances. Not doing anything could be like a cancer quietly growing inside the computer.

An example is how it could affect an accounts receivables program. It could cause aging reports to be off. "If a company has a receivable due on 12-15-99, as soon as we hit the year 2000, that receivable will look like it's not due for a hundred years," says Whitney. "If they run an aging to show everything that's due over the last 90 days, that receivable won't even show up in the report. And it's unlikely a customer is going to call and say, 'Gee, we owe you money!'

The same thing can happen on the payables side, but Whitney says that scenario will become obvious a little quicker because "vendors will be all over them to pay." But there's the potential to end up with a poor credit rating, which can affect future business transactions.

"Another thing is the history that you use to forecast your business," he says. "The system won't understand the dates in that history file and could possibly purge the data. So you could be losing data and not know that it's happening. Your business could very silently be getting all screwed up."

The people who will be hardest hit are those with custom software from companies that are no longer in business, Levin says. "You really have to go through and find every single place the system uses dates. Only the original programmers of the software would know where those places are, and those people might not be around any longer. It might take days to go through and find every single area, and some areas might still be missed."

Tracking down all the date coding in an existing system is a very expensive, tedious and time-consuming process. Each line of code must be looked at to decide what it's actually doing in the program. Industry experts generally place the cost to bring existing software programs into compliance at about a dollar per line of code in the program. Many programs have millions of lines of coding. "And there is no guarantee all the codes will be found," says Whitney.

It's hard to understand how something as small and seemingly insignificant as a two-digit date code could suddenly begin to wreak so much havoc throughout the world. It's not like the year 2000 has been hiding behind a bush, waiting to jump out and scare people. Brian Evans, EDI coordinator and product manager for Trade Service Systems, Inc., Blue Bell, Pa., thinks the smallness and seeming insignificance of the date code are precisely why it has mushroomed into such a huge problem.

Because most people don't understand how computer coding works, and don't understand the interdependence of all the software on a system, something as miniscule as two digits doesn't seem like a big problem to fix. "Most people outside of the software industry just don't realize how much of an effect this thing can have," says Evans. "They just don't realize it. And they don't know what kind of an impact it's going to have on them. It's really scary when you think about it. There are a lot of small companies out there running software that's just going to stop. I think there are going to be a lot of people in that boat."

Evans says that about a year and a half ago they stopped programming for everything else, put everything on hold, and started focusing on the year-2000 problem. He says Trade Service has now completed its beta software tests and has in place year-2000-compliant software, the 5.0A and 5.0B versions of Array. "We sent out a letter about a year ago to all of our clients, saying 'This is kind of in your hands. You have to schedule a date with us to get on this 5.0A and 5.0B release.' We'll hold their hands to get this release up, but it's their problem to get a date scheduled with us."

And therein lies another major problem that is beginning to rear its ugly head. Although 2000 is more than a year and a half away, the resources required to fix this problem-programmers, computer time, the new software itself, plus the sales, training and support personnel to get it up and running-are finite, and they are already beginning to run out. Evans says that if you're not in the queue now to get a fix, "you're pretty much screwed. There isn't enough time left to get everyone on board."

Although Trade Service has the resources to handle its present customer base, Evans expects to start having some trouble getting everyone installed who wants to switch to Trade Service from another software provider. "People are going to get a dose of reality," he says. "We're going to reach a point where we have to say, 'We just can't get you up and running by the year 2000.' It's just impossible. And frankly, it's not our fault. It's their fault for waiting so late."

Doug Levin is seeing the same thing at Prophet 21. "It's putting a lot of demand on software companies, like ourselves, for people to convert," he says. "Some people are going to procrastinate, and we're just not going to have the bandwidth to provide all the services that will be required, especially in a short period of time." Levin says that as one of the largest software vendors in the hardgoods distribution industry they have more resources than most, and they are already telling people, "You've got to get into the queue now." He says Prophet 21's lead time for upgrades is already four to six months, and they expect that lead time to keep increasing as more and more people start getting into the queue.

If you don't know whether your system will be able to handle the year 2000, Whitney says you should start contacting your software and hardware vendors. Ask them for a letter stating whether or not the system you purchased from them is year-2000 compliant. Ask them to come in and conduct a test on the system dates. Ask them to do a test on your system using blanket orders and payables and receivables with dates out past the year 2000. And ask that they do these tests right away.

It's also helpful to visit some of the many Web sites that have been set up specifically to address the year-2000 problem. Some of them, such as, have useful tests or other tools to attack the year-2000 bug. A word of caution: Many of these "tests" simulate what will actually occur when your PC's clock reaches the year 2000. You could lose data, corrupt data or cause time sensitive applications to permanently shut down. Be sure you close any such programs first, and make a full system backup before you run any tests or use any tools that you download from the Internet.

Although these tests will help you determine if you have a problem with the year 2000, David Weinstein, operations vice president for Kennedy Electric Supply Corp., Jamaica, N.Y., says for an electrical distributor to go through his own software to make his own fixes is an impossible solution. "The reason it's impossible is that, in programming, 40% of your time is in writing the software, and 60% of your time is in de-bugging what you just did," he says. "To assume that you can de-bug it, you need an equivalent amount of computer-processing power to debug what you just wrote. That means that if your computer, like most of us, is running at 70% to 80% of capacity, you would need another computer altogether just to test what you just did."

Weinstein, who used to work as a programmer before he came to Kennedy Electric Supply, says it's ludicrous to think that you can just open up your program, make your changes to or debug something as invasive as a date, then close it and not test it.

"The only people who are changing their software are the ones that have software that needs to be custom, like banks-big companies with big systems," he says. "Most people are going to go out there and buy the latest version of Word and Excel, and they're going to upgrade to the latest version of whatever accounting system they're on that's year-2000 compliant. And if they haven't bought a new computer system in recent years, they're either going to go out of business, or they're going to buy one. It's that simple."

Weinstein also predicts the major computer vendors will reach a saturation point. "They'll reach a point where they can't handle additional business at a reasonable rate," he says. "Sometime in early '99 Trade Service is going to be swamped. Prophet 21 is going to be swamped. IBM is going to be swamped. Everyone is going to wake up to this thing as early as October, November, December this year because people have computers that have forecasting dates."

The U. S. Global Positioning System (GPS), a major component of the shipping industry, will open some people's eyes in August, says Weinstein. Similar to the year-2000 problem, GPS time, which counts weeks, rolls over to 0 after every 1,024 weeks. On midnight, Aug. 21-22, 1999, the GPS week will rollover from week 1,023 to week 0000. On Aug. 22, 1999, unless repaired, many GPS receivers will think that it is January 6, 1980--the timescale origin (time zero) of GPS system time (its original birth date). Older systems may crash as they try to interpret the two-digit, 00 date code. This little glitch may provide a taste of what the year-2000 problem holds for businesses as they begin to experience late or lost shipments tied up in a transportation system befuddled by a date code.

The interdependence of industries is why most businesses, even those who early on jumped aboard the year-2000 bandwagon, will experience problems to one degree or another when that year-2000 date rolls over. "The concern really is not that the whole world is going to stop and break down," says Weinstein. "The concern is that you have breakdowns in different areas."

Weinstein made up a survey, categorizing all areas of Kennedy Electric Supply that had exposure to year-2000 risk. He sent the survey out to all the company's vendors, service providers, customers-anyone who interfaces with Kennedy Electric Supply in the course of a business day: banks, the alarm company, people who service their trucks, their radio dispatch company, the Internet provider, the company that maintains their bar code scanners, their payroll time-clock company, the phone company, their answering services, and so on.

"I don't want to come in on (that first year-2000) Monday morning and find that my phone isn't working, that my Bell-Atlantic switch isn't working, that my WorldCom long-distance provider isn't working," says Weinstein. "I may switch to new providers in August, because the people that I'm doing business with now are not getting back to me or are not compliant or are giving me nonsense answers.

"They can say, 'Yes, we plan to be compliant 12-31-98, and that leaves us a year for testing.' But the problem with that is there isn't enough computer capacity worldwide to do all the testing that needs to be done in that one-year time period."

Most people are sending out letters asking 'Will this product or that service be certified? Guarantee it. Certify it,'" says Weinstein. "It's a cover-your-tail kind of thing, in the event everything blows up," he says. "I don't care if I'm covering my tail because if I've got to cover my tail, I've got a bigger problem.

"What I want to know from my vendors is, are you going to be there, and if you're not, I need to know that so I can anticipate it and make alternative arrangements with people who will be there. I simply want to be doing business with people who have thought about this, have asked their people about it and know whether or not their shipping company, or whatever, is Y2K compliant, so that I don't find my packages sitting in Oklahoma while my customers wait for them."

One of Kennedy Electric Supply's customers sent the company a letter stating that it would be taken off the bidder's list unless a form was completed and returned guaranteeing that anything it ever sells to them in the future and all its systems will be year-2000 compliant. "Basically a cover-your-tail letter that states that if anything ever happens in the future that is date-related, you, sender, own it and have to fix it and pay us tons of money," says Weinstein.

"A lot of companies are looking at it as a legal issue," he says. "'I'm going to sue them. I'm going to do this. I'm going to do that.' Everyone's getting ready to sue everybody. My attitude is that I have a customer who wants his product, and I need to get it to him. I don't know if FedEx is or isn't year-2000 compliant yet, but when they return that survey and we find out that they are, cool! Any shipper that doesn't come back and say they are compliant, I'm not going to be using in December or January. I'll worry about them in February. They may work perfectly well. But for two months, I simply won't use them until I know that they work. That's all. This is not rocket science."

Weinstein suggests the following steps for minimizing the impact the year- 2000 debacle will have on your business:

Do your own internal assessment. If your phone system went out, would you be able to do business? Some people will find they don't have to replace some systems because a wrong date is only a nuisance. "But if you've got a system that cares about dates, such as a voice mail system that deletes voice mails that are older than 30 days and come year 2000 it's deleting every voice mail that comes in because it thinks the messages are 100 years old, it matters," says Weinstein.

Assess your own hardware and operating systems and your systems applications software. Then assess your package-based software. Evaluate the cost of upgrading or reprogramming your existing system versus replacing it with a new one.

Survey all your service providers. From the company that maintains your payroll time clock to the company that provides your EDI value-added network, ask them what their year-2000 solution is and why you should believe it will work.

Survey your vendors. Make sure they will be able to provide you with an uninterrupted flowof product and accessibility to their people. Make sure they've done the same with their suppliers.

Survey your biggest customers. Find out if they have taken steps to head off the millennium bug. If the year 2000 shuts down any of their systems, it could affect their ability to continue being one of your paying customers.

"I don't think the world's going to blow up," says Weinstein. "But I think that, in my own little world, there will be enough distributors, my own competitors, who will be giving me the opportunity to buy them. If they can't get a bill out because, when they try to enter an invoice, the computer says, 'cannot bill-invalid date,' they'll have a problem." Likewise, if those distributors can't get inventory delivered, can't process their payroll, can't ship products to customers, can't do any number of things that it takes to keep a distributorship running smoothly and efficiently-they'll have problems.

"None of these things individually will cause you to go out of business," says Weinstein. "But they will be a pain. And everyone will be trying to solve it at the same time, which will run up the cost and drive down the service level, and your competitor who is ready is going to be sitting there with the business."

Back in the 1960s and early 1970s when all things computer were new and very expensive, programmers developed a date format of MMDDYY, as in 12/31/98, supposedly to conserve precious disk space and facilitate faster computer processing. This six-digit date format eventually became a computer industry standard that was never changed, even as newer software was developed and cheaper, faster systems were built.

Since nearly everything on computers is somehow tied to a date, date codes are the most pervasive coding in a computer system. They show up in everything from the very lowest-level BIOS (basic input/output system) software, to the highest-level packaged software programs that can be customized for individual users. Those colorful computer screens we stare at all day are date-encoded. The hardware itself is littered with date coding that has to jive with the dates in the computer's firmware and resident software.

When Jan. 1, 2000, pops up, millions of computer systems will look at those last two zeros in 2000 and interpret the year as 1900, an earlier date than all the other dates in its systems. This will cause anything from what might be described as mild confusion within the computer to a total shutdown of the operating system and possible loss or corruption of data. Each system will experience its own unique and unpredictable response when it encounters the year-2000 date, depending on its coding and how dates are used in it.

To begin to understand the scope of the problem, think about the things that are computerized in everyday life- your phone system, the bank, traffic lights, security systems, elevators, all the computerized systems in use where you earn a paycheck. The list is endless, and it's likely every item on that list uses a date somewhere, somehow. >From the University of California, San Diego, this site provides a good overview of the Year 2000 problem in layman's terms. Clears up some popular misconceptions and provides links to sites of more than 20 software and hardware providers. IBM Web site that provides general information on Year 2000, background, its position on product readiness, and steps to take to prepare. Microsoft's nod to the Year 2000 problem. Provides a simple set of tests for Webmasters & Web developers to tell for certain if they will be celebrating or working on December 31, 1999. The Automotive Industry Action Group (AIAG) is a not-for-profit trade association of North American vehicle manufacturers and suppliers. Site provides assistance in the planning of test activities for systems, equipment, products and services. Presented by Virtual Dynamics Corporation, this site enables you to subscribe to Y2K Tool, which the site touts as a Y2K strategic resource, a Millennium Bug mastery tool and a Y2K survival kit. Definitely worth checking out just for the links to other Y2k sites. Year 2000 help for small business from the Small Business Administration. The Lycos site for links to Year-2000 Web sites. A good place to find Y2K vendors, articles and other resources to help you handle the Millennium Bug. Peter de Jager's PROJECT DAMOCLES site he has set up to force the hand of companies with information regarding the failure of their own systems and who are reluctant to make that information public. The goal is to fix `issues' before they become problems.

Sites with helpful discussions on Year-2000 problems: >From Industrial Distribution magazine, an article about distributors preparation for Year 2000; includes reports from a survey on Year 2000 preparedness. Bruce Merrifield's site. Click on "Commentaries," then scroll for articles on Year 2000. Computerworld magazine's link to its Year 2000 articles. The Securities and Exchange Commission's site that addresses financial issues surrounding Year 2000 issues. The Cassandra Project site. A grassroots, non-profit organization dedicated to raising public awareness and alerting public sector organizations of potential Y2K related health and safety risks and interruption of basic and essential services. >From Purchasing magazine. Discusses year-2000 issues in the supply chain.

And if you'd really like to scare yourself... Gary North's Y2K Links and Forums- "The Year 2000 Problem: The Year the Earth Stands Still." Need we say more? A real eye-opener.

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