Business

And Now What?

Companies are adjusting their focus—and their spending—after Y2K was largely a non-event

Danylo Hawaleshka January 17 2000
Business

And Now What?

Companies are adjusting their focus—and their spending—after Y2K was largely a non-event

Danylo Hawaleshka January 17 2000

And Now What?

Business

Companies are adjusting their focus—and their spending—after Y2K was largely a non-event

Danylo Hawaleshka

He was braced for the worst. In the week between Christmas and New Years, Brad Morningstar says shoppers at his Canadian Tire store in Richmond, B.C., just south of Vancouver, rang up 30-per-cent more in purchases than they did in the same period in 1998. The surge, says the assistant store manager, was in part due to worried shoppers stockpiling flashlights, propane, camping stoves, collapsible water jugs and lanterns in case the Y2K computer bug wreaked havoc. It did not, and Morningstar expected that when the store reopened on Jan. 2 there would be “tons of returns.” Surprisingly, there were hardly any, he says, possibly because customers kept their gear for earthquake preparedness kits—fairly common on the West Coast— or simply decided to save the supplies for a future trip outdoors. Whatever the reason, says Morningstar, glancing at the stores camping section, “this is the emptiest my aisles ever been.”

Like Morningstar, people around the world did not know what to expect heading into the

21st century. As it turned out, the new year, as far as serious computer malfunctions went, was a non-event. Analysts had feared computers would confuse the date change to 2000 with the year 1900 and suffer catastrophic electronic brain seizures, leading to nuclear meltdowns, shortages of drinking water and financial chaos. Never mind that a number of Y2K pundits, including Peter de Jager of Brampton, Ont., had for months been saying most everything in Western countries would continue to function normally come 12:00:01 a.m. on Jan. 1. The world, after all, had spent anywhere from $400 billion to $900 billion, depending on who gave the estimates, preparing for Y2K. When basically nothing happened, says Carl Howe, research director at technology analyst Forrester Research in Cambridge, Mass., angry critics pointed the finger at governments, corporations and the media for overhyping Y2K—and causing a lot of senseless spending. “You can believe what you like,” says Howe, “but the bottom line is the problem got fixed.”

Bayne Stanley for Maclean’s

There were a few glitches, but they bordered on the laughable compared with the dire predictions. For example, the Y2K bug was blamed for:

• 150 slot machines failing at racetracks in Delaware;

• 30,000 cash registers throughout Greece printing receipts showing the year as 1900;

• parking attendants at the University of Guelph in Ontario being forced to enter the date manually when their computer issued tickets dated 1900.

There were, however, some more serious incidents:

• the U.S. defense department lost contact with a key spy satellite system for about three hours;

• a malfunction at the Oak Ridge nuclear weapons plant in Tennessee involved a computer that tracks nuclear material (none of the material was lost).

In the sometimes perverse way in which stock markets operate, the world’s investors did not take kindly to everything running so smoothly. When Y2K problems did not materialize to slow the booming U.S. economy, investors started to worry about inflation, sending markets around the world tumbling. But by week’s end, many of the markets were recovering, some going on to post record gains.

The computer pundits who had warned of possible calamity also had a difficult time. Last week started off well enough for de Jager, one of the first to sound the Y2K alarm. With no more use for his Web page, www.year2000.com, he put the domain name he owns in partnership with Houston-based Tenagra Corp. up for sale on the Internet auction site eBay. The bidding went as high as a record $15 million—but that offer turned out to be a hoax, as did several other high bids.

The bad news for de Jager was compounded by a flood of hate mail, even a death threat, from people who felt he had misled them. Why, for example, had Italy escaped without suffering a crippling systems failure even though its spending was among the lowest of all Western industrialized nations? De Jager did not have the answer, and admitted so in an analysis posted on his Web page, though he stuck to his convictions. “You could place a gun to my head and threaten to pull the trigger unless I told you the ‘truth’ that the problem was not real—and I would steadfastly refuse,” he wrote. aI know that we were right.” So right, in fact, that last week de Jager continued to warn that Y2K failures may yet appear, saying the threat, while diminished, could still affect the month-end delivery of credit-card bills, paycheques and the like.

For all the controversy, one thing is abundandy clear: now that companies are finished spending billions of dollars on Y2K fixes, they will be able to afford other high-tech spending. Michael O’Neil, general manager at Toronto-based International Data Corp. (Canada) Ltd., an information-technology consulting firm, says companies will throw a fair-sized chunk of money at so-called customer-relationship-management systems, automating their sales and marketing to clients. “The next natural step,” says O’Neil, “is to look at deploying technology, not just to save money, or to protect one’s self

against shareholder lawsuits, but to make money.”

But the first quarter of 2000 will begin slowly as companies use up supplies and sell off inventory, both stockpiled as part of their Y2K contingency plans, says Howe at Forrester Research. The next economic hurdle arrives on Feb. 29, when the leap year’s extra day could trip up computers. Once it is out of the way, Howe expects a boom in informationtechnology sales, with companies spending heavily on projects put on hold because of Y2K. He says spending on e-commerce initiatives will accelerate, as will investment in so-called enterprise resource planning, which includes automating processes like financial accounting, sales-order entry and inven-

Where the money will go

Businesses are directing the funds consumed last year by Y2K-bug repairs to other areas of their budgets. Executives at 51 of the world’s 2,500 biggest corporations were asked: “What projects are you spending your informationtechnology budget on in 2000?” Their answers, by percentage (they could give more than one answer so the total exceeds 100 per cent):

tory management. “The fact that we now have bright, shiny, efficient infrastructures because we just jettisoned millions of lines of old, crusty computer code,” adds Howe, “just means business is going to be good for a while.”

It could be particularly good for database analysts in the e-commerce field. Starting salaries are expected to jump more than 12 per cent over last year, says David Tighe, sales manager at Toronto-based RHI Consulting, a placement agency for technology professionals. The demand, says Tighe, has been “incredible. We can’t put them in jobs fast enough.” Lawyers could also be busy in 2000. They earlier advised company executives to do all they could to combat the Y2K bug to avoid being sued by shareholders. Now, the fear is that some companies spent too much, and investors angry over the exorbitant costs will seek legal recourse. But some firms saw this coming, and signed a “millennium accord” in which they agree to take three weeks to negotiate settlements before resorting to mediation. If the process fails, they could still end up in court. “There’s a general rule of business,” says Howe. “No matter what you do, the lawyers win.” Y2K—blame it on the lawyers and the media. CD