It's a Small World After Y2K

If you're trying to get a handle on just how serious the year 2000 problem is in the world beyond the U.S., a trio of statements from the Global Millennium Foundation make it starkly plain:

• All countries have a serious year 2000 problem.

• No country is further advanced than Canada.

• Canada is losing this race.

Indeed, the Financial Times on Dec. 3 quoted Canada's auditor general, Denis Desautels, saying he is "very concerned that many essential government services may be disrupted at the start of 2000. Work on the systems supporting these services is falling behind an already tight schedule."

Now, let's be fair to Canada. GartnerGroup, a consulting firm that's made Y2K a specialty, places the Land of the Rising Puck in the top rank of countries dealing with the computer crisis. The U.S., the U.K. and nine other (much smaller) countries are rated tops as well. (See the table below.) And that means Gartner expects 15% of companies in those lands to suffer a "mission-critical" system failure.

Look away from those 12 standouts and the situation deteriorates in a hurry.

The World Tries to Battle Y2K STATUS COUNTRIES Sort of OK Australia, Belgium, Bermuda, Canada, Denmark, Ireland, Israel, Netherlands, Switzerland, Sweden, U.K., U.S. Not Real Good Brazil, Chile, Finland, France, Hungary, Italy, Mexico, New Zealand, Norway, Peru, Portugal, Singapore, South Korea, Spain, Taiwan Quite Bad Argentina, Armenia, Austria, Bulgaria, Colombia, Czech Republic, Germany, Guatemala, India, Japan, Jordan, Kuwait, Malaysia, North Korea, Poland, Puerto Rico, Saudi Arabia, South Africa, Sri Lanka, Turkey, United Arab Emirates, Venezuela, Yugoslavia Scary Afghanistan, Bahrain, Bangladesh, Cambodia, Chad, China, Costa Rica, Ecuador, Egypt, El Salvador, Ethiopia, Fiji, Indonesia, Kenya, Laos, Lithuania, Morocco, Mozambique, Nepal, Nigeria, Pakistan, Philippines, Romania, Russia, Somalia, Sudan, Thailand, Uruguay, Vietnam, Zaire, Zimbabwe

Key:
Sort of OK: 15% of cos. experience a mission-critical failure
Not Real Good: 33%
Quite Bad: 50%
Scary: 66%
Projections as of 3Q98. Source: GartnerGroup

Gartner defines mission-critical failures as causing any of these unpleasantries:

• A shutdown of business, production or product delivery operations.

• Health hazard to individuals.

• Considerable revenue loss.

• A significant litigation expense or loss.

• Significant loss of customers or revenue.

Looking at the ratings of the world's largest economies doesn't fill one with unalloyed confidence. Japan? It's in what we're calling the "Quite Bad" category, with 50% of businesses seen having a mission-critical failure. Germany's right there with old Nippon. France is doing better, up in the 33%-failure "Not Real Good" category, along with Italy, Brazil and Mexico.

But then there are those vast land masses with modest-to-tiny economies and lots of nukes: Russia and China, both in the 66%-failure "Scary" group.

"Given the current economic and political turmoil, it is impossible to assess Y2K preparedness" in Russia, according to a late-November release from Millennia III, a Westport, Conn., professional-services firm specializing in Y2K fixes. Millennia notes that a Russian government adviser has warned of possible Y2K problems in 80% of the country's defense computers.

Not Working Well with Others

Y2K thinkers are unanimous in calling for active international cooperation at every level, from governments sharing information with their allies to corporations in Detroit and Duluth meshing plans with suppliers in Dresden and Dakar. But precious little has been done in that direction, even at this late date.

The U.N. held its first global convention of government Y2K czars on Dec. 11. That's Dec. 11, 1998, with Y2K snafus expected to crop up throughout 1999. According to the brief New York Times story on the event, the confab ended with "an informal endorsement of regional cooperation." Oh, good. That'll do it.

At least the U.N. session, mostly closed to reporters, was later called "unusually unvarnished for such a diplomatic setting," as the Times put it. The Organization for Economic Cooperation \& Development, an association of 29 mostly Western industrialized countries, employed pretty varnished language in its October report on Y2K readiness.

Acknowledging that "the amount of remediation still required is daunting" and that "significant negative economic impacts are likely in the short term," the report concludes with toothless bureaucratic chatter such as:

Y2K requires high-level managerial attention and a central strategic capacity. The interdependence of many government information systems and the need to undertake testing involving multiple actors makes this particularly important.

"There is really no coordination going on whatsoever throughout the world," says Lou Marcoccio, research director at GartnerGroup. "The only attempts so far from a coordination perspective have been a couple of very small efforts."

Marcoccio noted a World Bank initiative -- for which "they've basically tin-cupped the U.S. and the U.K." for funding -- designed to aid high-risk emerging nations with Y2K problems. "It's the only effort so far that's addressing any kind of global effort for the countries that are farthest behind," he says.

Marcoccio, who testified in October before the Senate Special Committee on Year 2000 Technology Problems, stressed the need for a single federal agency to coordinate international and domestic efforts as a "Global Risk Management Agency." He predicts that "in the January-February timeframe," the committee will form a subcommittee focused on global risk issues.

Isn't that too late? "I think any effort is late at this point, but I don't think that makes much difference," Marcoccio says. "Any effort can help to reduce the risk and reduce the impact."

'A Very Basic Lack of Understanding'

For corporations, the quest for solid information on international Y2K readiness is often filled with frustrations, says Craig Mengel, vice president of marketing at Millennia III. The firm, with about 200 employees and a projected $44 million in 1998 revenue, focuses mainly on Y2K issues at midsized companies but has dealt with some large New York banks and other big outfits, Mengel says.

"The larger companies have taken into account the need to define the global risks they have," he says. "Unfortunately, the information they have gotten back from their global suppliers has not been easily forthcoming or easily verifiable."

Mengel pointed to a question that followed a July presentation Millennia III made for a group of risk managers in Japan. "Who is AIAG?" the indignant managers wanted to know. The Automotive Industry Action Group, a nonprofit industry consortium, had been pressing the risk managers for information on their Y2K compliance, Mengel says.

"It became very apparent to me in that simple question how there was a very basic lack of understanding," Mengel says. "That was very disappointing, to say the least."

So, as Lenin once wondered, what is to be done? Mengel says Millennia is advising clients to analyze their supply and customer chains closely, and cut ties wherever necessary.

"You have to look at an alternate supplier, one that's domestic, if possible," Mengel says. "You have to look at ways to bridge around it, to see if there's a patch or a fix so you can do business on the side. This is all very worrisome from the perspective of looking at this internationally, because if a company doesn't know this yet or doesn't realize it yet, they're going to be in deep doo-doo."

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