Ripple Effect

Sure, readying systems for the millennium is a huge, intimidating task. But getting started could help you speed other projects and get more funding.

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By Bob Violino and Bruce Caldwell
Issue date: April 21, 1997

There is a bright side to the year 2000 problem. Yes, readying systems for the year 2000 will be a headache. And yes, you could face devastating ripple effects-diverted IS funds, a drain on skilled people, and the threat of lawsuits, to name just three. But many IS chiefs are discovering that year 2000 conversions actually help speed major reengineering and upgrade projects designed to get rid of older, slower, and, in some cases, obsolete hardware and software. Because the need to solve the year 2000 problem is so urgent, they say, senior managers are willing to devote dollars to IT initiatives when they know the alternative is failed systems-maybe a failed company-on Jan. 1, 2000.

The biggest benefit is coming as year 2000 conversions result in accelerating moves to update older systems. An InformationWeek survey of 100 CIOs at U.S. companies finds that nearly half are speeding initiatives such as reengineering because of year 2000 wo rk. Similarly, about half say compliance efforts have allowed them to find out-of-date systems that can be phased out.

IS managers believe the preparatory work of year 2000 conversions can serve as a launchpad for other projects. William Ulrich, president of Tactical Strategy Group Inc., a consulting firm in Soquel, Calif., and co-author of a book on the year 2000 problem, says that kind of thinking makes sense. "One reason that companies have not been successful in replacing systems-and some have been trying to do this for 15 years-is they haven't gone through the effort of documenting existing systems to systematically phase out the older ones," says Ulrich. "If they take the time to inventory and assess systems, they'll be halfway there."

That's not to say all is sweetness and light. On the contrary, in addition to the troubles the date change is giving CIOs and project managers engaged in actually making systems compliant with it, the huge amounts of money and manpower required to effect the fi x mean many other technology initiatives are being delayed, and even canceled ( see story ). Then there's the looming threat of countless, possibly endless, year 2000 lawsuits ( see story ). And for companies in recently deregulated industries, the year 2000 problem couldn't be more inopportune. "It's all hitting at the same time," groans Tom Charlton, director of application development at Alltel Information Services, a telecommunications provider in Little Rock, Ark.

But against that anxiety-producing background, some IS managers who are willing to look for the silver lining are finding it. At MasterCard International in New York, for example, year 2000 work is speeding not one but four major upgrade projects, says Rob Reeg, a St. Louis-based senior VP for systems development. "We're trying to retire as many old systems as possible," Reeg adds. "Year 2000 is providing much of the business rationale for doing this-and making the conversions h appen sooner rather than later."

MasterCard's projects spurred by the year 2000 are:

• An effort to convert the MasterCard Interface Processor. Reeg and his team will move MIP, the connecting point for member banks to access MasterCard's network for financial transactions, from an IBM mainframe system to a year 2000-compliant NCR Unix client-server platform. The conversion is planned to be completed by year's end, Reeg says-well before conversion work on the legacy system would have been finished had they kept it running.

• A move to a Unix-based settlement system using custom applications created in-house. This system is scheduled to be completed in 1998 and will replace a year 2000-noncompliant mainframe system to handle settlements-money transfers between member banks-amounting to billions of dollars a day.

• The conversion of a purchasing-card system from an IBM MVS mainframe to a Sun Microsystems Ultra series client-server platform. Purchasing cards are used by companies for office supplies, travel, and other expenses.

• The move of MasterCard's regional service center in Australia from noncompliant Tandem midrange computers to a year 2000-ready Sun Unix platform.

Year 2000 work is also speeding large-scale migrations to client-server systems at other companies. Frank Povondra, systems manager at Bristol-Myers Squibb Co. in Stamford, Conn., says the pharmaceuticals company has accelerated its move to a global SAP R/3 environment to avoid year 2000 legacy costs. "We had already planned a migration from mainframe legacy systems for business applications like general ledger and accounts payable," he explains, "but the financial benefits of the move are even more evident to management when they see the cost savings from eliminating some year 2000 fixes."

Similarly, hotelier Marriott International Inc. is transforming a non-compliant reservation-reporting system, now running on mainframes, to a decision-support system based on data warehousing. Barry Shuler, VP of technology planning for Marriott, says year 2000 compliance issues played a part in the decision. The Washington company hopes the shift will let it make better use of historical data on reservation and purchasing patterns.

The year 2000 situation also presents opportunities to clean up application portfolios. At Budget Rent a Car Corp. in Lisle, Ill., 14 accounts-receivable applications accumulated over the past 20 years may be replaced with a single package, notes Mary Weddig, year 2000 manager at Budget. "We have 120 systems, and we're starting to whittle those down," she says. Budget has spent $400,000 assessing its systems; Weddig says one byproduct of that work is a "complete applications architecture, and a much better understanding of what we have out there."

Overdue
Along the same lines, Northern Illinois Gas, a Chicago utility, is doing a lot of long-overdue IT housecleaning along with its year 2000 conversion work. With the help of year 2000 tool provider Seec Inc., the uti lity found numerous legacy applications it no longer needs, says Usha Norman, year 2000 project manager. Northern Illinois Gas has also phased out noncompliant legacy general ledger and payroll systems as part of a move to client-server. "Some of these had been around for 15 or 20 years," Norman says, "and this seemed like a good time to replace them."

At General Motors Corp., year 2000 work is speeding a move to common systems. New CIO Ralph Szygenda, who's driving the common-systems effort, believes the size of the year 2000 problem will be reduced as duplicate systems are eliminated. About 25% of the 1.5 billion lines of code in 7,000 of the automaker's business systems are slated for replacement or elimination by the end of 1998 as part of the common-systems effort, says Raymond Khan, GM's year 2000 program manager. "Year 2000 accelerates the common-systems effort," he adds, "because if we're going to get compliance before 2000, we can't have schedules that straddle that date."

Complicating the e ffort, a major common-systems project for the European operations of GM Acceptance Corp. may have to be sped up to meet two deadlines: the year 2000 and the arrival of the European Monetary Unit. The latter could be a financial-systems requirement as early as 1999. "It's very tricky," says Khan. "No one is exactly sure when the EMU will drop in."

In the federal government, some IS managers view fixing the year 2000 problem as a rare chance to replace aging systems. Such replacements are long overdue. John Koskinen, deputy director at the U.S. Office of Management and Budget and head of a federal CIO council, says one federal agency has found 85 systems that no one uses.

Many companies still don't know what impact year 2000 work will have because they haven't completed inventories. Some haven't even started their work. Consultant Ulrich thinks they should start soon. The year 2000 problem is a once-in-a-lifetime chance for IS managers to bring technology issues to the attention of their organizations' top managers, he says. It also presents them with a rare opportunity to replace legacy systems that no longer provide much strategic value.

"I don't think IT managers are ever going to have senior-level attention like this," says Ulrich. "They have to take advantage. If not, they're missing the opportunity of the century."

See related story: " The Trial Of The Millennium " or participate in a threaded discussion about the year 2000 countdown

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