InformationWeek
Defining The Business Value Of Technology
November 10, 1997
Year 2000: No Small Job
Small and midsize companies struggle to get their code ready for the new centuryBy Bronwyn Fryer
The millennium bug is difficult enough for large companies with deep pockets, large IT staffs, and direct lines of communication to the big vendors. It's even more pernicious for smaller businesses, with far less money, personnel, and influence. A recent Gartner Group study found that nearly one-third of companies surveyed worldwide -most with fewer than 2,000 employees-have not yet started to deal with the year 2000 problem.
"Small companies are just beginning to be aware of the problem, while midsize companies are just beginning to be aware or are starting to do an inventory of their internal systems,"
says Lou Marcoccio, Gartner year 2000 research director. "Most are in dire straits."
Further complicating the situation, many tools and top-drawer consultants aim at converting larger companies' mainframe Cobol systems. "The year 2000 industry focus to date has been in helping large organizations address their transformation issues," says David Jones, president and CEO of Reasoning Inc., a Mountain View, Calif., year 2000 tools and services vendor that offers solutions to midsize companies.
Finding the tools that fit Washington Dental's needs is, in fact, the main problem for the Seattle dental insurance company, says Mike Leary, year 2000 project manager. "We're not using IBM mainframes, and we're small," Leary says. "One of our biggest problems has been finding tools for Digital that are worth anything." Leary knows that if the Alpha-based claims processing system stops running, claims will go unpaid to more than 1 million people. "We'd get a lot of complaints, and that would be immeasurably damaging," he says.
Leary had difficulties, even though his company was using a custom-built Cobol database. He began converting the 17-year-old system a year ago with a tool from Acceler8 Technology Corp. So far, about 40% of 1.2 million lines of code have been converted. He estimates the 210-employee company will pay up to $400,000 to get ready for the next century.
Price is a huge issue for many smaller companies. Many conversion tools are simply out of their r
ange, says Gartner's Marcoccio. Midsize companies generally plan to spend $900,000 on year 2000 fixes, while small companies will spend $300,000. At the going rate of $1 or more per line, companies with more than 1 million lines of code could spend more on year 2000 compliance than their systems are worth.
Even though conversion prices probably will hold steady or even rise between now and Jan. 1, 2000, many new vendors are targeting the midsize market with tools and services. That should make it easier for IS managers at these companies to find help.
According to Bob Cohen, a VP of the Information Technology Association of America in Arlington, Va., of 125 companies in the association's catalog of solution providers, about 60% may serve midsize companies.
That's good news for Terry Kimes, a VP of Mize, Houser, and Co., an accounting firm in Topeka, Kan. He's updating his 105-employee company's AS/400-based data-processing systems using both Century Technology Services Inc.'s Low Impact Expansion too
l and a tool from Uruguayan vendor GeneXus. Since Kimes' firm develops accounting systems for 100 clients in 10 states, it's responsible for the year 2000 problems of its customers as well. "That means we're in different stages of work not only inside the company, but with different clients," Kimes says.
Small companies that haven't started to deal with the year 2000 should get started soon, says IBM's Clarke. "People get scared into thinking there's nothing they can do," she says. "But they can take on more than they think."
The first step, Clarke says, is to break up the bonfire into a lot of little fires. IT managers at small and midsize companies should have their CEOs help them sort applications by importance: business-critical; short-term critical; short-term; and long-term. Then they should designate a project manager or hire a consultant to develop a plan that concentrates first on critical systems.
But sorting and classifying applications is more difficult than it sounds, says Jim O'Neill, d
irector of purchasing and risk management for the city of Fort Collins, Colo., which is spending $1 million on financial software to replace its 1970s Cobol system running on a Digital VAX. The expense is a big burden, but O'Neill says finding people to do the work is an even bigger problem. "We're all wearing multiple hats, trying to put in a new financial system, plus fixing the other ones," he says. "We just don't have the staff to do it all." A request for proposals early this year to outsource the conversion netted O'Neill only three responses. "I heard that you'd better grab someone-anyone-and go with them," says O'Neill.
Proceed With Caution
As a precaution, smaller companies should work with established vendors and VARs to upgrade software and locate solution providers. Vendors such as IBM and Digital say they can't serve smaller customers directly, but can recommend solution providers that can help bring platforms such as the VAX and AS/400 into compliance. They also publish related documents on their Web sites.
Other vendors are partnering with outsourcers to stretch resources. Business software maker J.D. Edwards is working with Boston outsourcing firm Keane Inc., which upgrades smaller companies to J.D. Edwards' year 2000-compliant release. "Internally, there aren't enough resources to go around, but we're getting a lot of positive feedback from customers working with Keane," says Catherine Bucher, VP of client services and training for J.D. Edwards.
ITAA's Cohen advises looking for a consultant with a good track record who has experience with the systems you have in place. Find someone who will ke
ep the conversion moving, he adds. Even now, Cohen says, it's possible for smaller companies to find good solution providers: "Most of the market has failed to get cracking."
he year 2000 challenge looms much larger for small and midsize companies than it does for big ones. "Smaller businesses look at this huge bonfire and think, 'How will I put this out with a cup of water?'" says Jennifer Clarke, year 2000 manager for IBM's AS/400 division, which has 450,000 systems installed at midsize companies around the world.
Gartner has identified nearly 3,000 year 2000 vendors, of which only about 300 have viable tools for the midsize and small-company market. Small to midsize businesses generally run anything but Cobol. Most run other systems, such as RPG-based ones on midrange IBM AS/400s, or VMS-based systems running on Digital platforms, all of whic
h can be vulnerable to the bug.
But smaller companies can be vulnerable to unscrupulous consultants trying to cash in as the millennium approaches. "Many people call me and say, 'We're thinking of starting a year 2000 company, but it's 25 years since I worked on code,' " says Jennifer O'Neill, president of Cipher Systems, a year 2000 and consulting firm in Calgary, Alberta. "Smaller
companies need to watch out."
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