InformationWeek
Defining The Business Value Of Technology
December 22, 1997
Year 2000 Cost Estimates Too Low, Reports Say
Network, desktop costs hard to judge
In a survey of 108 IS managers, 82% of the respondents said they believe they underestimated their total year 2000 costs. For the most part, the faulty estimates resulted because project managers didn't know how to measure desktop and network costs, says Howard Rubin, who conducted the study for Cap Gemini America.
"Budget expansions come when people delve into nonmainframe elements," says Rubin, "and there are no guidelines for that yet." Bellcore and Bell Atlantic Network Integration recently launched year 2000 services for networked computers, he notes, "but experience is just starting to be compiled."
Based on respondents who have revised their year 2000 estimates to include the desktop and networking so
ftware, it now looks as if the cost of bringing distributed computing into compliance will be nearly half the cost of fixing mainframe systems. Even after completing an inventory of systems, a major difficulty is projecting the cost of upgrades, Rubin says.
Meanwhile, the federal government's year 2000 cost estimate has grown from $2.3 billion in February to $2.8 billion in May to $3.8 billion in August and $3.9 billion this month. Sally Katzen, an Office of Management and Budget administrator who is the federal government's top year 2000 official, says she "wouldn't be surprised if it reaches $5 billion." She had previously projected the cost would be between $2 billion and $5 billion.
What worries Katzen is testing. There are still many unknowns, she says, such as how much testing will be required, how many agencies will have to be involved, and what protocols will be used. But, she adds, federal agencies haven't had trouble accurately estimating year 2000 costs in desktop and network environments.
ost estimates for year 2000 projects are rising as the work progresses and expenses that were difficult to predict are uncovered, according to two reports released last week.
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