InformationWeek
Defining The Business Value Of Technology
July 19, 1999
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And even if IT managers could ensure the compliance of all their suppliers, they can't necessarily guarantee the compliance of their suppliers' suppliers, says AG Communications' Babler. "For our critical partners, we've asked not only about their Y2K compliance, but also about the companies that provide components to them," he says. "It's the ones down the chain that keep you awake at night."
Large companies generally enforce deadlines stringently across their supply chains, says Cap Gemini's Ross. If smaller vendors don't get in line, they're out. But in many industries, such as manufacturing, large companies frequently rely on specialized vendors for customized parts that can't be easily replaced by another supplier. AG Communications, for instance, relies on manufacturers of one-of-a-kind electronics components. "If the chain breaks there, there's nowhere else to go," Babler says.
In such cases, companies are asking for more than a simple Y2K compliance letter or status report. Some are asking their partners to obtain independent validation and verification of their Y2K compliance, usually through a testing service. Cap Gemini's Y2K "factories," which have spent the last few years remediating code, are now doing more validation and verification than code correction, Ross says.
Some companies are so reliant on certain suppliers that they're willing to provide money or staff to help those suppliers make their deadlines. "We've offered to help a few of them in any way we can," Babler says, without providing specifics.
Counterproductive Litigation
Legal matters aside, most companies have managed to work closely with their most critical suppliers to find and fix Y2K problems. In some industries, such as securities trading, broad tests have been completed to demonstrate the Y2K readiness of all major trading partners.
Illustration by Doug Panton
That number is likely to rise over the last six months of this year because intercompany links are tested less frequently than internal applications and networks, says Cap Gemini VP Noah Ross. Although in-depth testing and validation is standard procedure in most IT departments, many don't have the time or resources to test every combination of transaction that may occur across hundreds of trading partners, he says.
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In other cases, businesses are sending their own people to suppliers' sites to confirm the Y2K compliance of their key systems and applications. The city of Orlando, Fla., for example, sent a representative to Motorola to view a Y2K test of the mobile communications system the city uses. "Our fire emergency people and our police officers may rely on those phones," says John Matelski, director of Orlando's Y2K task force.
Many Y2K project managers complain that the threat of Y2K litigation is slowing their progress. Every Y2K move an IT department makes--fixing code, issuing status reports, and building contingency plans--must be carefully documented and reviewed by company attorneys to ensure it doesn't carry potential liability. For example, many companies require an attorney's approval before their IT departments can issue a Y2K status report to a supplier. Others are carefully logging their exact remediation steps to prove due diligence in the event of a lawsuit.
Milliman & Robertson Inc., an actuarial firm, estimates that insurers could wind up laying out between $15 billion and $35 billion for claims and legal costs related to Y2K computer problems, ranking the expenditures second in size only to asbestos and pollution-cleanup claims. "We know some companies are going to sue everybody they can, wherever they can," Orlando's Matelski says. "As a result, many organizations are afraid the Y2K information they share with others will be used against them."
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Photo by Stan Barouh
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