InformationWeek

September 27, 1999

Plan Now For Y2K Protection

By Rivka Tadjer

ompanies seeking protection from losses caused by year 2000 problems can buy themselves some protection by developing a new procurement policy, drafting new maintenance contracts, and checking to see if IT vendors will still be in business after the millennium arrives.

In a revised procurement policy, make sure that all new site licenses and other technology purchases have an express Y2K warranty. Forget about simple 90-day warranties-even if you make the purchase after Oct. 1. It won't cover all your potential problems. For instance, you can now test an accounting software package by asking it to do projections after Jan. 1. But what about booting up after Jan 1? You won't know about that problem for more than 90 days. It gets tricky legally because an application software vendor can blame the operating system vendor if it doesn't boot up and then you're stuck in the middle. Assess risks and draft new maintenance contracts. This may involve a long session with your company attorney because you're covering two things.

First, determine what your own liabilities are in terms of being sued. Make sure that you have done as much good-faith testing and documentation as the federal Year 2000 Information Readiness & Disclosure Act requires. Also, make company attorneys aware of the implications of potential technical downtime so they can make sure the company has ample professional liability insurance.

Second, create terms for purchasing new maintenance contracts that you will need with all your vendors. Once you've resigned yourself to knowing that you're going to shell out more bucks for new maintenance contracts, at least do it right this time. The provisions your contract should contain include express Y2K warranty and upgrades; limitation of liability; lost profits; business interruption; and property damage.

Check to make sure that your vendors will be in business. This is tricky because there are no sure-fire methods of doing this. However, attorney Sam Kramer has his clients make

a comprehensive questionnaire for their vendors to fill out. Send it to your vendors and let them tell you their status on Y2K fixes, technical support, business plans, and whatever else you want to know. By doing this, you're using the good-faith concept of the federal Y2K law for your own purposes. They can lie to you, but it won't do them much good.

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