InformationWeek
Defining The Business Value Of Technology
September 27, 1999
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Part of the good-faith effort that is the core, underlying philosophy of the Information Readiness & Disclosure Act is that companies have gone to great lengths not only to assess risks, but also to minimize the impact of those risks. And, minimizing the net effect of those risks means developing workable back-up plans.
Bill Hampel, chief economist for the Credit Union National Association, says the member credit unions' No. 1 job was to create backup plans. Credit unions, like hospitals, are heavily regulated, so CUNA's members have finished with their compliance work and have learned the most important Y2K legal lesson: Be prepared. "Even though much of the testing revealed that the systems will be OK, as a federally insured institution, credit unions can't be too careful," Hampel says. "The credit unions have backup copies of customer statements on file, extra cash in case the ATMs go down, you name it." he says.
Even though Hampel believes these precautions will prove to have been largely unnecessary, they're worth it because they give the credit unions the peace of mind that they'll continue to do business, even if there are problems. That not only saves them from lawsuits, says Hampel, but from mistrust from customers. "So even if you think it's a waste of resources, do it anyway-be as prepared as possible."
Preparing comprehensive backup plans is great in theory. But aside from keeping a stash of extra cash around and paper-based back-up documents, it means corporate technology buyers must squeeze a helping-hand commitment from the vendors that sold them all the buggy technology in the first place.
And that's where the law is a Catch-22. The same good-faith disclosure practices that protect your company from lawsuits also protects the vendors. "No software is expected to be bug-free, so as long as the vendors disclose that there may be bugs, and that they are making concrete efforts to make sure the software is usable a substantial amount of the time, then they're likely to be protected under the law," says Kramer, who represents numerous technology vendors. "Concrete efforts means something like having technical staffers devoted to the project, which all technology companies have in place anyway."
Vague Definitions
And there's more: The Y2K Federal Act is designed to protect technology consumers from disaster and downtime. The law is supposed to apply to any lawsuit that's filed in which damages are due to Y2K problems. "It essentially says that if you're a customer and have a piece of software, you can sue the company for the licensing fee if they sent along a techie to fix the Y2K problem but he didn't fix it," Kramer says.
Contingency plans are critical. "Someone has to literally sit down and think through everything that enables the company to run," attorney Zanger says. "Make sure you have a cash cushion in case you need to purchase hardware or software or outsource help in a hurry. Make sure you're accounting systems have a way of staying up and running."
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One problem from the business consumer's perspective is that a "substantial" amount of uptime isn't defined in precise terms. Kramer says a court could define the meaning of substantial as anything more than 50% of the time. Think about any system that has uptime of 51%. The framers of the law may not fully understand the consequences, but you do: You're out of business.
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