Y2K: Bug ready to bite any day now

The Ministry of Defence has just warned the armed forces they must start worrying about the millennium bug which, as COLIN TAYLOR and RON TAYLOR report, may hit sooner than expected. But ANNE-MARIE ROBINSON says we need not worry that aircraft will fall out of the sky.

Watch out. The millennium bug is about to bite and sooner than most firms expect. According to a PricewaterhouseCoopers expert, companies could start having problems with their computers this month.

Gerry Conroy, in charge of systems risk management for
the company in Wellington, says computers could start experiencing problems as soon as older accounting systems roll over their systems to look ahead.

This is likely to affect computers with programs that are older than about five years - especially if they have programs written in-house or heavily modified packages, says Mr Conroy.

When these computers look ahead they will come to the year 00 and it may produce bizarre results, or computers may even refuse to operate.

Reports of budget figures versus actual figures may begin looking very strange. However, the first thing a computer operator is likely to notice is a message appearing on screen advising of a program failure.

Mr Conroy stresses, however, that this fault should apply to only a minority of older accounting systems. But it will not be long before even more modern systems start having problems.

He explains that computers tend to record dates as numbers using either the Julian calendar or the more familiar and accurate Gregorian calendar.

Under the Gregorian system the ordinary year is made to consist of 365 days and a leap year occurs in every year whose number is divisible by four, except those centenary years such as 1900 whose numbers are not divisible by 400.

Problems are likely to arise with computers programmed with the Julian calendar on April 9, 1999, which will be year 9999 as far as the computer is concerned. For computers programmed with the Gregorian calendar the equivalent problem date could be September 9, 1999.

Fields that are full of 9s are used by programmers for recording special conditions, explains Mr Conroy. When a computer tries to roll the year over to 9999 it could indicate a special condition such as the end of input and the system could indicate it as a program failure.

On April 10 or September 10 some computers may roll over from 9999 to 0000, creating serious problems.

And on top of the much-publicised January 1, 2000, date, problems could also occur the next month because February 29, 2000, is the first leap year in the new millennium.

The Institute of Chartered Accountants, the country's largest professional body with more than 50,000 members, is concentrating on alerting the business community to the need for action to combat the millennium bug, rather than the actual mechanics.

Divisional director Bev Edwin says it is a "business issue and that's what we talk about rather than anything else. We're emphasising what businesses could face, not will face."

She says worldwide estimates are that 2 per cent of computers will fail because of the bug. Translate that here - and there is no reason to believe the failure rate will be any less - and it spells big trouble.

"The problem is that even if you've done all the checks, updated your programs and taken every precaution and trained your staff to the utmost, you may still be affected because somebody else has not done so or thought they were not affected," Bev Edwin says.

"So if you're in business you need a contingency plan no matter what ... It's up to everybody to cross-check. Ask suppliers if they can assure you of continued service through the coming year because of those tricky 9999 numbers and 2000, and if they can't, why not.

"There's a lot of concern about apathy. While most are probably aware there is a problem, what they have done is another matter.

"Either that or they think they can get a quick, last-minute fix because they see it as an IT [information technology] issue. But it's much more than that. It's a business issue."

The president of the institute, prominent Auckland public accountant Keith Smith, is warning company directors and senior management of the seriousness of the Year 2000 problem because of the emergence of personal liability issues.

"Businesses of all sizes need to be aware that should their company's systems fail, they could be held personally liable," he says.

To avoid possible liability, directors and managers will need to be able to show that they have made every effort to educate themselves, and developed and implemented a detailed management plan to address their organisation's exposure.

"This is a hugely serious issue ... [and] while there are signs that major corporates and the public sector are addressing the problem, our members report that in many cases small and medium-sized enterprises have yet to act. As a country of predominantly smaller-sized enterprises this is of real concern."

Mr Smith says "the noise" about Y2K being about technology has obscured the issue. "It's attitudinal and it's the attitude of the business community that needs to change.

"[They need to] realise that by failing to act, not only could they be personally liable, they could also run the risk of having their financial institutions suspend their credit lines or impose unfavourable conditions.

"Then should their insurer seek to limit coverage and their clients or customers fail to renew supply contracts ... directors and managers will suddenly realise the enormity of the problem. Unfortunately, by then it will be too late.

"So there's no time to wait. We can expect the ramifications of the Year 2000 issue, such as forward order booking, to make themselves felt well before."

Mr Conroy points out that even if January 1, 2000, does not bring your system down in ruins other difficulties could occur on January 10, 2000 - which requires a seven-digit date field - and on October 10, 2000 - which requires an eight-digit date field.

Systems that allow only six digits for dates will have a problem and six-digit systems were built into computers just two or three years ago.

The rollover of the financial year from March 31, 2000, to April 1, 2000, could see a flurry of problems as systems try to produce the first set of quarterly results for the new millennium by looking back to the previous year.

The end of year 2000 is also likely to cause problems because it has 366 days and there could also be problems with systems rolling over to 2001.

A wider observation of the millennium-bug problem is that there are any number of dates that could cause systems problems or failures.

The more we have found out about the problem, the more dates become apparent, says Mr Conroy.

He predicts that any firms which have not had their computer systems checked and upgraded to full Year-2000 compliance will probably first realise they have a January 1, 2000, millennium bug problem on January 3, 2000, when the first person arrives at work and the computer will deliver only an error message.

When they phone for help every other user of that system - who isn't fully Y2K compliant - will be on the phone as well.

Most likely they will get a message from the supplier saying they have been entered in the business-support queue and the technicians and programmers will be able to come to rectify the problem in three or four months.

Mr Conroy says he has already heard of computer consultants dealing with the Y2K problem being offered salaries of œ400,000 ($1.2 million) a year to undertake compliance work in Britain.

While many problems will be beyond the control of firms or individuals, says Mr Conroy, the impact on any company will partly depend on how well prepared the organisation is.