Large firms too optimistic on Y2K progress?

Large U.S. corporations' optimism about their Year 2000 computer compliance may be unrealistic, according to a study.

2 min read
Large U.S. corporations' optimism about their Year 2000 computer compliance may be unrealistic, according to a study released today.

The study conducted by research firm Triaxsys looked at how much companies had spent through the end of last year on the Year 2000 technology problem, as disclosed in their quarterly financial reports submitted to the Securities and Exchange Commission.

Back to Year 2000 Index Page The findings led Triaxsys analyst and author of the study Steve Hock to conclude that although many companies have made major progress in their Y2K efforts, many are not spending enough to complete the projects by January 1, 2000.

"There are a significant number of companies that have a tremendous amount of work to do and they might not make it," said Hock.

From formal reports filed with the SEC between January and April 1999, Triaxsys obtained data on 647 Fortune 1000 companies' total Year 2000 project budgets and the percentage of those budgets that had already been spent.

Among the companies showing the least progress, as measured by percentage of total budget spent, are the computer networking giant 3Com, which spent just 7 percent of its budget; Tele-Communications Corporation, with just 10 percent spent; Sun Microsystems, which spent 14 percent; chemical manufacturer Union Carbide, at 20 percent; and food company ConAgra, which spent 26 percent, according to the study.

The average Fortune 1000 company is about 56 percent done with Y2K work, compared to 43 percent at the end of the third quarter of 1998, and 27 percent at the end of the first quarter of 1998, the study found. The estimated total project budgets grew on average about 11 percent since the end of the third quarter, compared to 15 percent between the first and third quarters.

The SEC filing also indicated that Fortune 1000 companies' estimates of the total cost of the Year 2000 computer problem continue to rise. Total estimated spending by companies on Y2K is now projected to be at least $53 billion, according to the study.

The so-called 'conventional wisdom' lately is that all U.S. large companies have the Year 2000 problem beat, according to Hock. That kind of generalization is not only inaccurate but overly complacent, he said.

Triaxsys expects to see a surge of spending over the next few months as companies try to accelerate projects to meet Year 2000 deadlines.

However, Hock said throwing additional money and bodies at major projects don't necessarily mean success, and in some cases can hamper progress.

In mid-June, Triaxsys will release its next analysis of Year 2000 progress by Fortune 1000 companies.