Reports of Y2K failures on the rise

With one year remaining until the new century, a survey of 110 U.S. corporations, 12 federal, state, and local government agencies, and 12 industrial sectors found that a large number of the respondents have experienced Year 2000-related failures, and nearly all of them--98 percent--expect more such failures in 1999.

The quarterly survey was conducted by Cap Gemini America, a Y2K consulting and services provider.

The study found that the percentage of companies with a process in place to validate renovated code prior to testing rose substantially in the past quarter from 16 percent to 62 percent.

"Testing is an essential and time-consuming element of an effective Year 2000 program," Jim Woodward, senior vice president of Cap Gemini America and head of its TransMillennium Services, said in a statement. "It's encouraging that nearly two-thirds of these large organizations are validating their renovated code before it enters the testing stage."

More than half of the respondents--55 percent--have already experienced a Year 2000-related computer error. This figure is up from 44 percent in October and 40 percent in July, according to Cap Gemini. Most failures caused processing disruptions of financial miscalculations.

The Year 2000 glitch can cause computers to read 2000 as 1900, since most older computers were programmed to read a two-digit year date. That bug could cause machines to either crash or transmit bad information.

Three quarters of the organizations--74 percent--expect that more than half of their systems will be tested and compliant by January 1, 1999, a percentage unchanged since October, according to the survey.

However, 92 percent of the companies report missing Year 2000 plan deadlines more frequently, up from 84 percent last July.

The report also found that every company is now developing contingency plans to prepare for expected failures. In a similar study done in April, only 3 percent were putting together such plans.

More and more firms expect Year 2000 issues to affect relationships with business partners, meaning that Y2K compliant companies are now considering breaking off partnerships with those companies that are not making headway on the technology glitch.

The number of companies that are very likely, or potentially likely, to stop doing business with noncompliant suppliers rose to 69 percent, up from 60 percent in the third quarter.

The percentage of firms planning to incorporate Year 2000 compliance into marketing messages increased to 55 percent from 50 percent in October.

In regards to Y2K budgets, companies continue to underestimate their Y2K spending. Eighty-four percent classified their cost estimates as "too low," compared with 82 percent in the third quarter and 87 percent in the second quarter.

The quarterly survey is carried out by Rubin Systems.