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Y2K study paints grim picture

The bug has already caused some minor failures in computers and will still be zapping systems in 2002, according to a recent Gartner Group study.

3 min read
Although nobody is sure just how much havoc the Year 2000 technology problem will cause, a new study released today paints a decidedly grim picture.

According to the Gartner Group, the millennium bug has already caused some minor failures in computers and the glitch will still be zapping systems in 2002, plaguing global telecommunication, transportation, and utility industries.

That, according to Gartner, could lead to a fair amount of Y2K-related litigation. Already, just less than a dozen Y2K-related suits have been filed, two in the past 24 hours.

The Gartner Group report found that companies began noticing failures in the 1980s. At that time projection and forecasting data that included dates on and beyond 2000 began to cause glitches in systems that didn't recognize those dates. The same occurred in 1995 when five-year warranties were processed, and again, earlier this year when systems at financial firm First Call's systems failed to process two year forecasts.

More grimly, the survey found that the industries on which the world's economic infrastructure relies--telecom, utilities, and transportation--are laggards, barely ahead of the least prepared industries--healthcare, food processing, and government--in their Y2K preparations.

The Year 2000 issue is also scaring insurers away from covering calamities that are related to the bug. According to the Gartner survey, 40 U.S. states have already granted insurance companies exclusions which will excuse them from covering Y2K losses under existing business interruption policies.

The survey, deemed "disturbing" by Gartner, shows how the Y2K issue can stem lawsuits, like those filed today for instance. A medical equipment vendor and a major software maker have been slapped with Year 2000-related lawsuits in the past 24 hours.

A medical services company, Medical Manager, has been slapped by a class-action suit alleging that the company violated the New Jersey Unfair Trade Practices Act when it marketed computer software without disclosing that the software was not able to process dates after 1999.

Also, software maker Quarterdeck is being sued for allegedly selling version 4.0 of its popular Procomm Plus software for Windows 95 between November 1996 and July 1997 without disclosing its non-Y2K compliant status.

"This will be a sticky issue as litigation goes, as more and more insurance companies don't cover Y2K-related problems," Marcoccio said.

The Gartner study also found that globally, Japan and Germany are at least 12 months behind the United States, Holland, and Belgium in Y2K fixes. Other countries falling behind, with a significant risk of facing major disruptions, are Argentina, Venezuela, and all the Middle East, except Israel, the study found.

Fifty percent of companies in the oil, electrical, and gas utility industry around the world expect mission critical systems to fail because of the Year 2000 technology problem, according to the report.

Gartner researchers, led by Lou Marcoccio, the director of the Year 2000 research team, surveyed 15,000 companies in 87 countries, along with other "relevant" research to develop the report.

The study also addressed the costs facing companies dealing with the Year 2000 technology problem. While only 5 percent of all IT budgets were dedicated to Y2K in 1997, that figure will increase to 30 percent by the end of 1998 before reaching 44 percent in 1999, the study reported.

Because of this transfer of available funding for information technology, businesses are cutting back on other software spending. And since everybody's shifting their priorities to Year 2000 issues, there are few people left to install new software, according to researchers.

The Year 2000 problem will also siphon off money for computer training; for equipment needed to maintain large data warehouses; and for systems support, since many of the technicians will be toiling on the glitch.