As seen in:
Talking To The Boss
27 Oct 1998 issue

Your Computers and Software Are Just the Tip of the Y2K Iceberg-I

by Donald L. Joseph

The President or Owner of a small business must take the Year 2000 threat very seriously and understand that every company will be impacted by the millennium bug, even if all internal computer systems have been checked. That’s one reason why President Clinton and the Small Business Administration declared the week of October 19th – 23rd as Y2K Action Week.

Consider that the SBA has predicted that 8% of small and mid-sized companies will fail as a direct result of Y2K related problems. That’s 1 in 12.5 companies! Similarly, experts agree that millennium problems will spawn over one trillion dollars in litigation.

Our society has become so dependent on computers and other devices with embedded computer chips, that there simply is not enough time and resources to locate, test and correct all of the possible problems. No "silver bullet" solution is possible. And this is one deadline that cannot be changed.

Your corporate and personal vulnerability extends far beyond your own hardware and software and it is only partly an internal problem. Even large businesses, which have the in-house resources to fix their own Year 2000 problems, are beginning to see that one of the greatest risks that they face lies in the supply chain on which they depend.

SUPPLY CHAIN RISKS

Even if you think your own company is ready, how badly will you be hurt if one or more of your key vendors or customers goes down (or even under)? Do you know if they are prepared for the problem? If they are fixing their problems, will their fix be finished on time and be compatible with your systems? What will you do if they are wrong?

In short, you are only as safe as the weakest link in your supply chain.

Most companies have started to receive inquiries from their customers asking about their Y2K compliance programs. These inquiries cannot be treated lightly. Many large companies have already announced that they will drop vendors that do not have an effective program. Their vendors, in turn, will be seeking the same assurances. Even vendors that are not dropped will probably see customers investigating alternative sources of supply, if they are not satisfied with the Y2K compliance program.

This means that companies without effective programs will suddenly have new competition. Companies with effective programs will have the opportunity to be that competition.

CAN'T "FAKE" COMPLIANCE!

Not only will it be difficult to "fake" an effective program, if you don’t have one, it will be very dangerous. While a new federal law will protect businesses that make good faith statements about their Y2K compliance, false statements will have tragic consequences if litigation results. This explains why documentation of all the actions you take is critical.

It is not too late to start an effective Y2K risk management program. The first step is to make all of your key managers aware of its importance and that the threats are both internal and external.

The next step is an inventory of these potential threats—hardware, software, machinery, office systems, vendors, customers, and other business partners. Following an analysis of these risks, comes the key executive decision—determining which represent the greatest threats to the company will, therefore, receive the highest priority. Remediation, testing, and implementation are the key steps that follow.

CONTINGENCY PLANNING NECESSARY

The final step for all companies is contingency planning. Even tested systems will fail, and some promised solutions will be late. Now is the time to plan what steps will be taken if key systems fail. The solutions may be simple, but they will be numerous and will require assignment of responsibility. To wait until the company is in "crisis mode" to deal with the issues may be an overwhelming task.

Donald Joseph is a certified management consultant (CMC) and president of Northbrook Consulting Group, Inc.creators of Y2Kontrol--strategy for millennium business survival. He can be reached at 847-498-7323

Visit the Y2Kontrol Website at http://www.y2kontrol.com