Meg Wheatley et al on Y2K - Part 1: The Problem

[Jeff Aitken]

>Subject: Meg Wheatley et al on Y2K - Part 1: The Problem
>
>programs on 80 mainframe computers to debug.  By the end of last year they
>had cleaned up 2,000 programs. [The Washington Post, "If Computer Geeks
>Desert, IRS Codes Will Be ciphers," December 24, 1997]  Capers Jones, head
>of Software Productivity Research, a firm that tracks programmer
>productivity, estimates that finding, fixing and testing all Y2K-affected
>software would require over 700,000 person-years. [Business Week, March 2,
>1998]  Programmers have been brought out of retirement and are receiving
>extraordinary wages and benefits to stick with this problem, but we are out
>of time.  There aren't nearly enough programmers nor hours remaining before
>January 1, 2000.
>
>        Also at the center of this technical time bomb are the embedded
>microprocessors.   There are somewhat over a billion of these hardware
>chips located in systems worldwide.  They sustain the world's manufacturing
>and engineering base. They exist in traffic lights, elevators, water, gas,
>and electricity control systems.  They're in medical equipment and military
>and navigation systems.  America's air traffic control system is dependent
>upon them. They're located in the track beds of railroad systems and in the
>satellites that circle the earth.  Global telecommunications are heavily
>dependent on them.  Modern cars contain about two dozen microprocessors.
>The average American comes in contact with seventy microprocessors before
>noon every day.  Many of these chips aren't date sensitive, but a great
>number are, and engineers looking at long ago installed systems don't know
>for sure which is which.  To complicate things further, not all chips
>behave the same.  Recent tests have shown that two chips of the same model
>installed in two different computers but performing the same function are
>not equally sensitive to the year-end problem.  One shuts down and the
>other doesn't.
>
>        It is impossible to locate all of these chips in the remaining
>months, nor can we replace all those that are identified.  Those more than
>three years old are obsolete and are probably not available in the
>marketplace.  The solution in those cases is to redesign and remanufacture
>that part of the system -- which often makes starting over with new
>equipment the best option. That is why some companies are junking their
>computer systems and spending millions, even hundreds of millions, to
>replace everything.  It at least ensures that their internal systems work.
>
>        At issue is time, people, money, and the nature of systems.  These
>technical problems are exacerbated by government and business leaders who
>haven't yet fully understood the potential significance of this issue for
>their own organizations, to say nothing of the greater economic
>implications.  The U.S. leads all other developed nations in addressing
>this issue, minimally by six to nine months.  Yet in a recent survey of
>American corporate chief information officers, 70% of them expressed the
>belief that even their companies would not be completely prepared for Y2K.
>Additionally, 50% of them acknowledged that they would not fly during
>January 2000.  If America is the global leader in Y2K efforts, these CIO
>comments are indeed sobering.
>
>        The economic impacts for the global economy are enormous and
>unknown. The Gartner Group projects that the total cost of dealing with Y2K
>worldwide will be somewhere between $300 billion to $600 billion -- and
>these are only direct costs associated with trying to remedy the problem.
>(These estimates keep rising every quarter now.)  The Office of Management
>and Budget (OMB), in a recently released Quarterly Report, estimated total
>government Y2K expense at $3.9 billion. This figure was based only on
>federal agency estimates; the OMB warned that this estimate might be as
>much as 90% too low considering the increasing labor shortage and expected
>growing remediation costs as January 1, 2000 looms nearer.  And in June of
>this year, it was announced that federal agencies had already spent five
>billion dollars.  Of twenty-four agencies, fifteen reported being behind
>schedule.
>
>        These numbers don't consider the loss of output caused by diverting
>resources to forestall this crisis.  In more and more businesses,
>expenditures for R&D and modernization are being diverted to Y2K budgets.
>Business Week in March of 1998 estimated that the Year 2000 economic damage
>alone would be $119 billion. When potential lawsuits and secondary effects
>are added to this -- people suing over everything from stalled elevators to
>malfunctioning nuclear power plants -- the cost easily could be over $1
>trillion.
>
>        But these problems and estimates don't begin to account for the
>potential impact of Y2K.  The larger significance of this bomb becomes
>apparent when we consider the next circle of the global network-- the
>organizational relationships that technology makes possible.
>
>
>        Who works with whom?
>
>        The global economy is dependent upon computers both directly and
>indirectly. Whether it's your PC at home, the workstation on a local area
>network, or the GPS or mobile telephone that you carry, all are integral
>parts of larger networks where computers are directly connected together.
>As we've learned, failure in a single component can crash the whole system;
>that system could be an automobile, a train, an aircraft, an electric power
>plant, a bank, a government agency, a stock exchange, an international
>telephone system, the air traffic control system. If every possible
>date-sensitive hardware and software bug hasn't been fixed in a larger
>system, just one programming glitch or one isolated chip potentially can
>bring down the whole thing.
>
>        While there isn't enough time or technical people to solve the Y2K
>problem before the end of next year, we might hope that critical aspects of
>our infrastructure are tackling this problem with extreme diligence.  But
>this isn't true.  America's electric power industry is in danger of massive
>failures, as described in Business Week's February '98 cover story on Y2K.
>They report that "electric utilities are only now becoming aware that
>programmable controllers -- which have replaced mechanical relays in
>virtually all electricity-generating plants and control rooms -- may behave
>badly or even freeze up when 2000 arrives.  Many utilities are just getting
>a handle on the problem."  It's not only nuclear power plants that are the
>source of concern, although problems there are scary enough.  In one Year
>2000 test, notes Jared S.Wermiel, leader of the Y2K effort at the Nuclear
>Regulatory Commission, the security computer at a nuclear power plant
>failed by opening vital areas that are normally locked.  Given the
>complexity and the need to test, "it wouldn't surprise me if certain plants
>find that they are not Year 2000-ready and have to shut down."
>[www.igs.net/~tonyc/y2kbusweek.html]
>
>        Other electric utility analysts paint a bleaker picture. Rick
>Cowles, who reports on the electric utility industry, said at the end of
>February: "Not one electric company [that he had talked to] has started a
>serious remediation effort on its embedded controls.  Not one. Yes, there's
>been some testing going on, and a few pilot projects here and there, but
>for the most part it is still business-as-usual, as if there were 97 months
>to go, not 97 weeks. ["Industry Gridlock," Rick Cowles, February 27, 1998,
>www.y2ktimebomb.com/PP/RC/rc9808.htm]  After attending one industry trade
>show, Cowles stated that, "Based on what I learned at DistribuTECH '98, I
>am convinced there is a 100% chance that a major portion of the domestic
>electrical infrastructure will be lost as a result of the Year 2000
>computer and embedded systems problem. The industry is fiddling whilst the
>infrastructure burns." [Cowles, January 23, 1998, ibid  www  site]
>
>        The Federal Aviation Administration is also very vulnerable but
>quite optimistic. "We're on one hand working to get those computers Year
>2000 compliant, but at the same time we're working on replacing those
>computers," said Paul Takemoto, a spokesman for the FAA in early '98.  At
>the twenty Air Route Traffic Control Centers, there is a host computer and
>a backup system.  All forty of these machines -- mid-'80s vintage IBM 3083
>mainframes -- are affected.  And then there are the satellites with
>embedded chips, individual systems in each airplane, and air traffic
>control systems around the globe.  Lufthansa already has announced it will
>not fly its aircraft during the first days of 2000.
>
>
>        Who else is affected?
>
>        But the interdependency problem extends far beyond single
>businesses, or even entire industries. Indirect relationships extend like
>tentacles into many other networks, creating the potential for massive
>disruptions of service.
>
>        Let's hope that your work organization spends a great deal of money
>and time to get its entire information system compliant.  You know yours is
>going to function.  But on the second of January 2000 the phone calls
>start.  It's your banker. "There's been a problem," he says. They've lost
>access to your account information and until they solve the problem and get
>the backup loaded on the new system, they are unable to process your
>payroll.  "We don't have any idea how long it will take," the president
>says.
>
>        Then someone tells you that on the news there's a story that that
>the whole IRS is down and that they can neither accept nor process tax
>information.  Social Security, Federal Housing, Welfare -- none of these
>agencies are capable of issuing checks for the foreseeable future.   Major
>airlines aren't flying, waiting to see if there is still integrity in the
>air traffic control system.  And manufacturing across the country is
>screeching to a halt because of failures in their supply chain.  (After
>years of developing just in time (JIT) systems, there is no inventory on
>hand -- suppliers have been required to deliver parts as needed.  There is
>no slack in these systems to tolerate even minor delivery problems.)
>Ground and rail transport have been disrupted, and food shortages appear
>within three to six days in major metropolises.  Hospitals, dealing with
>the failure of medical equipment, and the loss of shipments of medicine,
>are forced to deny non-essential treatment, and in some cases are providing
>essential care in pre-technical ways.
>
>        It's a rolling wave of interdependent failures.  And it reaches
>across the country and the world to touch people who, in most cases, didn't
>know they were linked to others.  Depending on what systems fail, very few
>but strategically placed failures would initiate a major economic cascade.
>Just problems with power companies and phone systems alone would cause real
>havoc. (This spring, a problem in ATT rendered all credit card machines
>useless for a day.  How much revenue was lost by businesses?)  If only
>twenty percent of businesses and government agencies crash at the same
>time,  major failures would ensue.
>
>        In an interdependent system, solving most of the problem is no
>solution.  As Y2K reporter Ed Meagher describes:
>
>        "It is not enough to solve simply 'most of these problems.' The
>integration of these systems requires that we solve virtually all of them.
>Our ability as an economy and as a society to deal with disruptions and
>breakdowns in our critical systems is minuscule.  Our worst case scenarios
>have never envisioned multiple, parallel systemic failures. Just in time
>inventory has led to just in time provisioning.  Costs have been squeezed
>out of all of our critical infrastructure systems repeatedly over time
>based on the ubiquity and reliability of these integrated systems. The
>human factor, found costly, slow, and less reliable has been purged over
>time from our systems.  Single, simple failures can be dealt with; complex,
>multiple failures have been considered too remote a possibility and
>therefore too expensive to plan for." [The Complexity Factor, Ed Meagher]
>
>        The city of New York began to understand this last September. The
>governor of New York State banned all nonessential IT projects to minimize
>the disruption caused by the year 2000 bomb after reading a detailed report
>that forecasts the millennium will throw New York City into chaos, with
>power supplies, schools, hospitals, transport, and the finance sector
>likely to suffer severe disruption. Compounding the city's Y2K risks is the
>recent departure of the head of its year 2000 project to a job in the
>private sector. [www.computerweekly.co.uk/news/ll_9_97]
>
>        But of course the anticipated problems extend far beyond U.S.
>shores.   In February, the Bangkok Post reported that Phillip Dodd, a
>Unysis Y2K expert, expects that upward of 70% of the businesses in Asia
>will fail outright or experience severe hardship because of Y2K.  The
>Central Intelligence Agency supports this with their own analysis: "We're
>concerned about the potential disruption of power grids, telecommunications
>and banking services, among other possible fallout, especially in countries
>already torn by political tensions." [REUTER "CIA: Year 2000 to hit basic
>services: Agency warns that many nations aren't ready for disruption," Jim
>Wolf, May 7, 1998]
>
>        A growing number of assessments of this kind have led Dr. Edward
>Yardeni, the chief economist of Deutsche Morgan Grenfell, to keep raising
>the probability of a deep global recession in 2000-2001 as the result of
>Y2K.  His present estimate of the potential for such a recession now hovers
>at about 70%, up from 40% at the end of 1997. [http://www.Yardeni.com]
>
>
>(continued in Part 2)
>
>_ _ _ _ _ _ _
>
>This was the first part of a two-part article.  If you did not receive the
>second part, request it from the person who sent you this first part.
>
>_ _ _ _ _ _ _
>
>        Copyright 1998 John L. Petersen, Margaret Wheatley, Myron
>Kellner-Rogers
>
>
>        John L. Petersen is president of The Arlington Institute, a
>Washington DC area research institute. He is a futurist who specializes in
>thinking about the long range security implications of global change. He is
>author of the award winning book, The Road to 2015: Profiles of the Future
>and his latest book is Out of the Blue - Wild Cards and Other Big Future
>Surprises, which deals with potential events such as Y2K.  He can be
>reached at 703-243-7070 or johnp at arlinst.org
>
>        Margaret Wheatley and Myron Kellner-Rogers are authors and
>consultants to business. A Simpler Way, their book on organizational design
>was published in 1997. Dr. Wheatley's previous book, Leadership & the New
>Science, was recently named one of the 10 best management books ever, and
>it also was voted best management book in 1992 in Industry Week, and again
>in 1995 by a syndicated management columnist. Their consulting work takes
>them these days to Brazil, Mexico, South Africa, Australasia and Europe. In
>the States, they've worked with a very wide array of organizations.
>
>
>