Year 2000 Glitch Costing Millions

If there was any question about how seriously Arkansas’ larger companies are taking the looming Year 2000 computer crisis, the answer is becoming evident.

First Commercial Corp. of Little Rock, the state’s largest banking company, estimates it will spend between $7 million-$10 million to modify its computer systems so they can function in the next century. Wal-Mart Stores Inc. of Bentonville is figuring the retrofit of its systems will cost about $12 million.

The Year 2000 crisis, commonly called the “Y2K” problem, exists because most computers and programs keep track of years with two digits — “98” instead of “1998.” Many machines will think Jan. 1, 2000, will instead be Jan. 1, 1900, or some other year.

Of all companies in Arkansas, the glitch perhaps has the most dire consequences for Wal-Mart. The fourth-largest company in the nation links its stores, warehouses and vendors with an integrated stock-keeping system.

Wal-Mart says it is well into its retrofit effort with an estimated 41 percent of its required fixes completed by the end of October. The company says it expects to have the remaining conversions completed by Jan. 31, 1999 (the end of Wal-Mart’s fiscal 1999). The company says the majority of the computer retrofit is being performed by its own programmers, thus keeping costs down.

Because many manufacturers and retailers such as Wal-Mart have gone to a just-in-time stock-keeping approach to lower inventory costs, the danger, one industry expert says, is that a company will fix its problems but its vendors won’t. Raw material outages and delayed shipments of products are imminent, he says.

Worldwide, the cost to fix the problem is being estimated at more than $600 billion, most of which will be incurred in the next 24 months.

However, some industry watchers are warning the cost of not fixing the glitch will be much more. It’s expected that U.S. companies that lag behind will see as much as $1 trillion in lawsuits, mainly for failing to deliver products on time.

Software Innovators Inc., a Little Rock programming company, put a significant portion of its eggs in the Y2K basket three years ago.

“In a lot of cases, it’s too late,” says Mark Diggs, the company’s president, of computer retrofits not yet begun. “There’s not enough time if they started today.”

Diggs’ firm and others have set up “repair factories” to handle the volume of computer code needing to be fixed. A company can send its computer programs on tape and get them back a few months later fixed. The factories use automated systems to search through the untold thousands of lines of computer code for date-dependent variables.

Custom Micro and Visiant Systems of Little Rock are partners in another software repair factory.

“There’s not a lot of time left, and people don’t realize this,” says Eddie Sligh, a longtime RPG programmer with Custom Micro. “We can probably do 20 jobs between now and the time it’s too late.”

“Too late” may be the end of 1998, Sligh says.

“They need a year to do some due diligence on this thing,” he notes.

There are other drawbacks to procrastinating, the programmers say. For example, as resources become more scarce, the cost to fix outdated computer software is rising exponentially.

A year ago, it cost a company about $1 per line to re-engineer COBOL computer code; RPG code cost about 25 cents per line (both are common mainframe languages). Since then, those costs have doubled.

Sligh says an average-sized company running an IBM AS-400 mainframe system will have about 1 million lines of RPG computer code that need to be repaired. That translates into about a $500,000 software retrofit — the same repair would have cost about $250,000 a year ago.

Diggs says some companies now include a clause in contracts that a supplier has to be Y2K-compliant and assume the liabilities of not making shipments on time. Some software companies are going so far as to perform on-site audits for their clients to make sure they and their vendors are Y2K-compliant.

?Se habla COBOL?

Across the nation, want-ad readers can find something like this:

Wanted: Experienced RPG, FORTRAN and COBOL programmers and technicians. Openings immediately. Starting salary: $70,000.

In fact, companies are stealing away computer programmers for salaries of more than $100,000.

That’s a big turnaround considering that, until recently, those languages were considered passe. Most colleges and technical schools have abandoned the COBOLs of the 1960s and 1970s for modern languages such as C++.

But many companies are still running computer systems such as the IBM AS-400 with software they had written years ago. The systems have worked fine for years with a minimal amount of maintenance, and it’s these systems that look to be among the hardest hit.

“There’s still programs running around that I wrote back in the ’70s,” Diggs says. “I never dreamed that they would still be in use today.”

Another problem is that many companies don’t have the original text for their software. The program was written and compiled as an executable program — the company has been using the compiled version and may not still have the programmer’s original text.

In that case, Sligh says, there is hope.

In extreme cases, the program can be decompiled and returned to a programming language where it can be fixed.

Also, despite what some businesses are being told, software on the IBM System 36 (another widely used mainframe system) can also be fixed, Sligh says.

Limited Exposure

Some companies’ exposure to the Y2K glitch may be limited, and it may be possible to keep costs from soaring into the hundreds of thousands of dollars.

Many software and hardware companies that sell mass-produced systems are providing patches and upgrades to fix the problem.

Richard Davenport is the business unit leader for MorTech Inc., a division of ESI Group Inc. of Little Rock. His company produces a specialized software package called MorTech Premiere. Davenport says clients that pay for ongoing support from MorTech will get a corrected version of the software from the company.

“It’s a business-critical program — they run their entire business on our software,” Davenport says. “They would be dead in the water.”

Davenport says the companies that don’t have support from MorTech could end up paying $500,000-$1.5 million to fix or replace their systems.

The good news, computer experts are saying, is that most home computer users won’t notice the problem. If a home computer is used for game playing, Internet surfing and word processing, the user isn’t likely to notice that the computer has gone into a time warp.

Home business owners, however, who frequently use financial and spreadsheet programs may be affected.