You've just invested millions in Y2K remediation. Do you feel lucky? Well, do you? Leading enterprises and data centres have always imposed freezes on change during critical business cycles to reduce risk and improve service quality.
Now, racing towards what might prove to be the most critical business cycle they'll ever face, many will lock down systems and resist all change for fear of the horrors that might be skulking beyond the horizon of the new millennium.
Many CIOs believe posing some limitations on change may be their last best hope for business survival amidst the uncertainties of the Y2K rollover period. Some large institutions with Y2K testing complete and the luxury to do so are apparently planning to go through the whole of 1999 without implementing any systems changes at all. Others are taking a more prudent approach, which accepts that some changes, cautiously introduced, may be warranted in the name of overriding business imperatives. Chief of the federal government's Y2K industry program, Graeme Inchley, says he's hearing anecdotally that a lot of development work in Australia has now stopped dead, with all efforts in most organisations being thrown at Y2K. He says the freeze on new developments is likely to last right through to the end of the year. Meanwhile, analysts are recommending a disciplined approach to change management to significantly reduce unplanned downtime caused by problems arising from changes.
And GartnerGroup has issued a warning against "Airplane Magazine Syndrome". It says some users who believe lockdown is not an issue for their management may get an unpleasant surprise if a flurry of articles in the general press inspires uninformed senior executives to order data centre management to lock down at any cost. Gartner Research Asia Pacific vice president Chris Morris says many Australian organisations are planning some kind of lockdown or change minimisation program in the second half of the year. "A few are going to start mid-year, most are going to start around October. They are going to go into chill mode third quarter and not-quite-frozen mode fourth quarter, but they've already begun to limit the changes they put in place to only those that are really critical to the business," he says. For those reasons most vendors are anticipating a slowdown in the second half of this year, Morris says. And while vendors are used to working around lockdown periods, they also recognise that this time the lockdown period may be far longer than normal. "They appreciate that this is going to happen, and they are very happy to make hay right now, while everybody is still buying extra processor and storage capacity and new software licences and the like," Morris says. "But in the second half [of this year], unless they have a very strong services component, they're planning for a slowdown."A GartnerGroup research note on 1999 lockdown survey results from Europe and Asia found the historically unprecedented shift in spending patterns to the first half of 1999 would be even more dramatic outside the US. The research also notes that international respondents forecast a longer lockdown period than their US counterparts. This is partly due to belated recognition of the Y2K problem in countries like Australia, and because of a number of admissions from organisations in Australia that they were slipping behind with their Y2K plans. "The results of these surveys, while not as apocalyptic as originally feared, indicate that users are planning actions in 1999 that will affect some vendor revenue streams in the latter part of 1999," Morris says. Australians also seem more prepared than their US counterparts to recognise the amount of remediation and clean-up that is likely to spill over into the first quarter of 2000, the report says. This is a realistic assessment. According to the expert testimony of Gartner's Lou Marcoccio to the US Senate Special Committee on the Y2K problem, Y2K computer failures will occur in highest quantities from Q3 1999 right through Q1 2000. All in all, only 10 per cent of failures will occur within two weeks of January 1. But Marcoccio told senators many companies and governments were unprepared for failures during this period and most were only planning to address failures occurring within one to four weeks of January 1, 2000.
Morris says that "25 per cent of Y2K-related failures will happen before the end of 1999. They're happening now, and about 55 per cent are going to happen during the entire year of 2000. A freeze, lockdown, is going to have some impact, but you're going to have to start introducing changes all through the year for fixes for stuff that hasn't been fixed properly or been overlooked or whatever. Anybody doing any planning for Y2K work had better be smart and include in their budget a resource plan for people to keep on working on the stuff all the way through to 2001." Michel Hedley, public relations manager for the Australian Information Industry Association (AIIA), agrees his members expect some corporate activity to slow down in the second half of the year. To balance that will be an explosion in e-commerce activity, where many of the products available are "supposedly already 2000-savvy". "The subtlety is that some customers are implementing some quite fundamental changes by way of BPR in terms of getting their back end sorted out, and in doing it they are also fixing up the Y2K problem at the same time," Hedley says. "One of the issues is going to be whether people will hold off in the second half of the year just to make sure everything is okay. But most know they can't afford to take six months off, because there are windows of opportunity now with e-commerce and such."The actual impact on vendors may also be softened by the planned introduction of the GST (see "For Whom the Bill Tolls", page 56), with many organisations planning to defer hardware acquisition but accelerate new software and systems integration spending because of the effects on prices of a goods and services tax. But if the GST may ease the Y2K lockdown blow for vendors, it also immensely complicates things for companies that will have to alter or replace financial systems to accommodate the GST's complexities. Still, it could have been worse: Inchley has said the government needed persuading to change the date of the GST introduction from the beginning of 2000 to July 1, 2000.
Concern about the impact of the GST is retarding the ability of retailers to place limits on change, says Australian Retailers Association spokesman Michael Lonie. "Many of our people clearly have a major issue in terms of a whole host of new points of sale systems they would be looking at developing to accommodate GST, not only at the front end but also at the back end, to cover inputs and outputs on GST," Lonie says. "Many of them are doing preparatory aspects and whilst they're focusing on Y2K, I believe a number of them will start to think about the GST definitely in the third quarter 1999. It is a key issue for some of us and I would have thought a number of corporations are not going to be able to say: 'Well, we're just going to lock up and do nothing'." Lonie says that for retailers many Y2K problems won't become apparent until well into 2000, particularly with embedded chip processors that are associated with the supply chain. Also looking at the issue at an industry level, Eric Maranik, the Y2K coordinator for the Electricity Association of NSW, says in the supply environment, electricity organisations will implement a clean management strategy rather than a lockdown, in the interests of maintaining the Y2K compliance of the network. "Within the supply environment that's relatively easy for the industry to do, because we're not particularly information technology-intensive. But there would be very little information that we would have available with respect to how each individual organisation is addressing that clean management issue, because that is not supply-critical, but business-critical," Maranik says.
Confident its mission-critical systems are compliant, Consolidated Press Holdings IT director Kevin Orsman says there will be no lockdown in his organisation. "Why panic?" Orsman says. "There's no reason why we should stop and not do anything and sit on our hands." But organisations in the finance and insurance sectors will of necessity be far more cautious. Alistair Turrell, head of the Y2K program for St George Bank, says the bank will run a production freeze from October 1 through to January 17 for all systems and October 1 through to March 15 for all inter-bank clearing systems. Royal and Sun Alliance general manager information services John McKibbin says that at present the organisation doesn't expect to do anything significantly different from previous years, when a lockdown has been routine. "We're looking to avoid what we see as a potential risk period at the switchover of the millennium, so we'd be looking to complete any key end-of-year processing between Christmas and New Year. We will, of course, be taking extra precautions over the New Year's Eve/New Year's Day timeframe," McKibbin says. "Our basic approach is to minimise or avoid any risk, so we wouldn't implement any significant projects during December 1999, and we would only do essential changes during that period."AMP, meanwhile, plans a phased and selective lockdown from about August this year to April next year in the interests of its very survival. "This is a show stopper, if we're not compliant," says AMP World Class Financials program director Philip Tedmanson. "All the focus and energies will be directed just to staying in business and [introducing change] will take the focus off the main game; that is what business is all about." AMP will conduct a phased approach to its Y2K lockdown, running in "grey areas" from about August this year through to April next year with very tight Y2K lockdown between November and February. Systems like PeopleSoft that are more Y2K compliant won't have the same stringent disciplines placed on them as other systems developed in-house, which are far more complex, Tedmanson says. The extended lockdown is a reflection of AMP's acceptance that most Y2K-related failures will occur outside the weeks either side of the end of the year.
Taxing Measures
Australian Taxation Office
If Australian Taxation Office (ATO) assistant commissioner Wal Collins gets his way, the ATO will freeze virtually all change -- "applications software, operating system software, hardware, the whole shooting match" -- from about mid November through to mid January. While the organisation strives to reach a firm agreement on this policy, Collins has been sending warnings to developers not to plan any significant change during that period. The exception will be in the event of a need for emergency changes, in situations where key processing systems are not working. "We also have as a norm a significant amount of hardware maintenance and operating system maintenance and so on that occurs in the quiet period between Christmas and New Year. Some of that may well occur as well," he says. "If we have problems during that period, we need to be able to understand as quickly as possible whether they are problems that are Y2K-compliant in nature or whether they are problems induced by other change.
And the least risk approach, in my mind at least, is to try and eliminate as much of that other change as possible, so that we can be reasonably sure when we are looking at a problem that yes, it is a Y2K problem and approach it accordingly."ATO faces significant changes over the next couple of years, with the planned introduction of the Australian Business Number (ABN) and GST. Collins says any extra effort that ends up being expended on fixing Y2K problems will take resources away from other change that needs to happen around July 2000 and July 2001.
Well Contained
P&O Australia
There won't be a total freeze at P&O Australia, but if anything new is to be installed it will either have to have rigorously defined interfaces or else P&O will have to redo its Y2K testing, says group general manager IT Jonathon Ladd.
"There will be a careful consideration of the risk. Yes, there is some risk, but it is manageable if you adopt the appropriate rigorous testing procedures," Ladd told CIO. P&O has pretty well completed its Y2K testing. It's done a great deal of component testing as well as some integrated testing, and plans to do more. Its integrated testing has involved shutting down all its networks and systems and rolling them over; getting users to work with them as they would on a normal day, then winding it all back to look at the results. It also plans more integrated testing with customers and external agencies with which it has electronic links. "If any new applications sit fairly alone and only have one or two defined interfaces, then we'll leave it at that; but if it's something that's right in the middle of a system, then we will have to do the integrated testing again," Ladd says.
Clean Bill of Health
Health Care of Australia
Instead of a lockdown, some companies will adopt a clean management methodology to ensure their Y2K remediation efforts aren't brought undone. Gary Moss, the group IS manager for Health Care of Australia, likens clean management to infection control.
"We say we're going to go and test our application suite, our hardware, our operating systems and the incumbent version; and we have got test scripts and methodologies for that. So if someone wants to take on board a new application, or we want to upgrade an application, we will rerun that test against it [the new software] again," Moss says. "We don't say: 'No, don't do it', but we do say: 'As part of the evaluation and implementation strategy, there is a Y2K component'. So as far as I am concerned, it can be December 15 and if there is a real business driver [to introduce something new], we have to take that on board." This approach is easier than enforcing a lockdown, but Moss concedes it comes at a cost. "The downside to my methodology is there is an incremental cost. So we say you can roll out an application, but the cost of rolling the application out, theoretically, prior to December 31 is higher than if we rolled it out in the first quarter of the New Year. And I do say 'theoretically', because the other side of the coin is our Y2K project is going to run into April next year." No Policy Change QBE Insurance Group A hard-line approach to lockdown just isn't right for QBE Insurance Group, says IT manager Ian Hannam. Instead, where there is an ongoing business requirement, or need for additional equipment or systems, the IT group will be happy to introduce them. "Obviously, we'll be making sure they're Y2K-compliant and that they can ultimately be integrated in with our other equipment. We're not that frightened of it." Hannam says he is "as confident you can ever be" that QBE's well-documented and reasonably rigid methodology, which it uses for any form of integration, will keep the organisation out of hot water. "I'm comfortable we're doing everything in our power and capabilities to ready ourselves for Y2K, and I'm quietly confident everything will be fine. To be perfectly honest, my greatest fear will be the capability of the major utilities. I'm not suggesting they're not working hard, but I know it's a much bigger job for them," Hannam says. "But we have contingency plans in place if our suppliers can't provide and so on."-- S Bushell
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