Y2K crunch time breeds urgency

Donald Rose, the head of Intel's global drive to prevent Year 2000 computer problems from derailing microchip production, is focused these days on 500 critical suppliers of materials and basic services like power and phones.

About half are ready for the date change, Rose says. Intel is busy dispatching training, testing and auditing help to the others in the hope they will catch up. But hope is a high-risk business strategy, so Rose is turning more of his attention to backup plans.

Intel already has begun installing extra power generators at factories in Asian countries and Latin American countries with shaky power grids. And its purchasers and technicians have been visiting companies it does not buy from today to see if they could step in if a supplier falters. "It takes us up to six months to qualify a supplier of something like specialty chemicals" to meet Intel's quality standards, Rose said. Driven by such deadlines for action, Intel's preparations to overcome Year 2000 glitches are becoming as urgent as its continuing efforts to prevent them. Intel has plenty of company. Once stuck on the "do later" part of the Year 2000 agenda, contingency planning is suddenly in full swing. After months of weighing options, businesses and governments are being forced to decide just how much they will invest in preparing for Year 2000 turmoil. As they do so, millions of workers who previously had little exposure to Y2K, as the Year 2000 problem is known, are getting their first good look at how seriously their employers are taking it. Year 2000 contingency planning is not a subject executives and their project leaders like discussing in any detail. Unlike most repair work, contingency plans have to take into account not just the computer user's own systems, but all the outside forces the user cannot control, like public power, phones, water and the readiness of both suppliers and major customers. The planners fear offending partners, inviting lawsuits and, in some cases, alarming customers or the public. The Securities and Exchange Commission has told publicly traded companies to describe their Year 2000 contingency planning in their quarterly reports to it, but most are sticking to a few vague sentences indicating they are working on it. The heart of the plan in many cases is likely to be arranging for more employees than normal to be on duty in the weeks before and after New Year's, often to make sure a company can fall back on nonelectronic methods of business such as taking shipping orders over the phone. Vacations are being canceled and major computer users like Paine Webber are booking hotel rooms for New Year's Eve in back- office locations like Weehawken, N.J., to make sure technicians are close to their data processing centers. It is also clear that growing confidence that major disruptions are unlikely -- at least in the United States -- is putting pressure on managers not to propose costly investments. Consultants like the Gartner Group say the sums budgeted for contingencies will average 10 to 15 percent of the hundreds of billions of dollars projected as the global tab for Year 2000 repairs and testing. Still, the effort is opening a new window on how seriously the world is taking the Year 2000 challenge. The Year 2000 problem stems from decades of using two digits to represent the year in dates, such as 99 for this year. Computers, software and electronic devices may malfunction if they read 00 as 1900 or do not understand that it is a date. Most Year 2000 contingency planning by big computer users is aimed at coping with local disruptions similar to those society often experiences from equipment failures, bad weather and earthquakes. But big enterprises are also considering how to respond to a global blitzkrieg of disruptions. "The danger of Y2K is a wide variety of things hitting simultaneously," said Charles Snyder, head of the Year 2000 project at Levi Strauss in San Francisco. Levi has scrutinized how it might shift or delay production of its jeans and other products factory by factory. Snyder advocates ignoring the nature of specific Year 2000 problems and simply looking at whether the interruption at a factory would be a matter of hours, days or longer. "You'd go insane if you try to handle it without some kind of streamlined game plan," he said. Business leaders hope contingency planning -- or business continuity planning as many prefer to call it -- will reinforce the prevailing cautious optimism that the Year 2000 challenge is being met. "It shouldn't signal a sense of alarm," said Dana Bennett, who has overseen the Year 2000 project at Aetna, the insurance giant based in Hartford, Conn. Jay Golter, co-founder of the Northern Virginia Year 2000 Community Action Group, disagrees. "It's just human nature that planning for disruptions will make people who haven't been paying attention more nervous," he said. But if nervousness raises consciousness, he said, the public will benefit. Clearly the planning is going well beyond redeploying the army of technicians that have done most of the repair work. Humana, the major health insurer based in Louisville, Ky., is turning to front-line employees like Zach Riser, who runs the mail room in its Louisville service center, for such jobs as lining up backup carriers for documents and overnight packages. Last month, many utilities drilled field employees who will be stationed at power plants and distribution sites over the New Year's holiday on how to use radio and other backup communication systems to deliver vital data that normally flow electronically to command centers. At first glance, Year 2000 contingency planning looks relatively simple. Many large businesses and other major computer users can start with plans they already have for computer crashes and natural disasters. Moreover, many actions are minor adjustments. The state of Washington's National Guard plans to mobilize 3,000 troops, about half its ground forces, in December so they will be available to help deal with loss of utilities, water or other essential services, or to quell civil disorder. The plan is virtually cost free, though, because the same troops would otherwise have been reporting for routine training a few weeks later. Likewise, Lubbock, Texas, is buying materials for 1,200 stop signs in one order this fall instead of spacing them out through the fiscal year that ends Sept. 30, 2000, and is suspending its normal replacement program. "We will have about 800 on hand in case traffic signals don't work Jan. 1 instead of the usual 50 or so, but it won't add to my budget for the year," said Geryl Hart Jr., manager of Lubbock's traffic department. But experts in Year 2000 contingency planning say it gets complicated because the possibilities are more varied than in typical disruptions. Humana's standard 20-page disaster recovery plan for its regional service centers swelled to 66 pages when adapted for Year 2000 problems, mostly because it detailed steps to restore services like the mail room deliveries that are normally taken for granted. Training, staffing and equipment decision deadlines are also looming for some. Automakers say they need to settle contingency plans in the next month to take advantage of summer production shutdowns for training. Union contracts require Kaiser Health Plans to make up its mind -- and negotiate next month -- for extra hourly employees it wants on duty for the New Year's holiday, according to Deborah Reinhold, director of Kaiser's Year 2000 project. And McKesson HBOC, a San Francisco-based drug distributor, said it had to make its decision to order eight large backup diesel generators from Caterpillar by May 5 to get guaranteed installation by the end of the year. Companies also need to worry about what happens if too many others are thinking about the same backups they expect to use. Take all the companies planning to rent generators. "There's no way in the world our industry could supply the demand that is in the planning stages," said Mark Conrad, U.S. marketing director for Aggrecko, the Dutch company that owns the world's largest rental fleet of mobile generators. Howard Rubin, a leading information technology consultant, says some of the toughest planning decisions may lie with key industries like banking and telecommunications that could be flooded with consumer inquiries Jan. 1 at the slightest sign -- or rumor -- of any glitch. "If those companies are understaffed and callers just get busy signals, it will contribute to panic," Rubin said. Consultants say a few shortcomings show up repeatedly in plans they see. Many companies, for example, are not ready to confirm and evaluate disruptions quickly. "When a global company gets a call from Thailand from someone saying the lights went out, how does it rapidly figure out if it's a Y2K problem, how widespread it is, whether it will persist and what others will do?" Rubin asked. Louis Marcoccio, head of Gartner Group's Year 2000 research program, says another common failing is assuming that contingency plans are needed only for the first week of the new year. Gartner estimates that less than 10 percent of computer software failures will show up that quickly.

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