Profits of Doom

How a costly computer glitch turned into a once-in-a-millennium bonanza for high-tech companies.

Like Accelr8, TAVA has developed special tools for identifying Y2K problems. The company compiles an inventory of plant control systems and checks it against a database of thousands of known Y2K compliance problems. Over the past six months, Jenkins says, plant inspections have revealed that 20 to 30 percent of the systems are checking out as "noncompliant" or "suspect"--meaning that they could fail under certain circumstances.

"Every plant we've been in has had some problems," he says. "Some are trivial and readily fixed. Some are significant."

How significant? Until a company checks out all of its control systems, no one really knows. A recent survey of British manufacturing companies found that less than a quarter of them had even begun such an audit; one chemicals-company executive responded to the survey by saying, "We would be amazed if there is not a major chemical disaster somewhere caused by Year 2000 problems with embedded software."

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But even glitches that don't amount to full-scale disasters can still damage a company's equipment--and its bottom line. Jenkins describes "an energy management system that's used in the utility industry that made it fine from December 31 to January 1 on a test--and then went right on through January 31, 32, 33, and 34." He has come across a defective $600 control device that could bring an entire production line to a screaming halt. And his engineers have found plant security systems at the mercy of a lowly desktop PC.

"On one quick walk-through," he recalls, "the card-readers were okay, but the host computer that was managing this stuff had a fatal BIOS [Basic Input/Output System]. If that hadn't been attended to, on January 1 people couldn't get into the plant. The bigger risk is that someone could get locked in someplace where they need a bar code to get out."

Most of TAVA's Y2K clients are still at the "pilot stage" of assessing their problems. Others are balking at the cost involved--an understandable reaction, Jenkins says, but a troubling one. He estimates that huge multinational companies with dozens of plants have at least a year and a half of work ahead to repair and test their systems.

"The frustration is that here we are, one month into 1998, and most people still don't get it," he says. "We have to start most conversations by beating people into submission on the point that there is a real problem."

Jenkins understands what his clients are up against. Many have downsized their plant engineering staffs, and the survivors must cope with the "real-time world" of a round-the-clock processing plant. "If something's broken, you've got an hour to fix it, so someone will go in and write a crude patch program that stays there twenty years," Jenkins notes. "And every time you change your control system, you have a big risk of plant shutdown. So there's a natural reluctance: If it's still putting out product, don't mess with it."

But as the witching hour approaches, companies that want to keep the product flowing will have no choice but to mess with it. Recently TAVA announced an agreement with Bristol-Meyers Squibb to provide its Y2K software and support for roughly 125 plants worldwide. Jenkins says the deal shows how Y2K can lead his company into relationships with clients on a global scale that will endure well past the millennium.

"All that we're doing in Y2K enhances our base business," he says. "The opportunity for us downstream is to end this Y2K event with a strongly expanded client base on a corporate-wide basis."

If there is an upside to the Y2K frenzy, it isn't simply that a few high-tech companies and opportunistic investors stand to make a killing off it. The huge outlay of resources now being directed at the problem promises to transform the way businesses and government agencies deal with information technology. And that could be a good thing.

"We're seeing the fruits of twenty or thirty years of undisciplined, piecemeal development," notes Welty of Hanifen Imhoff. "From a corporate perspective, the encouraging thing is that it's going to force executives to realize the importance of information technology to their business. It's going to focus management attention."

The problem has certainly captured the attention of the State of Colorado, which is devoting an estimated $39.5 million to Y2K work--primarily for upgrading mainframes in the departments of personnel, revenue, and human services--and posting progress reports on the Colorado home page. Although few systems are actually being replaced, state officials regard the process as part of a much-needed overhaul.

"We've got a comprehensive inventory of our computer systems now, which we've never had in the past," reports Brian Mouty, statewide Year 2000 project manager. "That's invaluable for future decisions. And we've done a better job of cleaning up the code than before. We've found programs that we never used."

William White, who heads up US West Communications' Year 2000 project, also sees some possible hidden benefits in the venture. "Certain companies have started to figure out that getting yourself Year 2000 compliant is actually a marketing advantage," he says. "That's part of the tack I've taken internally. We want to make sure we're compliant and hand that out to our salespeople."

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