The Year 2000 Problem is likely to cost South Africa R1 billion or more, but there is a way for many companies to sidestep the problem, says Ernst & Young CSI`s Hans Visser The year 2000 (Y2K) problem, or millennium bug, has thrown up some astronomical numbers. One widely used estimate -- that it will cost about R30 billion to solve this worldwide problem -- has recently come under fire as being hopeless understated. Many critics argue that the real cost could well be three times this figure. Supporting the higher rather than lower view, the White House Budget Office has raised to R19 billion its estimate of what it will cost the US Government alone to address the problem. No convincing estimate appears to have been published of what it will cost South Africa, but Ernst & Young CSI managing director Hans Visser believes it will cost well over R1 billion. "Working on the basis that South Africa represents about 1% of the global information technology market, if it is going to cost R90 billion to solve the world`s problem, the cost to us here could hardly be less than R900 million. However, when First National Bank says its 2000 project is expected to cost about R130m alone, R900 for the whole country looks more than a little light." What is clear, says Visser, is that all computer-using organisations need to take action to avert this looming disaster. "Organisations all over the world are battling to upgrade their legacy systems in time, and there`s no doubt about it that a lot of them are wasting their money," he says. "A far better bet for many of the large and medium-size companies, would be to implement an enterprise resource planning (ERP) system." Moving to SAP R/3, Baan, Oracle Finance, PeopleSoft or JDE would not only be more cost-effective, it is a better strategic option, says Visser. Not least of the reasons for this is the finding of a recent worldwide study that, as a result of Y2K projects, 55 percent of all expenditure on IT this year and next will constitute non-value-producing expense. "There is little economic logic spending large sums for no gain beyond ensuring that your legacy systems will continue to work after 1999. It makes much better sense to simply sidestep this issue by implementing software that will not only solve the Y2K problem but will enhance the productivity of your systems and people." Importantly, ERP is no longer just for mega companies, and software manufacturers like SAP AG are now marketing aggressively to mid-sized organisations. For many of these, an ERP implementation will provide the best opportunity to gear up for the 21st century by re-engineering their business processes. "Any company that fails to do this is certain to lose momentum; at worst it will go out of business," he says. "Making a move to ERP now would, in many cases, be the best thing to do to become or remain competitive and avoid Y2K problems."
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