Several discussions over the past few weeks have compelled me to revisit the Y2K problem and its potential impact on organisations everywhere. In many ways, it is not just the compliancy issue but the effect it may have on an organisation as it increasingly refocuses its best and brightest talent on the problem.
Does being aware of the problem in your organisation mean you are in control of the problem?
You will undoubtedly be considering whether this problem is being overhyped and wondering if it is really as bad as it is made out to be. I do not have the definitive answer to this. However, some very smart and savvy people have been sounding the call to action for some time.
I would like to raise a few questions. The first is almost intuitive. As you read this column you may well wonder why we are discussing this topic yet again! The question is: does being aware of the problem in your organisation mean you are in control of the problem?
In many cases it seems the issue has not reached a high enough priority for many senior executives because it is regarded as an IT problem. This is a serious mistake.
I recently read a statement which made me think. It said: "A disruption of the oil supply caused a global recession in the 1970s, this time the cause will be a disruption in the flow of information." (Dr Edward Yardeni, Chief Economist and a Managing Director at Deutsche Bank Securities, based in New York.)
The problem is more pervasive than it appears as it impacts the organisation`s whole supply and value chain. What good does it do if your systems are year 2000 compliant but you cannot order parts because your suppliers aren`t?
This question is relevant to Y2K, but it is also indicative of the increasing complexities as the world becomes ever more electronically connected and businesses become increasingly electronically dependent and integrated. The ramifications of a problem can no longer be isolated as they have the potential to reverberate up and down the supply chain.
This is a crucial time for the whole organisation - starting with the senior executive level - in order to understand its interdependencies, organisationally and electronically, from the obvious links, such as suppliers and customers, to the not so obvious of financial markets and government. The organisation should be planning scenarios to underpin and test its defensive strategy, whether it is a set of small contingencies or a major crisis.
How well prepared is your company to deal with Y2K contingencies? Has the organisation considered its areas of highest impact and risk? Have contingency plans been crafted for these areas should they or any participants in the supply chain fail? Are these plans well communicated and rehearsed?
This highlights the topic of communication. How well is the year 2000 problem understood by the entire organisation? Does every player know about the potential problem, how it might affect their job and the plans that are in place to manage the problem areas?
Each person in the organisation can become an early warning signal regarding potential problems and can form part of the organisation`s damage control. It is the many people at all levels of the organisaiton who will really have to deal with all manner of crisis situations. They will have to make decisions and take action whether or not they are equipped to.
As we move closer toward the year 2000, not only will we need to cope with the problem and decide how to fix it, but the very existence of the problem will cause its own set of issues which have to be dealt with. For example, you may decide to request hard-copy reports of your financial records from the bank as backup to its computer systems. So will almost everybody else - what is the impact of this added volume on the bank and will you be waiting in line? As the problem gets increasingly hyped by the media, your clients - the consumers out there - will want to have some peace of mind and will want to phone your call centre. Are you prepared to handle not only the increased volume but the type of questions they will ask? There are many more similar issues that need to be considered.
There is a rapidly growing industry of Y2K legal counsel. Whereas estimates of the cost of fixing the problem have been in the billions of dollars, the estimates of the cost of litigation that may be brought against senior managers and boards of directors by shareholders, suppliers and customers have risen to a trillion dollars. Ultimately though, what is the use of compensation from litigation if your business has lost its momentum and ability to operate?
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