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Most small businesses have no plan for Y2K

Posted online

by Scott Hickman

for the Business Journal

By the time you read this, there will remain fewer than 300 workdays to prepare for the year 2000.

Time is running out, and overall readiness is poor. A recent Gallup poll showed 75 percent of small businesses have not made any year 2000 repairs, and 50 percent have no plans to do so. There are 22 million small- to medium-size businesses in the United States. They are your suppliers and your customers. What will happen to your business if they are not ready for Y2K?

A recent Year 2000 National Symposium, a conference of industry experts, peers and vendors designed to shape Y2K strategies and solutions, attracted approximately 250 attendees (mostly Fortune 1,000 companies) and 50 vendors. The vendors were there to market testing, planning and risk analysis tools. The chief information officers, chief financial officers and industry consultants were there to seek solutions, validate strategies and compare progress.

The general consensus among these participants was that we are sailing uncharted seas, and progress is a mixed bag of "I haven't started yet," to "I learned something else I didn't think of," to "I think we will make it."

The overall actual progress appears to track with recent reports: the financial institutions and automotive manufacturing related industries are the leaders in Y2K readiness, with government and public services way behind, and everybody else somewhere in between.

The U.S. leads European activities, which exceed Asian progress. The comments of certain utility representatives were particularly alarming.

The initial Gardner Group estimate of $500 billion to obtain Y2K compliance appears to be understated. Industry analysts now estimate the cost at more than $1 trillion.

If you still think the issues and risk are not real, a keynote speaker provided this perspective: "The recent GM labor strike is estimated to cost approximately $1.5 billion. One manufacturer in one industry disrupted by a labor agreement. Consider the disruption created by technology failures in all industries at the same time!"

BKD recommends that businesses perform thorough Y2K assessments, the scope of which should include review of a company's various technology components and business partners.

And if you are planning to replace your technology, you are in the middle of Y2K rush hour. Software vendor response time is taking twice as long. In the past 90 days, we have assisted with the negotiation of several software license agreements worth approximately $1.25 million, and only one vendor provided Y2K warranty provisions. We were able to obtain Y2K provisions in all the situations. Be careful!

Your business is a ship, and the year 2000 is an iceberg. The bad news is your are on a collision course with the iceberg. The good news is you may have time to make a decision.

What are you doing?

(Scott Hickman is a CPA with Baird, Kurtz & Dobson, CPAs, in Springfield.)

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