Coaxing computers to comply with 2000
For economy, Y2K bug is contagious
As Y2K work wanes, companies search for new niches
Will it be safe to fly? Will you be able to make a phone call? Will your power be on? The Tampa Bay area's major businesses are confident there won't be any major problems.
Times staff writers
© St. Petersburg Times, published May 2, 1999
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Coaxing computers to comply with 2000 For economy, Y2K bug is contagious As Y2K work wanes, companies search for new niches |
Dunbar budgeted $150,000 for the task, a painful amount for a start-up that earned just $229,000 in its latest quarter. He assigned two of his 40 employees to Y2K full time, passed three regulatory reviews, ran simulations with 13 test dates to make sure computers wouldn't go haywire with the New Year and replaced a few vendors he wasn't comfortable with. He even searched the bank's 234 computer connections to other companies for problems -- from the building's elevators to the phone company.
Then a regulator quizzed him about whether he had tested a backup generator the bank planned to install in case of a power outage. Was there a spare tire on the tractor-trailer that Peoples will use to haul the generator to the bank two weeks before Y2K day?
"It just goes on and on," said Dunbar, the bank's chairman. "But I think we'll be ready. It's certainly not going to be the end of the world by any stretch. There's just too much preparedness going on."
That's the view of Tampa Bay area business leaders in every sector from banking to the electric utilities: Their businesses are ready. There's no need to panic. But there also is no guarantee that 2000 will arrive without annoyances and maybe even disruptions of business as usual.
"I think we're in excellent shape," said Gerard Roth, GTE's vice president of technology programs. But, the phone company executive said, anyone who offers "100 percent assurance has a nose as long as Pinocchio's."
Even the most vigilant business is dependent on assurances from its vendors, which may not take the task of rewriting software so seriously.
And U.S. officials have warned that governments and businesses in many other countries have done little to prepare their computers, a potentially ominous sign in an era when a business along Tampa Bay may depend on the reliability of suppliers and subcontractors in Malaysia or Brazil.
One of Silicon Valley's top computer tycoons, Sun MicroSystems chief executive Scott McNealy, recently warned that Asia is "disastrously behind" and "if all of a sudden some core components, some core capacitor or disk driver or keyboard, piece of silicon or something just shuts down, the entire components of the supply chain get shut down."
Many small businesses have put off dealing with the problem, national studies have found, as have many health care providers.
Although Tampa International Airport says all its crucial systems are ready, a recent government study found nine of the nation's 50 largest airports and many more small ones would not make a June 30 deadline for repairs.
Here are reports on how some of the area's major businesses are fighting to master Y2K:
Bank of America Corp., which operates the NationsBank franchise in Florida, spent $411-million on Y2K through the end of 1998 and has budgeted to spend up to $550-million. First Union Corp. has spent $20-million of its $65-million budget
Republic Bank of St. Petersburg, the biggest bank based in the bay area, had spent $400,000 of its $1.4-million Y2K budget as of the end of 1998.
Federal regulators said more than 95 percent of banks were on schedule for Y2K testing as of Dec. 31, but many more are expected to fall short when results come out from a more stringent audit.
Consumers shopping around have to take a bank's word that it is among the safe ones. Regulators so far have taken a "Don't ask; we won't tell" approach to releasing Y2K information on a bank-by-bank basis.
All Federal Reserve chairman Alan Greenspan will say is that an overwhelming majority of U.S. banks have made "impressive progress" and that regulators are following up with the few that have fallen behind.
Bank researcher Marty Weiss, for one, thinks the feds are not releasing enough information to help consumers decide where to keep their money.
Weiss, who runs a bank rating agency in Palm Beach Gardens, found 17 percent of banks were below average and 5 percent were poor in a December survey on Y2K preparedness. Most large banks in Florida, including First Union, SunTrust, Huntington and AmSouth, refused to participate in the survey.
Weiss also found that 32 percent of about 900 banks missed a December regulatory deadline for having "internal mission critical systems" ready, fueling concern the industry is not as prepared as it would lead customers to believe.
Most major banks in the Tampa Bay area say they are confident they will be ready for the millennium.
The two biggest banks in Florida, NationsBank and First Union, said they met the regulators' December deadline for "mission critical" systems. The banks also expect to meet the next target date set by regulators. By June 30, banks have to be in compliance for non-critical uses of their computer systems.
At Republic Bank, about 95 percent of the hardware and 80 percent of the software, including all systems considered critical, have been successfully tested, spokesman Stan Blakey said.
Assuming they pass regulatory reviews this spring, many banks are zeroing in on arguably their toughest challenge: persuading customers not to pull their money out en masse in a year-end panic.
"What we're focusing on now is increasing awareness among our employees," First Union's Ken Darby said. "They're the best ambassadors we have in increasing customer confidence."
Bank of America has even hired a London public relations firm to figure out how to persuade customers not to worry.
John Hall of the American Bankers Association said each bank will be combed over three times by a compliance team put together by the Federal Deposit Insurance Corp, Federal Reserve, Office of Thrift Supervision, Office of the Comptroller of the Currency and the National Credit Union Administration.
The FDIC says it will identify and cite problem banks before year-end, and its usual $100,000 guarantee for each depositor applies.
-- Jeff Harrington
After all, Dow 10,000 and conversion to the euro currency went off without a hitch. There had been fears that those milestones might create problems for computer systems designed to track a four-digit Dow Jones Industrial Average and European currencies that fluctuated independently
The mutual fund industry expects to be able to settle all trades when the markets open Jan. 3, said John J. Brennan, chairman of the Investment Company Institute and the Vanguard Group. The brokerage industry is also optimistic.
"We've been compliant since September. Since then, we've been doing testing internally and within the industry," said Lawrence Silver, spokesman for Raymond James & Associates Inc. in St. Petersburg.
But there is plenty of potential for glitches because of the great interdependence among companies and exchanges in executing and reporting trades, pricing securities, transferring ownership and keeping customer records straight. No company completely controls its own destiny.
"We feel it's impossible for any company to give absolute assurance that things are going to be fine," said Steven Norwitz, a spokesman for T. Rowe Price mutual funds. The Baltimore-based fund group, which has an office in Tampa, is spending about $21-million on Y2K compliance this year.
"Our systems are going to be tested and ready, but if you have a 401(k) client and their system isn't converted completely, that could affect your record keeping," he said. "If people panic and start pulling money out for no particular reason, that's a concern. We're not so worried about our own systems as we are the external reactions and problems of other companies."
Brokerage firms and mutual fund companies have had to disclose their progress getting ready for Y2K, although the reports leave considerable wiggle room. (Reports are on the SEC Web site at http://www.sec.gov). Some, such as Raymond James, report no Y2K spending because the SEC only asked for expenses budgeted separately. The company expects to spend between $3-million and $5-million, Silver said.
The SEC proposes to shut down brokerage firms and transfer agents that have a "material" Y2K problem they haven't solved by Oct. 15. (The proposal is expected to come to a vote this month.)
In the meantime, mutual fund companies and brokerage firms advise customers to hold onto copies of account statements and trade records and call promptly if mistakes show up in the statements that arrive in January.
-- Helen Huntley
"The millennial "falling sky' scenario is highly unlikely," said Tracy Mullin, president of the National Retail Federation, the top trade group for the $2.7-trillion industry. "But we still encourage consumers to plan ahead to minimize any short-term disruption to their lives.
Retailers are on the front lines of the year 2000 enigma. Their business is selling other people's products directly to consumers. They have never been so reliant on computers to keep their customers happy. And they fear a run of needless panic buying during the height of the Christmas holidays could quickly deteriorate into a self-fulfilling prophecy.
Their Y2K vigilance goes far beyond the checkout scanners and credit cards. Retailers buy and manage their huge inventories with computers. Their computers are often connected to their suppliers' computers. Retailers depend on computers to schedule work, stop shoplifters, run elevators, even open the doors to their stores.
Since 1995 most retailers have been spending a lot of money to find and replace software codes that will not work when the calendar hits 2000.
ublix Super Markets Inc. and Wal-Mart Stores Inc. each poured $12-million into their efforts. Federated Department Stores Inc., the owner of Burdines among other chains, has spent $26-million so far and expects the total to reach $46-million, including the costs of new computer systems.
Beall's Inc., a 160-store apparel chain based in Bradenton, spent about $1-million plus three years of work by two full-time programers. They tested every program, fixed every snag identified and plan to wrap up the final tests of the fix-it job by July.
For many retailers, it was the first inventory of exactly what is in their computers. Often they came across ancient, undocumented programs written by consultants who went out of business years ago.
The scope of the job is evident at Eckerd Drugs' Clearwater headquarters, which uses 33,000 programs. Technicians tested 166,000 pieces of hardware and replaced 100,000 of them. After checking 15.8-million lines of computer code, they rewrote 5-million lines.
The biggest retail companies spent the most on Y2K fixes. Small retailers can run their stores manually with less hassle than a huge chain. A question mark is the medium-size retailers -- those with annual sales of $50-million to $1-billion. Many grew quickly because of their ability to use technology, but are not big enough to afford all the bug-proofing, industry analysts say.
"Our earliest system was installed in 1992 and upgraded after 1995," said Kristi Mullis, investor relations director for Discount Auto Parts Inc. "We think our systems are already compliant, but we have done some tests to be sure." The Lakeland auto parts chain, with 1998 sales of $447-million, spent $250,000 on Y2K fixes.
One big unknown to retailers is how well their suppliers' computers work. Many retailers visited supplier factories to do their own tests. More often they asked for letters affirming the supplier was ready.
Imported goods are about 20 percent of all retail sales. Experts think overseas suppliers are more likely to have problems, some of which will not be evident on the shelves until three months after Christmas.
"Overseas vendors are a black hole," said Cathy Hotka, vice president of information technology for the National Retail Federation. "The conventional wisdom is that when an overseas vendor tells you there's no problem, there probably will be."
All the preparations may not matter if there is no electricity, so retailers are mapping contingency plans.
"Home Depot will be open even if it means having guys in the parking lot collecting the money in trash cans," Hotka said.
-- Mark Albright
The St. Petersburg company found that some of the robotic equipment on its circuit board assembly lines was at risk. The controllers, or "brains," of these machines had to be upgraded or replaced. And it wasn't a simple job
"There was more work to be done than we originally thought," said Ron Rapp, senior vice president of operational development. He estimates the company is spending about $3-million on year 2000 repairs.
Technology companies in the Tampa Bay area are finding Y2K work as tedious and complex as any other industry, even though they might have been aware of the problem earlier.
Tech Data Corp.'s project expanded after it acquired Computer 2000 AG last summer. A manager in the Clearwater computer distributor's information technology deparment traveled to Europe in February to train Computer 2000's programers on how to find and fix glitches.
Tech Data even set up a private Web site to update the status of the project. "One thing we felt was most critical was communication," said Tim Jay, a lab manager in the information technology department.
The bug also affected corporate strategy. Tech Data decided to finish its year 2000 work before accelerating the integration of Computer 2000's systems with its own.
Jabil is considering stockpiling some materials in case some of its 900 suppliers are not Y2K-ready. Jabil has joined a group of electronics companies that have banded together to try to evaluate suppliers. Still, Rapp said, "the supplier side is probably our largest question mark."
-- Ameet Sachdev
Officials at the airport concede -- while smiling broadly -- that the arrival of 2000 could sabotage the computer software that keeps track of which departments have how many of what kind of chair
"And desks, and lighting fixtures, and book cases," said Sharon Harrell, director of administration and head of the efforts by the Hillsborough County Aviation Authority to get ready for the next century.
But if they can't find the furniture, it won't be such a big deal. At Tampa International, as at all the nation's airports, the focus is on resolving life and safety issues within the next few months.
"We can ensure that we have a system that turns on runway lights at night, and a backup manual contingency system if the primary system fails," Harrell said. "We can ensure firefighting capability. We can be certain that we have access control so doorways into baggage areas and gates can only be opened by those authorized to do so."
While safety and security systems are getting top priority, the monorail to the long-term parking garage, the shuttles between the landside terminal and the airside, elevators, escalators and baggage delivery systems are getting considerable attention, too.
"We ran a test on the monorail where we rolled the clock over to Jan. 1, 2000, to see what would happen," Harrell said. "The system continued to run, though it sent some weird electronic messages. The maintenance contractor is working now to fix the communications errors.
"But, honestly, if it did quit and people had to walk to and from the long-term garage, it would be an inconvenience, but the airport would continue to operate."
At St. Petersburg/Clearwater International Airport, assessment of computerized systems -- everything from elevators to security -- began last year, and upgrades will be completed before the end of the year, executive director James Howes said. "We know what we need to do, and we're working on it," he said.
While officials at bay area airports are satisfied their operations won't come to a screeching halt, the General Accounting Office, the audit and investigative arm of Congress, won't vouch for airports nationally. In a survey of 334 airports, a third said they would not meet the Federal Aviation Administration's June 30 deadline for repairs and had no backup plans to stay open if computers failed.
The GAO did not identify the airports. The report said most of them are smaller ones, but nine of the nation's 50 largest airports also were not prepared.
Nor are some prominent frequent fliers confident the skies will be safe. The National Football League is asking teams to fly on Dec. 31 for games on Jan. 2 to avoid any Y2K glitches that might occur in the airline industry.
Aerospace firms say they have spent years identifying which of their computer systems have date problems and fixing or replacing them. All of this is costly: U.S. airlines alone will spend more than $2-billion on the repairs.
Seattle-based Boeing Co., the world's biggest jet builder, found "absolutely no safety-of-flight or operations" concerns, spokeswoman Mary Jean Olsen said.
Only three pieces of equipment on some models of Boeing craft are affected, and those are not crucial. If not fixed, they will be nuisances for pilots but not dangerous, the company said.
Southwest Airlines expects to spend $20-million to fix all critical systems by summer.
Fort Worth, Texas-based AMR Corp., owner of American Airlines and the Sabre reservations system, is spending up to $250-million on its year 2000 fixes. The Sabre system already passed its test and has been taking reservations for travel in 2000 since Feb. 4.
The FAA recently tested its computers and radar systems in Denver using a Jan. 1, 2000, date and there were no glitches. The FAA is so confident that on New Year's Eve, Jane Garvey, the FAA's administrator, and Ray Long, who has headed the agency's Y2K preparedness program, will be in the air, crisscrossing the country, from the afternoon hours until long after midnight.
-- Jean Heller and Kris Hundley
Monthly progress reports through March at the state Public Service Commission show that Florida's largest power companies have completed 83.8 percent of the repair work and testing of their computer systems. These 11 utilities, which include investor-owned companies, municipals and electric cooperatives, plan to have their year 2000 projects finished by July 31 or earlier
The PSC posts the reports on its Web site (http://www2.scri.net/psc) as a way to build public confidence in an industry on which so much activity depends. Utilities could be especially vulnerable to the year 2000 computer problem because of the interconnected way they operate, with hundreds of generators belonging to hundreds of utilities run mostly by computers in separate control centers. Power companies swap electricity among themselves on a minute-by-minute basis.
Nationally, an umbrella group known as the North American Electric Reliability Council has been monitoring the situation. In a recent report, the group found that the Y2K problem caused some incorrect dates to appear in event logs and displays but did not appear to interrupt the flow of electricity to customers.
More than 200 utilities, including those in Florida, also ran a drill last month to see how they would respond to the loss of voice and data communications that they normally rely on to monitor power production and distribution. During the exercises, the companies switched to radio and satellite communications systems. Although the drill was described as successful, utilities reported some minor problems, such as out-of-date phone numbers.
Some power experts say it is too early to get complacent. "There's no way to do complete end-to-end testing of a system in a production environment," said Rick Cowles, a technology consultant who spent 25 years in the electric industry. In addition, industry trade groups say there could be billing glitches.
Nevertheless, Tampa Bay area power companies are confident the lights will stay on. Florida Power Corp. had completed 79 percent of its repairs and testing through March, which included poring over 15-million lines of computer code.
Florida Power's audit of its nuclear plant in Crystal River found that most of the systems are controlled by old-fashioned analog components.
Tampa Electric Co. was slightly further along at 85 percent; its sister company, Peoples Gas, also had completed 85 percent of its Y2K work. Seminole Electric in Tampa, which provides power to several regional cooperatives, reported that it had fixed and tested 65 percent of its systems.
Florida Power's parent company, Florida Progress Corp., is spending $15-million to $25-million to address year 2000 issues. TECO Energy Inc., parent company of Tampa Electric, estimates its costs at $8-million to $10-million.
-- Ameet Sachdev
Some callers might experience a busy signal as millions of people across the nation try to call family members and friends to celebrate the year 2000 (or to make sure everyone survived the transition.) International calls may not go through because systems in some countries -- especially those in Central and South America, and parts of India and sub-Sahara Africa -- will not be ready
And in the days after Jan. 1, both routine and emergency phone line repairs could be delayed because the systems that monitor and supply such functions are among the most date-sensitive.
GTE, the largest local phone provider in the Tampa Bay area with 2.3-million customer lines, expects its internal systems to be Y2K-ready by June. But even if the company meets that goal, there are too many variables, too many interdependent parts to the nation's and the world's telecommunications systems to be sure how well everything will work, said David Isenberg, a telecommunications analyst in Westfield, N.J.
"The bottom line is we will not know until it happens," Isenberg said, "and furthermore, stuff could happen well after 12:31" a.m.
There is much out of GTE's control. For example, individual businesses have to make sure internal phone networks and equipment such as fax machines can read the year 2000. Local communities must ensure public safety answering systems such as fire and police departments accessed through 911 are upgraded. And long-distance carriers and cellular phone companies need to make the necessarily computer alternations.
So will it all come together?
"In all likelihood, there will be a dial tone when the phone is raised on New Year's Day," a report by the Federal Communications Commission staff concluded in March.
Nationally, the largest local phone providers covering 92 percent of the country's phone lines will be ready by June, the FCC reported. And the largest long-distance carriers such as AT&T;, MCI/WorldCom and Sprint are on a similar time frame. Also, the agency expects few problems with cellular phone service because many of the wireless handsets and networks are fairly new.
The biggest area of concern is small and medium-size phone companies that serve rural areas, which are not expected to be ready until the very end of 1999. "The tight schedule is cause for some concern," the FCC said.
In Florida, the Public Service Commission's year 2000 coordinator, Brenda Buchan, said she expects few problems even in the rural areas.
As for emergency services, Buchan said, the majority of local jurisdictions throughout the state are replacing or upgrading the appropriate systems. And the state's Telecommunications Relay Service, which provides phone service to the hearing-impaired, is already up to date, she said.
Overall, Buchan said Y2K will end up being a non-event for phone users if everyone stays calm. "New Year's Eve will come and go in Florida," she said, "and no one will notice any difference."
-- Eve Tahmincioglu
These are some of the nightmares Tampa Bay area health care providers and manufacturers are trying to avoid by spending time and money making sure all equipment is ready for the year 2000
Columbia/HCA Healthcare Corp. expects to spend as much as $18-million to ensure that its hospitals in west Florida operate smoothly in 2000. At places such as Largo Medical Center, a 165-bed hospital, that means making a list of more than 10,000 electrical devices, then fixing or replacing equipment -- such as $10,000 defibrillators -- that doesn't work.
BayCare Health Systems, which has 10 hospitals in the Tampa Bay area, can't put an estimate on its Y2K expenses yet, but expects to spend about 70 percent more on its information systems this year than last, largely because of computer upgrades and replacements for Y2K compliance. Cardiac monitors and lab equipment have been high-priority replacements.
Hospitals are only one piece of the health care business.
Removed from patient care, but still critical to the industry, are local companies like Clearwater's Maxxim Medical Inc., which manufactures and distributes surgical trays and non-latex gloves to hospitals. Maxxim is allocating $1-million to make sure production and distribution are uninterrupted by the year 2000.
Doctors' offices, especially solo or small-group practices, are being criticized for ignoring potential computer issues. A Senate panel concluded that more than 90 percent of doctors' offices have yet to address the problem. Though the results may be only minor annoyances, such as scheduling mix-ups or billing errors, they could still cause inconvenience and expense.
Doctors and all Medicare providers are being prodded to take action, at least on their billing systems, by the federal Health Care Financing Administration. HCFA, which handles Medicare reimbursements, has said it will reject provider's claims that are not Y2K compliant after April 5.
But doctors, as well as year 2000 consultants, doubt HCFA will stick to that deadline. They fear the agency still will be untangling its own Y2K compliance problems well into the new century, causing long delays in Medicare payments.
"How much evidence has HCFA produced to substantiate" its own claim of readiness, asked Alistair Stewart, a senior adviser with Giga Information Group in Cambridge, Mass. "I think they're being a little too Pollyanna-ish, but somebody has to be steady. And they're probably doing the right thing, sending that message. Otherwise there would be panic in the streets."
-- Kris Hundley
-- Information from Times wires was used in this report.
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