ACT II

[@ is discussing a prediction he's made about the effects of the Y2K bug]

@: How do I arrive at an estimation such as "50% of important networks crippled". I don't just pull it out of my head, it is based on numerous reports coming out based on actual surveys and research. Although the results of these studies varies to a considerable degree, I'm starting to see a trend developing of more consistency in the numbers. This one from last week is just one such example:

[@ brandishes a copy of a "recent survey including the Fortune 500", which says]

"The survey covered a broad range of industries from utilities to health care and telecommunications. Seventeen governmental agencies and 144 Fortune 500 company managers responded."

"only 48 percent of those responding expect to have their own mission-critical computer systems tested and compliant by the end of the year"

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RC [frustrated]: Alright, I'm gonna try this ONE MORE TIME...

The Cap Gemini survey Mr. Maudlin refers to is the same one Mr. Core posted about a few weeks ago, and to which I referred in the earlier IEEE thread.

Quoth Mr. Rubin in a discussion of this survey: "The good news is that the vast majority don't see their level of compliance as posing any major business risk. Only about one in ten said that non-compliance may impose a significant business risk. 6% are simply not sure what is going to happen."

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@: Of course! They have to say that to protect their own stock prices and to try to avoid any liability for negligence. Their lawyers tell them they must continue to say they "expect no problems" because to say otherwise would be a flagrant violation of SEC reguirements.

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RC: So they told the truth in one part of the survey, but lied through their teeth in another? Are you sure the legal department didn't lean on them to reduce their remediation percentages? Are they being overly optimistic to appease their stockholders, or overly pessimistic to appease their lawyers? Or both within the same survey response?

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@: Exactly. They can reveal that their entire company is going to explode (a plea for help or a warning to those who pick it up), as long as they "do not believe it will pose a business risk". As long as they say that, they can't be held liable. Think about it, and if you don't believe me, ask any lawyer.

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RC: Are you sure you want to base your prediction of coming events on a survey which ain't worth the powder to blow it to hell?

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@: Yes, it is better than anything I'm hearing from you.

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RC: Man, I'm at a loss. You really believe that Fortune 500 companies are sending "subliminal" messages to those who are attuned to them by way of survey responses?

That's some pretty tortured logic there. I would say it's more likely a confusion over the definition of "mission critical" or something like that, but I kinda just lost the will to live.

If you don't mind using questionable poll data as gist for your predictions, try this from the "Y2K Experts Poll" press release:

"Surprisingly, when asked if legal considerations are affecting their ability to publicly share information about Y2K, 25% of those surveyed say they are in better shape than their lawyers will permit them to state."

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@: Yes, and what did the other 75% say? I rest my case.

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@'s little friend "very (nice@job.'@')": Court adjourned.

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@: Thanks "very".

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RC: 26.4% said they are in much better shape than their lawyers would let them say. 1.5% said they are in much worse shape than their lawyers would let them say. 59.8% said no effect. 12.4% weren't sure. OK?

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@: Yeah, it's always nice when the pollys get so stupid that they hand you the information instead of having to search for it. I deserve a break today! Thanks RC.

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RC: For the second time in our little exchange of views, I'm at a total loss as to how to respond to you. How do those poll numbers in any way support your point of view? They indicate to me that legal considerations tend to make publicly shared information MORE PESSIMISTIC, not more optimistic.

And I am not in the habit of concealing information. If this makes me stupid, color me stupid.

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[@ splits]

-- RC (randyxpher@aol.com), October 07, 1999

Answers

ACT III

RC is committed indefinetly to the Belluve Psychiatric Hospital - Ward C , due to unctrollable paranoia and hallucinations of a naked George W. Bush chasing him through a futuristic Chinatown with a butcher in one hand and his **** in the other.

[Everyone] exits [stage left].

The End.

-- (aye@carumba.!!!), October 07, 1999.

Do we really need to start 2 new threads to review another thread? Come on, there's already too much going on here to keep up with!

Tick... Tock... <:00=

-- Sysman (y2kboard@yahoo.com), October 07, 1999.

Mom, you swore you'd never mention my hallucinations again!

-- RC (randyxpher@aol.com), October 07, 1999.

Hey RC - just admit you lost and quit whining about it!

-- @ (@@@.@), October 07, 1999.

You're right. I should not have started these threads. I am a boob, a fool and an ass. Again, sorry.

-- RC (randyxpher@aol.com), October 07, 1999.

@@@@@, You are really a nasty person. I pity your family. Were you raised with wolves?

-- (Pollywannacr@cker.com), October 07, 1999.

If he were raised by wolves I wouldn't pity him at all, because Wolves kick ass. lol

-- (jack@handey.snl.net), October 07, 1999.

I'm pretty sure I didn't post that last one attributed to me.

OK @, we're gonna do this one more time:

You said "Their lawyers tell them they must continue to say they "expect no problems" because to say otherwise would be a flagrant violation of SEC reguirements." The survey said "26.4% said they are in much better shape than their lawyers would let them say. 1.5% said they are in much worse shape than their lawyers would let them say. 59.8% said no effect. 12.4% weren't sure."

Now explain how this does anything but contradict your statement. Be careful, you're going for the record this time.

-- RC (randyxpher@aol.com), October 07, 1999.

Hey "Pollywanacracker", that's funny! Sorry, I just don't have much sympathy for sore losers, especially when they whine about it.

BTW, I really like your name... "Pollywanacracker".

It's very appropriate, because next year when the stores are out of food, you're going to be wanting a whole lot of crackers!!

LOL!!!

-- @ (@@@.@), October 07, 1999.

OK RC,

I admire your persistence, but I must go to work right now. I'll be back this evening to see if I can explain my logic. You don't have to understand it, but maybe we can agree to disagree. Later.

-- @ (@@@.@), October 07, 1999.

RC,

Ok, here are the observations from my experience on which for the most part I base my conclusions from the various reports and surveys I read. You don't have to like it, but hopefully it will make more sense.

The conditions that apply:

1. The SEC requires public companies to provide an evaluation (not required to be verified by an independent party) of their current status, and any efforts being made toward remediation. The idea here is to warn investors and other dependent businesses if any obvious problems are anticipated that would pose any significant risks to the operation of the business.

2. The SEC does not require any company to be compliant, or even to make any attempt to be compliant. They are simply requiring that each company state to the best of their knowledge if they are aware of any potential risks.

3. Lawyers predominantly advise against disclosure of any information other than that which is required (ie; "I cannot say anything until I speak to my lawyer").

Ok, call our example "The Non-Compliant Corporation". They know that they are not compliant, and will not be compliant by the end of the year. Whether or not this will cause a significant business risk is anyone's guess. Perhaps it should be obvious, but they don't know for sure until it happens. It also depends on what the meaning of significant is, which has not been defined by the SEC, or anyone for that matter.

Now, for simplification, let's look at the 2 most obvious approaches to this problem, and the possible repercussions of each (of course there will be some companies that handle it differently).

Approach A

They decide out of fairness to anyone who may be affected by the operations of the business that they should try to be precautious and give a fair warning. Even though only God knows for sure whether the business will suffer economic losses, they believe that many of their mission critical systems will not function. So they reveal this possibility in their SEC disclosure.

The likely repercussions:

1. Many stockholders will sell out

2. Other dependent businesses will seek new partners to conduct their business with.

3. The Non-Compliant Corporation will most likely be held liable for losses incurred to other parties because they knew they were not compliant and admitted it (intentional negligence). Even though they may be disclosing their status several months before the rollover, many plaintiffs will claim they were not given sufficient time to react.

4. Most devastating of all, The Non-Compliant Corporation could be forced into bankruptcy before they even find out whether or not the business would have been able to survive the disruptions.

Approach B

They know that some of their critical systems will fail and very likely put the business in jeopardy, but how do they know for sure this will cause a "significant" business risk. Maybe they'll be able to get most of it done manually. Maybe they'll be able to get that extra loan they're waiting on and be able to hire more programmers. Maybe a larger company will consider a merger and provide the necessary funds. They decide to go for it and report that they "don't see their level of compliance as posing any major business risk".

The likely repercussions:

1. Most stockholders will hang tight.

2. Most of their business partners will continue to conduct business with them.

3. The SEC will not fine them since they met the requirements for disclosure. They revealed their status and their opinion that they did not see(definitively) that this would pose any major risks.

4. Since they had made an effort to be compliant and were not aware of any "significant" risks, they will be provided an additional 90 days after any failures to fix them before they can be held liable for losses incurred. (This is an excellent strategy for many companies who simply do not want to spend the money to fix something until they are sure it is broken.)

It should be clear that most businesses would opt for the second approach. Notice how the second approach, although they are not compliant, still includes the words you found in the survey... "the vast majority don't see their level of compliance as posing any major business risk."

It's not really outright lying when you think about... they just choose their words very carefully. Notice the key words in bold such as "significant", "see", "major", and even "compliance" leaves a lot of doubt. It's these kinds of words that make the difference in a court of law because they are so open to interpretation. It all depends on what the speaker had in mind when they were spoken.

The point I'm trying to make is that many of these statements you're reading in news reports about "seeing no risks" are meaningless. On the other hand, why would any company admit they will not be compliant by the end of the year if they really don't need to say that? (ie; "only 48 percent of those responding expect to have their own mission-critical computer systems tested and compliant by the end of the year"). My guess is that some of the answers gathered from surveys was done anomynously, or in guaranteed confidence, which in my opinion, actually makes it more credible.

-- @ (@@@.@), October 08, 1999.

Thank you, @, for the time and thought put into this response. Very nice work. Comments:

"The conditions that apply: "

1. & 2. Granted, 3. (Lawyers predominantly advise against disclosure of any information other than that which is required (ie; "I cannot say anything until I speak to my lawyer")).

RC - I'm no expert in legalese, but my assumption is that the lawyers would probably advise: a) "Say nothing unless you have to." (i.e. what you said) b) "Never say anything optimistic unless you're pretty sure you can back it up." (This would seem to be borne out by the response to the "Expert's Poll" legal question.)

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@ - "4. Since they had made an effort to be compliant and were not aware of any "significant" risks, they will be provided an additional 90 days after any failures to fix them before they can be held liable for losses incurred. (This is an excellent strategy for many companies who simply do not want to spend the money to fix something until they are sure it is broken.) "

RC - It's also an excellent strategy for fixing that final 10% of bugs that you missed in remediation. It really is much easier to fix something when you can see where it broke (that's for all you FOF detractors in the house).

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RC - Your portraits of "The Non-Compliant Corporation" are pretty prejudicial - they know critical systems will FAIL (there is a huge difference between occasional malfunction and total failure, ya know), they have no idea whether they are at risk I suppose there are companies out there in that sort of position, but I don't think that's even close to the norm.

Here's a different picture: The N-C Corp. has been pretty careful about deciding which systems are mission critical, because they'd like to remain in business. They know they won't be finished remediating critical systems by EOY. They figure they're about 70% done now (see below), and expect to be at 80-85% on Jan. 1. Their testing has shown their critical systems will not FAIL (complete system failures tend to be pretty easy to spot during testing), but there will be malfunctions to deal with. They make an educated guess that while they have some bumpy days of FOF and workarounds ahead, the risk that they will be pulled under is low.

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@ - "It should be clear that most businesses would opt for the second approach. Notice how the second approach, although they are not compliant, still includes the words you found in the survey... "the vast majority don't see their level of compliance as posing any major business risk."

It's not really outright lying when you think about... they just choose their words very carefully. Notice the key words in bold such as "significant", "see", "major", and even "compliance" leaves a lot of doubt. It's these kinds of words that make the difference in a court of law because they are so open to interpretation. It all depends on what the speaker had in mind when they were spoken."

RC - Yes, there's some weasel words in there, but the statement still stands (in the SEC context at least) as a reassurance that "it's cool to do business with us". Will the weasel words be enough to avoid all legal responsibilty when your customer winds up with his pants around his ankles? I'd say no, but in these Clintonian times, who knows? Still, it seems to me to be a level of risk the average legal department wouldn't take on lightly.

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@ - "The point I'm trying to make is that many of these statements you're reading in news reports about "seeing no risks" are meaningless."

RC - I don't honestly get a warm fuzzy feeling from those statements, either. But from a legal standpoint, I consider them slightly more meaningful than the actual reported numbers. (Granted that there's no penalty for making warm fuzzy statements in an anonymous poll.) @ - "On the other hand, why would any company admit they will not be compliant by the end of the year if they really don't need to say that? (ie; "only 48 percent of those responding expect to have their own mission-critical computer systems tested and compliant by the end of the year")."

RC - Since this started with your prediction, @, I'm going to go out on a limb and make a prediction too - assuming "compliant" means 100% fixed, no glitches - the percentage of compliant mission critical systems will be, for all intents and purposes, zero. 0.0%. That, combined with the fact that The N-C Corp's reported remediation percentages were probably based on a six-week-old status report, then passed through ten layers of bureaucracy and twenty layers of lawyers The point I'm trying to make is these poll numbers are a very poor mirror of reality.

This is why I cringe every time I see these figures, bogus (IMHO) to begin with and then totally divorced from their context, posted by the Paul Milnes of the world and adapted as "facts". And these pseudo-facts become the tentposts of the doomer circus.

But @, we've finally reached the point where it's admittedly opinion against opinion. I agree to disagree.

Thanks again,

-- RC (randyxpher@aol.com), October 08, 1999.