Y2K: Was it worth the cost?

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Y2K: Was it worth the cost?

Without the Y2K Bug's impetus, many companies would have opted for piecemeal solutions rather than scrap aging systems Well, we passed the test and won the battle, but was it worth the cost?

On Jan. 1, 2000, we took a test (some may not have noticed), and it was a whopper -- or was it? As the chiming of the clock ushered in the 21st century around the world, millions of people wondered if the Millennium Bug would bite and if so, just how deep. Many people had predicted an epidemic of computer glitches.

The global glimpses brought to us by CNN showed beautiful images of island sunrises, spectacular fireworks and celebrations galore. Nary a scene was of people rushing to emergency rooms for treatment against the Y2K Bug. There were no massive computer shutdowns like those we had been conditioned to fear.

As the world rubbed its eyes and awoke, the oil was still flowing, and there were no errant missiles flying. As Americans finished their first cups of coffee and leafed through the morning newspapers, some might have been amazed to find no headlines denoting the massive failures of infrastructure caused by the collapse of our computer-based foundation.

What was your reaction? I was so confident that the world would not end, I ushered in the new century amidst the pyramids and festivities on the plains of Giza.

So why was there no technological-breakdown epidemic? Was it the diligent efforts of thousands and the expenditures of millions? Or, as some claim, was the whole matter simply a hoax, a contrived opportunity to charge enormous bills?

Estimates of worldwide spending on Y2K approach $600 billion. According to the Commerce Department, total Y2K Bug preparations in the United States were around $100 billion.

The federal government alone spent in excess of $8.4 billion. Some have criticized the use of such a large amount of money, saying the United States spent too much on something that turned out to be practically nothing. But could we have afforded not to?

Most of the federal government's expenditures were for two departments -- treasury and defense. If you're like me, you're glad for every penny used to avoid an accidental igniting of World War III. And you're pleased the system of payments never once failed.

Although some analysts estimate the United States spent some $40 billion "too much" on Y2K, others remind us that these efforts brought many benefits. Any investments in systems upgrades will almost certainly add to overall productivity and efficiency.

Of course, some experts say it will take months to know the full extent of the problems since only about 10% were anticipated to occur on Jan. 1. What other hidden dates might ambush our computer code? An industry leader recently estimated that 60% to 70% of the world's computer systems have yet to be fully used since the new year began.

Programmer Lane Core said it best: "Y2K is not a one-time event. It's a chronic condition." Anytime you change computer code, you run the possibility of new problems slipping through the open door.

As I predicted last spring, the country saw a spurt of capital spending in 1999, and some notable inventory accumulation in the last quarter.

As the new year dawned, we saw a few minor headaches, but no major disruptions. I didn't buy any disaster food, I didn't stay at home, and I didn't sell any stocks on the last trading day of the 20th century. I did, however, believe there was the potential for a problem; that's why our computer systems were "vaccinated" against the Y2K Bug well in advance of the clock striking midnight.

Was it wisdom or waste? Those of you who spent the time and money to review, rethink and retool your computer systems will find the investment paying for itself. Without the Y2K Bug's impetus, many companies would have opted for piecemeal solutions rather than scrap aging systems.

Of course, there were some expenses not likely to pay out in the future (such as overtime for staff who spent the weekend waiting for calamities that thankfully failed to materialize). Even so, the vast majority of dollars spent and time invested will pay dividends for many tomorrows.

Perryman is president and CEO of The Perryman Group (http://www.perrymangroup.com). He also serves as Institute Distinguished Professor of Economic Theory and Method at the International Institute for Advanced Studies.


-- Martin Thompson (mthom1927@aol.com), February 21, 2000

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