Facing 2000 crisis ahead of schedule Some Maryland firms are acting now to fix computer glitch

Expected to cost millions

Problems are already starting to crop up in inventory systems

December 28, 1997|By William Patalon III | William Patalon III,SUN STAFF

The Year 2000 software bug introduced itself to Bob Schoening well ahead of the new century.

As Giant Food Inc.'s senior vice president for information systems, Schoening is the guru of all things digital for the Landover-based supermarket chain. About two years ago, Giant Food's warehouses first began receiving pharmaceutical products date-stamped to expire in 2000. Its inventory control computers balked, reading that date-stamp as "1900" instead of "2000" -- and deciding the pharmaceuticals had reached the warehouse about 100 years too late.

The culprit behind the confusion: The pesky Year 2000 bug.

Thanks to a decision made by some anonymous designer years ago, computers are programmed to read and record year dates by their last two digits -- meaning, for instance, that 1901 is reduced to "01" and 1997 to "97." Unfortunately for Giant, that quirk of computing also meant the pharmaceuticals date-stamped 2000 were interpreted to have expired in 1900.

"What we found," said Schoening, "is that the software we used to ship product no longer worked. We got the wakeup call. This [software glitch] wasn't just a minor problem. It really had the potential to have a major disruptive impact on our business."

Giant Food and other Maryland companies are spending tens of millions to make sure they don't get stung by the Year 2000 bug ("Y2K" in computer-speak). The problem is a global one that the Gartner Group, a market-research firm, projects will take $300 billion to $600 billion to eradicate -- and perhaps more since many companies and government agencies the world over have compounded the problem by waiting until now to start tackling it.

The potential cost to a company to fix the problem is significant enough that the Securities and Exchange Commission is strongly encouraging U.S. public companies to break it out as a separate item in their quarterly and annual financial statements, said SEC spokesman John Heine.

"The bottom line is that federal securities laws are designed to produce disclosures by publicly held companies of all material information, to [have them] divulge any kinds of liabilities," Heine said. "If we're talking about material liabilities, that has to be disclosed."

When finished, Giant says it will have spent about $3.5 million searching out and fixing its Year 2000 bugs.

Many initially believed the Y2K glitch wouldn't become an issue until midnight, Dec. 31, 1999, when that year ends and the new century begins. Doomsayers have predicted a kind of technological Armageddon, with computer systems crashing, telecommunications networks failing, and even microchip-controlled elevators and air-traffic-control equipment malfunctioning -- all because of the tendency of computers to interpret the "00" in the date field of programs as "1900" instead of as "2000."

In reality, however, the problems will begin much earlier, and will gradually gain force, much as a tropical breeze gets whipped into a gale, predicts Andy Kyte, a research director in Gartner's London office.

"The important thing to be concerned over is the next two years, rather than specifically Jan. 1, 2000," said Kyte, whose voice-mail greeting always notes the number of days left until the turn of the century (the day he was interviewed, that number was 739). "The Year 2000 problem is not a time-bomb. It's actually a hurricane."

Software programs used to forecast sales a year or 18 months into the future will be affected. So will the programs factories use to track and stock inventories of items that demand advance orders to fill.

Computer programmers will see their salaries swirl skyward as companies compete for their services, experts predict. Many smaller companies will fail -- dumped by their big customers after failing to become "Year 2000 compliant." News stories about Year 2000 problems will appear daily, and the courts will be swarmed by Y2K bug litigation. Some even say all the chaos caused by the Year 2000 glitch could nudge the world economy into a minor recession.

Maryland companies such as Legg Mason Inc., Mercantile Bankshares Corp., Baltimore Gas and Electric Co., McCormick and Co. Inc., Lockheed Martin Corp. and Giant Food say they're working hard to make sure they don't experience the bug's venom. The companies have hired outside consultants, set up special program teams and appointed information-systems executives such as Giant Food's Schoening to manage the confusing myriad of tasks required to fix the problems.

Most firms concede that they will swat down only the worst of the problems and will focus chiefly on those that could hamper their dealings with their customers.

The Year 2000 problem represents "the first time in technology ++ that a deadline is not flexible," said software executive Peter C. Lynch, joking about the tech industry's penchant for delivering new products well after promised deadlines.

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