Cover Story

Dissecting the bug

Everyone has questions about the millennium bug. "Where did it come from?" is the easy one. "How severe will the bite prove to be?" That one is much tougher.

Issue: "Y2K: Binary blowout?," Aug. 22, 1998

in Seattle, Wash. - As worries about the millennium bug grow, it doesn't help that no two experts seem to agree on how many malfunctions will result from the bug, or what the social and economic effects might be. But something unusual will almost certainly happen. "There is no way it will be business as usual at the start of 2000," writes economist and Y2K-watcher Ed Yardeni in a report for Deutsche Bank Securities. Yardeni is typical of the experts who spend many hours thinking and talking about the bug. He warns against doomsday thinking and negativism, yet predicts the world is heading for "a wicked global recession and a 30 percent drop in stock prices." The root of the problem is extremely simple and fixable, if only it weren't so widespread. In the early days of the computer boom, equipment and storage space were extremely scarce. Data was entered via punch cards, and the giant mainframes had to be cooled by water to keep from overheating. For efficiency's sake, programs were written that used only two digits for the date. Things worked fine as long as every date was in the 20th century. But once the computer had to know that year 00 is greater than 99, things became worrisome. The system might think the year was 2000, 1900, or a mythical year zero. The problem could affect everything from mail to transportation to electricity to whether the local supermarket gets a fresh supply of milk. That's why a small army of business analysts and computer consultants is warning government and industry to get their computers repaired-and fast. The Gartner Group says nearly a quarter of all companies haven't even begun the big project. Most of these are smaller firms. Last year, Gartner predicted that total repairs would cost $600 billion worldwide. Their analysts say that number-crunching industries like banking, investing, and insurance are in best shape. But telecommunications, transportation, utilities, and water companies lag far behind. A cynic might say that even if the power goes off and sewage backs up into the bathtub, at least the bank won't lose the mortgage. Merrill Lynch is more optimistic, saying that the world's businesses are taking aggressive steps to fix their bugs. Their report, issued last month, compared the dangers of Y2K to that of a space shuttle mission. "We do not see Armageddon, but like every space flight so far, there is an element of the unforeseen," said the report. "If there are glitches, and there always are, companies expect to manage their way through them as they do in power blackouts, and as they did when the AT&T and America Online networks have occasionally shut down." Arthur Levitt Jr., chairman of the Securities and Exchange Commission, isn't taking any chances. He's fired off a series of letters to executives of more than 9,000 publicly traded companies. He wants accurate reports about their Y2K projects. "Time is short," he warns the executives. "Because the lack of information regarding your preparations for the Year 2000 could seriously undermine the confidence investors place in your company, it is imperative that you provide thorough, meaningful disclosure on this topic." "Thorough, meaningful disclosure" is far from the norm at the moment. Often the public receives only boilerplate assurances that everything is under control. So the SEC issued new guidelines, ordering companies to report how much bug fixes will cost, as well as disclosing the consequences if their computers aren't ready for the year 2000. Expect those reports to show staggering amounts being spent on repairs. BankAmerica is spending $600 million and Citicorp $380 million on their Y2K programs. As regulators scurry to keep business moving forward, others worry about the government's own chances of keeping on track. Rep. Steve Horn (R-Cal.), the House's chief Y2K-watcher, issues regular report cards on federal projects. They're almost always dismal. The feds got a big fat F from Horn in June, down from a D-minus last February. "Underlying this dismal grade is a disturbing slow-down in the government's rate of progress," Mr. Horn explained. He bases his grades on reports from the agencies, the GAO, and the House Subcommittee on Government Management Information and Technology, which he chairs. The Gartner Group says that for all its problems, America is ahead of the rest of the world in the battle against the bug. The Russians, on the other hand, are strapped for cash and plan to wait until after the big day to fix many of their bugs. The Japanese are staying quiet, saying only that their Y2K programs are well under way. No matter what the country, exterminating the Y2K bug will be a boring, tedious job. Managers must first catalog a company's software to see what programs are being used. If commercial software is involved, the manufacturer is called to see if its programs are Y2K compliant. In addition, computer hardware must be checked to ensure that internal clocks can understand the year 2000. Often businesses use custom-made applications written in relatively ancient languages like COBOL, the cyber equivalent of Old Church Slavonic. Programmers must be recruited-or pulled out of retirement-to check and correct date calculations buried in thousands of lines of computer code. Software has been developed that can scan through that code looking for date fields, but so far no program has been able to catch every potential problem. Once all the drudge work is finished, the big moment arrives: testing. Sometimes the process reveals that the bug has been beaten, but it can also show that new bugs have entered the system during repairs. That, in turn, forces programmers back to the drawing board to sift through still more code. Companies that don't begin testing early enough may not have time to fix the unforeseen problems that crop up. Besides all these concerns, there's still the wild card of the whole Y2K imbroglio: embedded chips. These preprogrammed microchips use dates in controlling everything from elevators to climate control systems to hospital equipment to assembly lines. This means that everybody from automakers to hospitals and nuclear power plants must hunt down the tiny chips and replace them. Only a small percentage of the countless chips in use will prove defective-but finding them will be difficult. In recent weeks, much of the furor over embedded chips has been directed at medical device manufacturers. The industry came under fire at a Senate hearing last month for not revealing which products need fixing. Grandpa's pacemaker should be fine, for instance, because it doesn't need a date to function. But in other cases, dates are crucial. Take the radiation emitter used in treating cancer patients. If it can't correctly calculate both the age of the radioactive isotope and the date of the last visit, the patient could get the wrong dose of radiation. The radiation device is already known to be defective, but the prognosis for many other medical instruments is uncertain. The Food and Drug Administration estimates that 2,700 medical device makers (out of 16,000 companies) have products that could be affected by the Y2K glitch. Yet despite the life-and-death implications, only about 500 of the at-risk companies have reported on potential problems, causing heart palpitations among lawmakers from both parties. "This is simply not acceptable," said Sen. Bob Bennett (R-Utah). He charged medical companies were being less than forthcoming in order to protect themselves from legal liability. "I get very, very impatient with people who hide behind lawyers," he said. Senators aren't the only ones looking for straight answers. Y2K books such as Managing '00 by Peter de Jager and the pop guide Year 2000 Solutions for Dummies are starting to move briskly. The biggest seller so far is Time Bomb 2000 by software engineering consultant Ed Yourdon and his daughter Jennifer. He shows what varying degrees of Y2K severity could mean in areas from education to home computers to phone service. The book is written to let readers make up their own minds, but Mr. Yourdon's reaction to the bug was to leave Manhattan for New Mexico. In his book The Millennium Bug, former Christian book agent Michael Hyatt compares the current uncertainty to the days of his Nebraska youth, when his family kept a food pantry and a cellar ready for disaster. "We would often go years without a tornado or a blizzard," he writes. "But that did not make my parents or grandparents any less vigilant." Will such vigilance be necessary in this case? Again, nobody knows. It could be a mild rainstorm or a nasty hurricane. No weatherman can predict the extent of this storm.

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