Bugged By the Millennium

A computer glitch has some Dallasites predicting an apocalyptic meltdown. They may not be that crazy.

The meetings are designed to raise awareness about Y2K by giving program managers from Dallas-area businesses and government agencies a forum in which they can share information about the problems they're finding as they scramble to make their computer systems "Y2K compliant."

The group's speakers have included representatives from Texas Instruments, American Airlines, the city of Dallas, GTE, and Texas Utilities. Company representatives who regularly attend the meetings hail from Frito-Lay, Mary Kay cosmetics, EDS, and Mobile Oil, to name a few.

"The good news is, compared to where we were three years ago, there's a tremendous amount of awareness," Wachel says. "I can remember when there were 100 people around the United States, myself included, and we were literally begging Fortune to write about this, and nothing happened."

The problem Wachel and others like him are battling stems from the way computers store dates. When computers were first made, programmers decided to save precious electronic storage space by lopping the first two digits off the year in dates. So August 27, 1998, for example, is stored as 08/27/98. The computers were told to assume that '98 means 1998.

As far as computers know, the year 2000 doesn't exist. So at the stroke of midnight on December 31, 1999, computers that aren't Y2K compliant will see that the date is 01/01/00 and assume it is January 1, 1900.

It's a relatively simple problem to fix technically; the trouble is one of scale. Computer programs are made up of thousands of lines of computer code, and incorrect dates are scattered throughout those lines like seashells on a beach.

There are also dates hidden in the codes of "embedded chips," the tiny brains that control everything from elevators and traffic lights to factory robots.

In April, Fortune published an article featuring Ralph J. Szygenda, the chief information officer at General Motors, whose rare candid assessment of GM's Y2K situation illustrates the potential for disaster that the bug presents.

When Szygenda arrived at GM in late 1996, he said he was stunned that most of the company's factory managers assumed Y2K didn't affect them. So Szygenda hired 91 experts who, along with squads of GM technicians and programmers, inspected GM's 117 facilities in 35 countries. When they were done, even Szygenda was shocked.

"At each one of our factories there are catastrophic problems," Szygenda told Fortune. "Amazingly enough, machines on the factory floor are far more sensitive to incorrect dates than we ever anticipated. When we tested robotic devices for transition into the year 2000, for example, they just froze and stopped operating."

GM expects to spend up to $550 million to correct the problem, but even if they find every one of the millions of incorrect dates, the company could still see its manufacturing line halted in the new millennium. That's because 100,000 suppliers around the world deliver essential parts to GM on a "just-in-time" basis, meaning that the company's factories don't warehouse extra parts. If a supplier shuts down because of a computer glitch, GM employees and hundreds of suppliers could find themselves out of work, waiting on critical parts.

"That is the worst-case scenario," Szygenda says, "and yet it's a very real threat."

Of course, GM will eventually find a way to fix its assembly lines. The companies less likely to survive are the smaller suppliers. If many of those businesses go out of business, Wachel and others say, unemployment will likely rise, and a recession could set in.

Although all federally insured banks now appear to have their computer systems well on their way to being Y2K compliant, Wachel says there's a chance that the country could experience bank runs depending on how people react when, and if, many businesses fail.

"If there is a perception that [the economy] is going to fail, it could cause people to sell their stocks and create chaos," Wachel says. "If people perceive there's failure, it's probable that there will be failure."

And people are already concerned. Wachel says the important thing to remember is that it's still too early to panic.

"People ask me, 'Bill, are you going to sell all your investments?' I tell them, 'I don't know yet. I'll make the decision next summer.'"

In the meantime, Wachel says the best way for computer illiterates to understand what the Y2K problem means to them is to consider what's possible vs. what's probable. Take electricity. If there are mass power outages, electrically controlled gas pumps won't be able to pump gas into trucks. Those trucks won't be able to make deliveries to grocery stores. In several days, the grocery-store shelves will be empty, and people will begin to panic.

"It's possible for a lot of infrastructure to fail," Wachel says. "It is not probable."

That's because, in Dallas anyway, TU electric has spent some $16 million since early 1996 to fix the problem, and company officials are confident that they'll meet the deadline without an interruption in power, says company spokesman Eric Schmitt.

"Our testing is showing good results. Our overall plan is to have most work and some testing done by the end of this year," Schmitt says. "We want to have the majority of '99 for us to test and review our work."

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