While UK bosses are aware of the need for Millennium compliance, manystill see it as something which just affects the IT department rather thanthe business as a whole. Cosima Duggal analyses the findings of a surveycommissioned by VNU and carried out by research firm Spikes Cavell.
There is a clear disparity between board directors’ and finance and IT managers’ awareness of Year 2000 problems, and their understanding of how Year 2000 is going to affect their businesses, according to Profit from our Intelligence, a survey commissioned by VNU and carried out by market research firm Spikes Cavell.
The research confirms that businesses still see Year 2000 projects as a problem for the IT department, rather than something that the board and the business as a whole has to tackle.
The survey found that while a majority of finance directors and IT people are aware of the problems associated with Millennium compliance, a quarter of finance directors and nearly a third of IT people think the issues are not crucial to their business (Figure 1).
Project management is not seen as important. Only 15 per cent of respondents considered it a high end issue.
What is surprising is that plans to bring in external resources also feature very low on the list. Only 31 out of the 272 firms surveyed have plans to bring in other external resources for project management. But the survey predicts that project management will be one of the most onerous tasks of Year 2000 work (Figure 2).
Consultants do not feature highly on the strategy side either. Out of the 272 respondents, only 23 intend to use consultants to help with their external strategy. Only 35 out of the 272 firms intend to call in consultants or off-shore firms to carry out systems testing. This is despite firms’ knowledge that the number of computer systems that need changing and testing, while regular business is expected to continue, will take the best part of a year to complete.
The proportion of IT departments taking on the testing work is also quite low. Only 14 IT departments will take on 100 per cent of the work, while 79 will not take on any at all. The remainder will take on a small proportion of the work, which begs the question, who will actually carry out Millennium compliance?
The survey reveals that of the 10 per cent of top UK firms surveyed, the majority still see Year 2000 date change projects as an expensive irritation. Of the 272 people surveyed, of whom 90 were finance directors and 182 IT managers, two-thirds says they have a strategy in place.
When questioned more minutely, however, all 90 finance directors said they were still looking into their strategy processes and none had completed assessment of it.
IT people were slightly further ahead than finance directors, with 30 per cent having researched their strategy, and 40 per cent having completed it. But, the 15 firms that said they were “Millennium compliant”, turned out to be only half-way through rolling out their Year 2000 strategy.
Overall, there is low awareness of what needs to be included in Year 2000 strategy, indicating that, either no impact analysis had been completed, or if it has it is barely adequate. This can be deduced from firms’ unclear business strategy and the exclusion of essential business components from the overall strategy.
A low percentage of finance directors and IT managers included EDI, news feeds, e-mail, the Internet or billing systems as part of their Year 2000 strategy.
Just over 5 per cent of finance directors included EDI linkages, compared with nearly a quarter of IT people; 1 per cent included news feeds compared with just over 5 per cent of IT managers; just over 8 per cent of finance directors included e-mail, compared with 23 per cent of IT people; just under 6 per cent of financial directors had included the Internet in their strategy, compared with 14.9 per cent of IT people. A higher percentage of both groups – nearly 50 per cent – included billing systems in their Year 2000 strategy.
The Year 2000 issue is not thought to affect outside accounting systems or sales order processing systems – a third of finance directors and IT managers believe it will not have any effect in these areas, and just over 20 per cent anticipate that it will seriously affect their business.
They do not anticipate any problems with manufacturing systems: nearly 50 per cent believe they would not be affected, and only 12.5 per cent thought they would be heavily impacted. Just under 10 per cent of firms believed that the logistics and distribution divisions would be affected by Year 2000, although around 42 per cent of respondents thought there would be no change at all.
What is disconcerting is that firms have not yet come to terms with exactly how many business areas might be impacted: 24 per cent of IT managers and financial directors did not know if new MIS and datawarehousing projects would be affected.
Lack of directed funding also plays a part in poor business strategy.
The research found that most companies’ allocation of budget was poor or non-existent. It found that many financial directors and IT managers were under-aware of Year 2000 problems and did not fully understand the funding needs.
Overall, only 18 per cent of those questioned had a budget for Year 2000 projects, just over 73 per cent of firms surveyed have none, and 8.1 per cent don’t know whether they have one or not (Figure 3).
The biggest inconsistency in strategy is that neither the finance department nor the IT departments are clear how long their budgets are going to last.
IT managers believe that they have an annual budget to deal with Year 2000 issues, but the accountants have accounted for it as a one-off project.
Despite the fact that nearly a third of finance directors and nearly two thirds of IT managers have a Year 2000 company taskforce, on the whole there is little provision for new money for Year 2000 IT. The IT departments tend to be responsible for the management of the taskforce, rather than it being business-led.
Out of the 272 firms surveyed, one organisation receives 20 per cent of new money for Year 2000 projects, another 24 organisations do not get any additional funding for projects, and 18 others get 100 per cent new money.
The sums being diverted from other IT projects are also low: 18 firms will get 100 per cent diverted funds, two firms will receive 50 per cent, another two firms 30 per cent, and about 25 firms will not receive any additional funds from other IT projects. Besides that a large number of IT and finance people are not aware of the source of the Year 2000 budget.
Although 61 per cent of financial directors and IT managers say they believe that board director’s awareness Year 2000 issues is high, the research suggests otherwise. No-one has taken account of what effect diverting the funds will have on the business, whether projects will have to be put on the back burner, or whether other parts of the business will be affected.