Timely Y2K Business Solutions

Managers who take charge can gain a competitive edge.

February 1, 1999

For your business to survive the millennium changeover, experts say, you'll need to take the reins and make some hard choices about priorities, resources, and contingency plans.

“Y2K is not a technology issue; it’s a business survivability issue,” says Jon Kibler, systems architect for Advanced Systems Engineering Technology, Mount Pleasant, S.C. “Companies that do nothing are going to be the first to be hurt.”

Y2K, or the millennium bug, is a computer problem caused by the use of a two-digit abbreviation to express the year. Affected equipment may not recognize the year 2000 and may malfunction or shut down.

The biggest mistake you can make as a CEO or a responsible manager is to say, “My technical staff will fix this,” say the experts. Only the CEO or top manager can decide what the most critical systems are and where the resources should go in the finite amount of time left.

But don’t forget to include the people who know the equipment and software best.

“There should be cooperation from the highest levels to the lowest,” says Dean Choma, information technology manager for Century 21-John Cole Realty, Redford, Mich. Users and technical staff need to help executives understand the technical issues, and executives need to give staff the authority and the resources they need to solve the problem, says Choma.

If you don’t have a technical staff, it’s even more important for you to lead the compliance efforts so that your sales staff isn’t disabled.

“I’ll do absolutely anything to insulate our salespeople from the whole question,” says Dominic Dutra, president of Dutra Realty Enterprises, Mission, Calif. “Not that they should be ignorant on the issue, but it’s our responsibility as brokers to worry about it so that the salespeople can focus on sales.”

Legal concerns

Many companies now require that new contracts and purchases include a compliance guarantee. They can’t hurt, but by themselves such warranties don’t offer fail-safe protection—any vendor can say it’s compliant.

“To think you can relax because you have a letter of compliance is a mistake,” says Patricia Bybee, president and CEO of Metrolist Inc., the MLS in metropolitan Denver. “Do business with people you trust, communicate with your vendors, and make a sincere effort to understand the Y2K issue. It’s about relationships, not getting a letter for your file.”

Real estate companies face “serious liability issues” of their own, says Matthew Ferrara, technology chair of the Real Estate Educators Association, Methuen, Mass. “Without the MLS, you can’t service the seller, and the seller could sue for nonperformance.” Consider adding Y2K disclaimers to your client contracts for protection in case you lose critical tools like power or the MLS, he says.

Recent federal legislation is designed to limit the liability of companies that offer Y2K compliance information in good faith. However, don’t make any assurances to your clients until you can back them up. “Y2K will be a legal feast. You may be held accountable for false or inaccurate statements that harm others,” says Robert Pullan, president of Lighthouse Web Technologies, a Y2K software and training developer in Cleveland.

To protect yourself, keep careful records and establish a firm policy of what to say and what not to say to clients and vendors, says Pullan.

What can you do?

The No. 1 rule of Y2K preparedness is, Don't underestimate its importance. “Eighty-two percent of Fortune 500 companies admit they severely underestimated the costs, complexity, and time it'll take to resolve Y2K issues,” warns Pullan. “If the guys with access to the best resources and virtually limitless cash admit they got it wrong, the odds against a small-business person getting it right on the first try are astronomical.”

For many businesses, addressing Y2K issues will be expensive. “Outsmarting the Y2K bug is going to cost money,” Ferrara says. “If you don’t have a budget in place, you may not be ready to fix problems even when you find them.”

Kibler agrees: “Most companies are finding they’ll need to spend 5 percent to 20 percent of their lifetime investment in information systems on Y2K remediation. And small companies with only three or four computers may need to spend as much to fix the problems as they ever spent on buying computers.”

Make a Y2K plan

Experts advise taking specific steps to successful year 2000 remediation. “Develop a plan; don’t do it willy-nilly,” says Pullan. “Then focus on mission-critical systems first. The rest can happen after the millennium.”Your plan should cover how to

  • Take inventory—Take a hard look at your office and identify every aspect that might be affected. Write down the manufacturers, brand names, and serial numbers of electronic equipment, hardware, and software and list everyone you depend on externally—from the phone company to the bank.
  • Prioritize—You may not have the time or the money to fix everything. So categorize your priorities, starting with the things that are mission critical (see “Y2K priority classifications”). For most real estate offices, that includes such things as the MLS and the telephone. But each company's mission critical needs are different; heat will be critical if you live in Maine but not if you live in Florida.
  • Remediate— Contact the manufacturers to determine your options. “Remediation can be broken down into three action categories: repair, replace, and retire,” says Pullan. “Repair what can be repaired for a reasonable cost; replace items if there are appropriate off-the-shelf products; and retire what can’t be repaired or replaced.”
  • Test—“Test, test, test. There's no more critical step,” advises Pullan. Testing is time consuming, often taking as long as the remediation process itself. But there's no other way to find out what will happen when the hardware, software, and operating system have to work together.

Y2K evaluation software, widely available on the Internet, will help to get your tests started. Search for “Y2K evaluation” or “Y2K test software” (including quotes) using a search engine like Netscape, Lycos, or AltaVista. Remember, you'll need to test for two levels of compliance: first, that each individual fix works, and second, that each fix works with other parts of your system.

Making lemonade

On the bright side, if you're on top of things, your Y2K preparedness may be a great way to add value.

“I see this as a fantastic opportunity for us to provide service for our existing customers and to get new ones,” says Dutra. “We're providing information they can use, such as suggesting they call their mortgage company to make sure their payments will be processed correctly.”

As Y2K problems surface, the companies that are ready will benefit when others falter. “There'll be potential to acquire business and to grow market share,” says Kibler.

Dutra says he considers his reaction to the Y2K challenge philosophical in nature. “You're either proactive or reactive—and the proactive companies usually win out.”

Questions top managers must answer

  • Which systems can you absolutely not allow to fail?
  • How much money can you spend on compliance issues?
  • Where do you look for new vendors if yours are lagging behind?
  • What’s the backup plan if systems fail? If you are without power? Telephones?

Y2K priority classifications

  1. Mission critical-- Systems that are absolutely essential to the survival of your business
  2. Important but not critical-- Systems that cause major inconvenience or loss of revenue if not functioning properly
  3. Useful but substitutable-- Systems that are not essential to the operation of your business or for which an acceptable alternative exists

Y2K Myths Dispelled

Experts say there's a big difference between people's understanding of Y2K and the truth. Here are some popular myths and realities.

Myth: My business is insured against any losses.

Reality: Most insurance companies fear huge losses—that should tell you something—and are quickly excluding all Y2K-related claims on the basis that the year 2000 is a predictable event. Normal business interruption insurance, for example, may not apply if the problem is caused by Y2K.

Myth: I bought all new hardware and software, so they must be compliant.

Reality: New does not mean compliant. “Even IBM won't certify anything purchased before 1998 as Y2K compliant,” says Pullan. Get a guarantee in writing or go elsewhere.

This is not the time to buy cheap, no-name products. You want to be certain the manufacturer will be around after the millennium to address your needs.

Myth: I have a whole year to figure out what to do.

Reality: Many problems won't wait until 2000; they’ll occur when the computer first has to deal with the year 2000. Annual budgets, 30-year mortgages, 60-day escrows, and MLS expiration dates can all create havoc before the new year.

Besides, you want to solve your problems before the feeding frenzy. “When people finally experience failures and decide it’s time to do something, there's going to be such demand that equipment manufacturers and service people won't be able to keep up,” says Pullan.

Myth: My tech staff can handle it.

Reality: Technical staff rarely have the authority or the vision required to make decisions that could impact your company's survival. Make sure you're in control of your company's future.

Sara Geimer is the manager of REALTOR® Magazine's Good Neighbor Awards and a former senior editor with the magazine.

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