How to Survive the Millennium Bug

Although time and resources are dwindling, there is still plenty you can do to soften Y2K's bite. The worst thing you can do is nothing.

January 1, 1999

By now you've heard of the millennium bug, the technical glitch that threatens to unravel our computer-dependent world.

Predictions of its effects range from “no big deal” to “a complete cataclysm”; no one knows for sure. But one thing experts agree on is that being prepared will improve your business's chances of survival.

Real estate practitioners are likely to feel the bite of the year 2000 bug—Y2K—in many ways. Your home PCs, the MLS, the escrow companies you depend on, and local phone companies all risk serious Y2K malfunctions.

So far, however, real estate professionals are far from alarmed. Only 6 percent of the respondents to a June 1998 member education survey by the National Association of REALTORS® said they were interested in Y2K-related education programs. “If they knew how it might paralyze their marketing efforts, they'd care,” says Matthew J. Ferrara, technology chair of the Real Estate Educators Association.

The problem isn’t so much the bug itself but how vulnerable our dependence on technology has made us to Y2K's effects. “The real year 2000 problem isn’t computers but dependency,” says Robert Pullan, president of Lighthouse Web Technologies, a Y2K software and training developer in Cleveland.

“We all rely heavily on computers for products and services essential to our business,” says Pullan. “And we rely heavily on other companies, which also rely on computers. In most cases, we’ve forgotten how to function without these dependencies.”

In this environment, almost everyone is at risk. “The actual programming error is very simple,” says Chris Kelley, a mainframe programmer in Boston. Kelley has overcome much more complex errors. “The problem is, it’s so widespread.”

Once upon a time . . .

The year 2000 computer problem stems from a simple yet insidious decision. In the dawn of the computer era when memory space was very expensive, software developers intentionally shortened the year date field from four digits (1968) to two (68). The problem will surface as we move from 1999 to 2000, when many computers will interpret 00 as 1900.

This century ambiguity can botch the way programs utilize data, especially with date calculations such as those commonly used for loan interest. With a 30-year mortgage starting in 1972, if 2002 is misinterpreted as 1902, the interest will be calculated over minus 70 years.

Year 2000 pundits have anticipated this time bomb for years, but the fix was expensive, time-consuming, and easy to put off—until now.

No simple solutions

Sounds simple enough—just expand the year date field from two to four characters, right? Unfortunately, it’s not that easy. “There's a mistaken belief that Y2K is a single system problem and that someone will come along with a silver bullet fix,” says Ferrara. “The reality is, there's no single solution.”

Compounding the problem is the fact that businesses aren’t paying attention. According to a recent Wells Fargo survey, 83 percent of small businesses have done nothing to prepare for the Y2K bug, and 40 percent don’t believe it’s a problem.

Many companies will not be Y2K compliant in time, says Pullan. However, the sooner they start, the easier it will be to find the equipment and expertise they need. “Start now,” he says. “Resources are scarce and costly now, but they’ll become even more so as the deadline approaches.”

And, unfortunately, this is one project whose deadline is not negotiable.

Five Y2K danger zones

1.PCs and software—It would be nice if someone would just hand you a list of which systems are compliant and which aren’t, but with unlimited combinations of hardware, software, and operating systems, it’s difficult to make generalizations. “It’s not straightforward,” says Jon Kibler, systems architect for Advanced Systems Engineering Technology, Mt. Pleasant, S.C. “You may have compliant hardware, but your version of Windows or your spreadsheet may not be compliant.” And your PC is only as compliant as its weakest link.

Many people assume that a PC bought in the past few years is compliant, but that’s not necessarily true. To find out, contact the manufacturers and ask what can be upgraded and what must be replaced, or use one of the free or low-cost evaluation programs widely available on the Internet. “You may think you can’t afford new computers, but can you afford to go back to operating with paper and pencil?” asks Kibler.

Be careful: Even a computer that’s been carefully prepared for Y2K can be undone if it electronically exchanges data with one that hasn't been. So if your computers are linked by a network, it’s important to test every machine. And always be wary of any data you get from an outside source.

2.Microchip-embedded systems—Preparing your PC is your first line of defense, but virtually all businesses are also exposed to a much less predictable type of equipment failure. Many office essentials, from telephones to security systems, contain embedded microprocessors that depend on date functions. Michael Jawers, author of Meeting the Year 2000 Challenge: A Guide for Property Professionals (Building Owners and Managers Association;$20), predicts that 5 percent to 20 percent of embedded-chip equipment will malfunction.

Much of this date-dependent equipment is obvious; most fax machines, for example, display the date and time. But some may surprise you, such as an elevator that uses an embedded calendar to determine whether to follow a weekend or a weekday response pattern.

Computerized building systems such as elevators, HVAC, and fire alarms should cause special concern for property managers. An elevator could shut down if its built-in calendar thinks too much time has elapsed since the last maintenance visit.

Or worse, a system may go offline without any indication, says Kibler, “Think of what could happen if a fire alarm system stopped working with no warning.”

To anticipate problems, “contact the manufacturer or repair facilities, look at service contracts, and expect to pay for Y2K compliance,” says Pullan.

Unfortunately, even manufacturers will find it difficult to predict which embedded-chip equipment will have trouble. “Assume that unless you've tested and confirmed a product's compliance, it isn’t compliant,” says Pullan, “even if the manufacturer explicitly claims it is.”

Testing is the only way to guarantee compliance. “To paraphrase the real estate adage, the three most important steps to Y2K compliance are testing, testing, and testing,” says Pullan.

3.Vendor vulnerability—Even if you have no Y2K issues of your own, you depend on systems that do: banks, MLS systems, and escrow companies, for example. Together, those individual links create a chain of events that enables your business to function. “It’s a problem of layers: One problem causes another, which causes another, which causes another,” Kibler says. “Are your vendors checking their vendors? It takes only one failure to break the supply chain.”

“From the practitioner's standpoint, I’d be concerned about the MLS,” says Jerry Matthews, executive vice president of the Florida Association of REALTORS®. “A lot of information in there has aging significance.” If it’s inaccurate or unavailable, “there could be horrific results.”

If you're worried about the MLSs’ compliance, many MLSs are equally worried about yours. “It’s a dilemma for the MLS,” says Pat Bybee, president and CEO of Metrolist in Denver. “No matter how much we try to prevent problems, it won't matter if our members haven't addressed their own equipment.”

One way to reduce your exposure is to ask your important suppliers what they’re doing to prepare, and really listen to their answers. Experts say that if you suspect that any of your vendors won't be ready, you should select an alternative provider or create manual procedures.

Some real estate companies require their vendors to answer compliance questionnaires.

“I hadn't really thought about it as a property owner until I received a questionnaire from one of my tenants,” says Dominic Dutra, Dutra Realty Enterprises, Mission, Calif. Now Dutra plans to send a survey to all his vendors.

4.Customer failure—Your success also depends on the success of your customers. If they fail, you won't get paid.

“A commercial landlord needs to realize that even with a contract, a company that goes bankrupt isn’t going to pay its rent,” Ferrara says.

To protect yourself, ask your important clients about their Y2K preparedness. “The drill is identical to what you do with vendors, except with greater diplomacy,” says Pullan. Your goals are to motivate your clients to plan for Y2K and to assure them that you're on top of the problem, he says. Continuous communication may prevent your clients from losing confidence in you.

5.Contingent risks—U.S. Senate hearings have confirmed that many power and telephone companies won't be fully compliant in time. That'll certainly impact the reliability of those critical services.

“It’s not Armageddon, but it will be an opportunity to experience what it’s like to live in a Third World country for a while,” says Pullan. Be prepared for brownouts and inconsistent service, at least for the first few days of the year, he says.

To foresee how you'd be affected, try a test run without electricity. “Go into the basement and pull all the fuses, then try to conduct business for a day,” suggests Ferrara. “Most of us won't know how paralyzed we are without electronics until we try to survive without them.”

The year 2000 probably won't be the end of the world, but unless you live in a cabin in the woods, it’s sure to bring surprises, inconveniences, and delays. “Folks need to start planning, especially for the contingent risks,” says Pullan. “There's virtually a 100 percent chance everyone will be directly affected by these problems, and there'll be no way to predict exactly when, how, or how often they’ll occur.”

WHAT YOU CAN DO NOW

To protect yourself from Y2K failures, take steps now to assess your risks and make contingency plans. Here's what the experts suggest:

  • Prioritize. You may not have the time or the money to fix everything, so make sure you address the most important pieces first. The MLS is probably a priority; the microwave probably isn’t.
  • Check all hardware, software, and electronic equipment. Contact manufacturers for upgrades, replacements, and written assurance and then test everything. “Spend the time to call every single manufacturer,” advises Ferrara. “There's no way around it.”
  • Contact your vendors, especially those critical to your survival. Obtain written assurance they’ll be fully operational, or find an alternative vendor.
  • Talk to your important clients. Make sure your business won't suffer because of your clients’ failures.
  • Understand your insurance coverage. Most insurance companies are excluding coverage for all Y2K-related damages.
  • Develop contingency plans to deal with the predictable probabilities of Y2K.:

    • Print out hard copies of all important records, forms, and documents.
    • Develop manual procedures for key functions. “Have a supply of purchase and sales agreements printed out and a working manual typewriter,” Ferrara says.
    • Download data. “If you're confident your equipment will be OK, download MLS information a few days before the year 2000,” says Bybee.
    • Keep some extra cash on hand. In case of ATM breakdowns or bank problems, keep enough cash to get you through a week or so. To anticipate a nationwide demand for extra cash, the Federal Reserve plans to increase its currency inventory by one-third in late 1999.
    • Stock up on a 30-day supply of inventory. Placing orders only as needed will make you painfully vulnerable to manufacturers’ failures and shipping delays.
    • Prepare for power outages. Power surges can severely damage equipment. Invest in surge protectors and unplug all important equipment when the power goes out.

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

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