So what exactly is all the fuss about? Will all computer systems simply stop functioning as the clock strikes midnight on 31 December 1999?

Many won't, but the likelihood of at least some of them either failing or producing spurious data is very real. Peter de Jager, a Canadian-based Year 2000 analyst, has been warning industry for years. He was long lambasted as a doomsday merchant and scaremongerer. Only now is his message starting to filter through.

The 'problem' goes back to the 1960s, when external storage devices were expensive and data entry labour intensive. Programmers saved storage space by allocating two digits for the date field. This practice has widely continued despite technological developments. That means that '2000' appears in most data files as '00', which will not differentiate the date from 1900.

The date field is used in data manipulation - mainly subtractions and comparisons. If the computer was asked today to calculate the age of someone born in 1965, it would subtract 65 from 96 and produce the result 31. But in the year 2000, a computer performing a similar calculation would subtract 65 from 00 and conclude the age of the person was -65 or just produce an error message.

This could have serious ramifications throughout many industry sectors. A recent JP Morgan analysis, which was tempting investors with projections of a $200 billion market in the IT services area, uses the example of a phone call started just before the end of 1999 that carries over into 2000, which could be billed as 52 million minutes long. As the telecommunications sector is the most advanced in implementing the changes required this is unlikely to happen.

But one real-life example serves as a warning. In 1993, a system that issued seven-year policies for a medium-sized US insurance company crashed. The disruption was manageable because the volume of seven-year policies was low enough to administer by hand. But the firm's chief financial officer admitted that the company would have gone bust if the system administering one or two year policies had crashed.

It is impossible to determine which systems will fail without an audit of every piece of equipment running software; microchips can turn up the most unlikely places. Elevators, heating systems, lighting, telephone exchanges and inventory systems could all crash.

This potential chaos has stemmed from the human failing of short-sighted planning. The JP Morgan analysis quotes a Raytheon report on Global Positioning System programs: The good news is that GPS programs will not have a "Year 2000" problem. The bad news is that GPS system time will roll over at midnight 21-22 August 1999, 132 days before the turn of the century. On 22 August 1999, unless repaired, many or all GPS receivers will claim that it is 6 January, 1980 . . . and so on. I would expect that some manufacturers have already solved the problem, but many have not.'

The cost is going to be enormous. The US government and its agencies face an estimated bill of some $30 billion, while worldwide estimates range between $300-600 billion.

There may not be enough programmers to solve the problem. The Canadian Imperial Bank of Commerce says that even if each company needs to increase its IT staff complement by 10-15 per cent, supply will not meet demand.

Source: Airline Business