Computers Today, October 16-31, 1998, Master File

On New Year's Day 2000 as their internal clocks go haywire, air-conditioning systems in critical establishments such as bloodbanks, vaccine cold chains, eutectic freezers and seafood processing plants may stop functioning with serious consequences.

Factories may grind to a halt as supplies fail to deliver their just-in-time shipments. Delivery problems could be compounded as railway signalling computers start malfunctioning, causing massive transport disruptions, and at worst, maybe even serious rail mishaps.

Factories with a small degree of automation are at risk. Electricity board computers or telephone billing systems may release astronomical bills. Aircraft may refuse to take off as computerised pre-flight inspections fail.

Guess who wrote this prophecy of doom? It is none other than K.B. Dadiseth, chairman of Hindustan Lever Limited. To him, the millennium bug or Year 2000 (Y2K) problem has far more significance than a systems fault. Says Seth: "Its potential impact is huge because it is not one big problem, but literally millions of small problems."

The entire world is seized of it but what about India? Is it ready to handle the ticking timebomb? Says N. Seshagiri, director general of National Informatics Centre (NIC), the treasure house of information for the whole nation: "Seth is not indulging in scare-mongering. It's real, real, and 2000 times real. But, I'm afraid Indians have not become scared enough to realise that something is going to hit them. They are in a kind of a fool's paradise." Nasscom president Saurabh Srivatsava voices his concern: "A lot of people haven't woken up to this reality because it seems conceptually such a simple issue that you've written a two-digit code for year and all you now need to do is to change it to four digits."

Now listen to Rabindra Gupta, secretary in the Department of Electronics. "We have really a year to go to identify, test and correct problems. The entire nation should be ready by next June," says he in his preamble to the Year 2000 Survival: A Practitioner's Guide, issued by the government in July last. Is he confident that India will be really ready by then? "Why not? Don't forget that the level of computerisation in this country is low. Big IT users like the railways and telecommunication, financial and banking sector and the government are fully aware of the Y2K impact and corrective steps are underway," clarifies the bureaucrat.

What does Gupta have to say of Dadiseth's prophecy? "The social disorder forecast by him will come if services that are Y2K-dependent fail. It could be financial services, the failure of which could hit the general public," admits Gupta. "No doubt, airline services and insurance policy services which are date-dependent will be badly affected. But I don't think there is going to be any public disorder," reassures the bureaucrat.

Unfortunately, there are few takers for Gupta's line of argument. Says Partha Iyengar, country manager of Gartner Group in India, which specialises in providing personalised advisory services on Infotech: "On an average, almost all sectors of Indian industry have a misplaced sense of complacence.... There is still the feeling that this is mainly a 'mainframe problem, or a problem impacting the high-tech western economies'." Iyenger lists defence, telecom (MTNL, VSNL etc.), post and telegraph, stock exchanges, banking, railways, airlines, nuclear plants, chemicals plants as areas that will face the major brunt.

Seshagiri-led NIC claims that all is well. DoT is equally sure its operations will not be disrupted. A special cell within the department has analysed and found a solution to the Y2K bug. Officials at the Master Control Facility at Hassan (Karnataka) categorically say the Indian satellites "won't go kaput". Claim officials in the civil aviation ministry, "the fear of aircraft falling off the sky in the new millennium is far-fetched. Suppliers of equipment have greater realisation of the Y2K impact on their bottomlines and have done everything possible to survive the big event." Officials at the country's nuclear power establishments maintain that they are at the cutting edge of technology and are ready to face any eventuality. The railways, one of the biggest users of IT in India, is gearing up so that signals don't fail and reservations made in advance are valid on and after the D-day.

As far as banks and financial institutions are concerned, Gupta reassures, it is hunky-dory for them--there won't be any run on the bank on the first day of the new millennium. The RBI has given the task of monitoring Y2K compliance to one of its deputy governors. Under S.P. Talwar, a special team is closely monitoring compliance. Finance ministry officials indicate though that the deadline may be extended to December 31. "Offsite monitoring is on and we expect banking organisations to stick to the deadline," says P. Subramaniam, AGM, banking supervision, RBI.

At ICICI Bank, like many other private sector banks which are newcomers and are IT-savvy, anxiety about the Y2K problem is relatively low because they have adopted technology recently and have made sure that all hardware and software purchases have Y2K compliance certification. "As per our plans, all software and hardware will become compliant by December this year, leaving us with a fair margin to cope with unforeseen contingencies," declares A.G. Prabhu, executive vice president (IT) at ICICI Bank.

LIC, the country's leading life insurance cover provider, admits that most of its software packages are affected as they were using dates in the conventional DD/MM/YY format. LIC started working on the Y2K bug last December and completed modification and testing of some of the packages in time. Implementation and trial runs are expected to commence by November, says the executive director in charge of management systems. What if LIC is not ready by January 1, 2000? "If the problem is not solved, all date-related calculations will go wrong and, hence, data processing will have to be manual. We hope such a contingency will not arise," he adds.

What worries the non-life insurance segment is the impact of non-Y2K compliance. Says a senior executive at the National India Assurance Co: "The millennium problem carries with it big risk of property damage and pure financial losses. Any industrial process which is computerised faces the Y2K risk. Process control computers could crash or give wrong instructions which may lead to property damage. Moreover, any liability cover given to software developers would be exposed to high risk. The air traffic control is one area which would be affected. The aviation policies and airport owners' covers would be under great risk." Are they prepared for such an financial emergency? Their response is guarded: "Sort of."

Given the fact that a major chunk of India's securites market and other related activities are highly wired, what is their level of preparedness? Says Satish Naralkar, NSE: "We are working hard to ensure that all our systems will be Y2K ready far in advance of the turn of the century. Year 2000 readiness is now the foremost priority."

The worry lines on the forehead of the capital market watchdog--the Securities and Exchange Board of India--are lengthening. "Failure to address this issue in a timely manner would cause operational problems in all the institutions operating in the securities market, even to the extent of disrupting financial markets," warns senior executive director O.P. Gahrotra at SEBI.

As a regulatory body for the Indian capital market, SEBI has initiated steps to coordinate the efforts made by the various agencies operating in the capital market. A timebound schedule for implementation of a comprehensive plan to combat the Y2K problem has been drawn. The deadline is December 31, 1998--so that they can test, validate and implement the sytems by June 30 next year. Contingency measures to deal with any likely failure of key parts of the financial market infrastructure are also under way.

"The Indian industry is still at a denial stage," laments Lalit Sawhney, chairman of the Y2K Committee at the Confederation of Indian Indusry (CII). Sawhney, incidentally is the architect of Hindustan Lever's strategies to tackle, what he calls a dimensionless challenge. "Many still believe India is a Unix country and the Y2K problem will be specific to Cobol-oriented programs," says Sawhney. There are millions of software codes written over the years for all kinds of computer systems. And not to forget the embedded systems. Even boilers used in various industries and supplied several years ago have embedded systems which are date-dependent. "The likes of IBM and Digital who have supplied mainframes to Indian corporates have admitted that systems in India are prone to the Y2K problem. Like a responsible corporate entity, they are advising their clients on how to fix it," adds he. On their advice, the RBI has decided to replace the equipment at its clearing centres so that any potential financial crisis is averted.

The global financial giant Merrill Lynch tries to play down the impact. "With corporate India having started computerisation only in the 1990s, Year 2000 for the most part is not a problem," declares a report put out by DSP Merrill Lynch in June this year. Sawhney, obviously, does not share Lynch's optimism. "We can't wait. Waiting would be like playing the game of Russian Roulette. Believe me, Lever or CII is not trying to create a scare. We are talking about this problem loudly because we sincerely believe it can be solved," says an exasperated Sawhney.

Surprisingly, DoE secretary Gupta is tightlipped about how the Rs 700 crore budget allocated to tackle the Y2K bug would be spent. "Don't draw the wrong conclusion that we are papering over this. We are still trying to assess the situation and don't want to create a panic," says Gupta.

He disapproves of the idea that India should involve the Prime Minister into the Y2K campaign just as US President Bill Clinton and British Prime Tony Blair have been drawn respectively into Y2K projects in their countries. "If that happens in India, it will speed up Y2K compliance here," argues Sawhney. Adds Srivatsava: "Not a bad idea." Sawhney and Srivatsava need not despair, despite Gupta's disapproval. NIC's Seshagiri, who is also member-convenor of the IT Task Force, declares that the prime minister would certainly be making a statement in Parliament on the need for Y2K compliance soon.

Does compliance ensure no catastrophe? "Honestly, I can't give a clear answer," says Sawhney nonchalantly. "There is no guarantee that Dadiseth's doomsday predictions will not come true. It is impossible to predict because even if the manufactuer of an item would have overhauled his systems and made them totally Y2K compliant, what about his vendors? Are they Y2K compliant? Today, it is an interdependent world and nobody does everything under a single roof. Still, we would recommend Y2K compliance, so alertness will help to reduce any eventuality," adds he.

Should the government set up a mechanism to give a compliance certificate? Not feasible, avers the DoE secretary. He is perfectly on target because the dimensions of the problem are still unknown.

However, the infotech industry--hardware and software--has not come out with flying colours in the whole ugly drama being enacted all because of a programme glitch. The infotech industry has woken up only when prompted by the non-IT segment, who claim that Y2K is not an IT problem, but a business problem. The Manufacturers' Association for Information Technology (MAIT) has given an assurance that all new shipments would comply with the Y2K regimen. Its software counterpart, NASSCOM, has also joined the fray to drum up support through its slogan "I am Y2K OK" for the domestic market.

It is ironic that Indian brainpower which is helping the world to overcome the millennium bug problem has failed to fix the same problem back home. In their drive to line their purses with hard currency--$2.5 billion--through Y2K projects, the Indian infotech industry has let the domestic economy down. Time is running out: it's hardly 15 months before D-Day. If a concerted action plan is not put in place and executed well in time, Dadiseth's prophecy may turn out to be a reality and the nation may face "the spectre of acute and destabilising economic loss, chaos and wastage" at the stroke of midnight, December 31, 1999!

The Global Nightmare

Worldwide estimates of the Year 2000 problem are staggering. The Gartner Group quotes a price tag of $600 billion. That's about Rs 25,80,000 crore! Financial catastrophe or not, the Y2K knot is tightening--governments all over the world are sanctioning mega budgets for Y2K conversion.

The US government has estimated the cost of its Y2K bill to be around $9.28 billion. According to Sally Katzen, director of the Office of Management and Budget for the President, who is in charge of overseeing millennium bug fixes in 24 federal agencies, half of the government's 77343 mission-critical computers have been made Y2K compliant. However, only 37 percent of these systems have been tested for compliance and put back online.

The Securities and Exchange Commission (SEC) has drawn up guidelines to make sure that the exchanges, their members and agents are Y2K compliant. It conducted an initial "streetwide test" that proved that the financial community is already prepared for the next century. This test involved 29 Wall Street firms, major US stock markets, numerous clearing agents, and other market participants. Test participants sent mock orders dated December 29,1999 through January 3, 2000 to simulate trading during the date rollover.

The hypothetical trading cycle was smooth--with only a few hiccups.

Unlike the 'lets play safe' attitude of Indian insurance companies, the Insurance companies in US are providing protection from the Y2K snafus. For example, the J&H Marsh & McLennannn insurance company has a '2000 Secure' policy that covers wrongful acts, business interruption, contingent business interruption and the expense of setting up backups for back-office services.

According to Logica, one of the UK's highest ranking systems consultancies, the millennium bug will cost the British industry a whooping $2.5 billion. The figure is based on the fact that there are more than 14 million PCs on corporate desks. However, recent reports reveal that only 20 percent of the companies are addressing the desktop problem, and of those only 30 percent are addressing the data where the real problems lie.

In Australia, the focus of Y2K planning is contingency and disaster recovery planning. The government agencies are required to formally address business continuity from a 'year 2000' perspective and send a status report to the government regularly.

The Canadian government began working on the Y2K challenge long before other countries did. It is ranked among the top four countries in the world in terms of Y2K efforts alongwith UK, US, and Australia. It has developed a two-tier approach: the Chief Information Officer Year 2000 Project monitors activity across federal departments and Task Force 2000 helps the Canadian industry in particular. According to sources, the average level of preparedness of 84 government departments and agencies is 44 percent. Similarly, large organisations are expected to have completed about 45 percent of their conversion work by the beginning of this year.

The Y2K problem haunts all nations. So much so, a special international summit on the Year 2000 challenge being sponsored by organisations such as IBM, Compaq, Anderson Consulting, World Bank, etc. is being held in London next month. For the first time, major multilateral governmental organisations and business firms will get together and deliberate on issues pertaining to Y2K

--Kavita Kaur