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1998-02-24 14:53:02


Plenty of Capacity Left in Y2K Repair Industry: July, 1997



This report from Information Technology Association of America (ITAA) indicates that firms that do y2k repairs were not overloaded with clients as of July, 1997. About 80% said they could take on more business.

If most U.S. firms were well into their y2k repairs, this would be good news for the U.S. But most forms are not well into their repairs. This indicates that (1) most firms were still planning to do the repairs on their own and/or (2) they had not begun, and so they see no reason to hire a third-party service bureau.

If these repair firms were not operating at full capacity at this late date, then we can be skeptical about claims by American industry that the repair is on schedule.

ITAA concludes: "ITAA members report numerous instances of organizations establishing enterprise-wide Y2K program offices yet failing to create the internal mechanisms necessary to force compliance at the business unit level. In short, the Y2K program office remains significantly underutilized. Companies which confuse a Year 2000 public relations exercise with the steps essential for business survival place themselves at substantial risk. This ITAA survey indicates that a significant external capability remains largely untapped."

Meanwhile, Peter de Jager and Capers Jones have said that a firm that did not have a repair program in place in November of 1997 will not finish it by 2000.

* * * * * * * *

Can organizations coping with the Year 2000 (Y2K) software conversion gain access to the critical products and services needed to assist with this work? Many observers warn that, as a result of the pervasive nature of this issue, the fixed completion date involved, and the slowness of firms to respond to their system vulnerabilities, the available capacity of commercial Y2K providers to support many customers could evaporate as the century roll over nears. Excessive demand could severely impact the ability of solution providers to perform software conversions, to maintain products, to control price inflation, and to offer additional services, including software testing, to all buyers. . . .

To help "take the pulse" of the Year 2000 marketplace, the Information Technology Association of America (ITAA) Software Division conducted a survey of IT companies in July, 1997. . . .

As readers will soon discover, this survey contains a surprising but unequivocal finding: while limited vendor capability to offer Y2K support is now viewed as a serious collective concern, IT companies view themselves individually as having the resources necessary to add Y2K clients. . . .

Here’s an important point: Most companies polled are not realizing significant sales revenue from Year 2000 work. Almost 53 percent told ITAA that Y2K accounts for less than 10 percent of total revenue and 77 percent said the date change accounts for 25 percent or less of total revenue. Only nine percent of respondents said that Year 2000 products and services account for 75 percent or more of their total revenue stream. . . .

Respondents appear to have clients in most major industries, with relatively stronger representation in government, banking, manufacturing, healthcare, utilities and telecommunications; and a relatively weaker presence in aerospace, wholesale, education, entertainment and energy. . . .

ITAA asked respondents whether they were experiencing sales growth or contraction of non-Y2K offerings as a result of Year 2000 issues. Fifty one percent indicated that sales are increasing. Of those who agreed, however, 34 percent registered mild agreement and just 20 percent strongly or very strongly agreed. Fifteen percent of respondents disagreed. Asked whether sales were decreasing as the result of Y2K issues, only 10 percent agreed.

•Companies see an industry-wide supply side capacity shortfall. From a "big picture" point of view, capacity is a serious problem for the Y2K solution buyer, according to survey respondents. Indeed, this question polled the highest degree of consensus in the entire survey. Eighty-two percent of respondents think supply side capacity is a serious issue. . . .

•Individual companies have Y2K capacity available. Survey respondents overwhelmingly told ITAA that they have the capacity to take on additional Year 2000 assignments. Asked if they have all the Year 2000 business they can handle for the next six months, over 80 percent said no. Forty-two percent either totally disagreed or strongly disagreed with this notion. Only four percent of companies appear to be contending with a full plate. . . .

•IT Companies are continuing to invest resources in the Y2K marketplace, despite what many are finding to be a disappointing reception. Respondents reported a mixed picture on Y2K sales and revenue. . . .

•Year 2000 workers are generally available in the U.S.; although some signals here are mixed. Worker availability appears to reinforce a soft commercial Y2K marketplace. IT companies told ITAA that for the most part they do not have problems finding technical or marketing personnel nor must they look off-shore to fill the ranks of their workforce. . . .

On the other hand, 41 percent of respondents indicated that they may have to increase prices in the next 90 days based on marketplace labor shortages. Thirty percent disagreed. Twenty-two percent adopted a "wait and see" attitude. . . .

•Experts continue to see Year 2000 demand. While customers may be slow to act, the nation’s most IT-savvy organizations continue to see a formidable marketplace for Year 2000 products and services. . . .

•Organizations must seize the moment. Numerous factors may account for the failure of firms to award Y2K contracts, including organizational inertia, conflicting priorities and opting for internal solutions.


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