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Small businesses not forgotten in Y2K

December 30, 1999
Web posted at: 11:14 a.m. EST (1614 GMT)

by Cathleen Moore


(IDG) -- Small businesses, not to be forgotten in the rush to achieve year-2000 compliance, have had a mixed plate of blessings and disadvantages in coping with the rollover.

IT managers in small businesses have faced a different set of challenges in preparing for the year-2000 date rollover compared to their counterparts in large corporations. Although hindered by smaller budgets and less staff, smaller companies benefited from access to government resources and in some cases faced less remediation than larger companies.

The federal Small Business Administration (SBA) and the Association of Small Business Development Centers (SBDC) foundation teamed up to establish a year-2000 readiness training program for small businesses around the country. The SBDC worked with the SBA to help small businesses prepare for the year-2000 date rollover by offering information and services tailored to the needs of smaller organizations. The SBDC conducted year-2000 workshops in which small business owners and workers were given handouts, planning checklists, year-2000 conversion kits, and guidance on how to analyze systems.

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The SBDC program in California, for example, resides under the Trade and Commerce Agency, in Sacramento.

"[California's] small businesses had plenty of assistance to address their Y2K concerns over the past 2 years," said Mike Maramdo, spokesman for the Trade and Commerce Agency. "We provided information, training, and workshops [to] assist many companies in bringing them up to speed."

"The small company owners assessed and documented inventory, completed risk evaluation, contingency plans, Y2K tests, and remediation plans," Maramdo said. "Y2K work that was done consisted of replacing computers, workstations, and software. Businesses throughout the small business development program learned about embedded chips, tested for Y2K problems, and established contingency plans."

Dissemination of information and the costs of year-2000 upgrades are hurdles for small businesses, said analyst John Gantz, senior vice president and chief research officer at International Data Corp., in Framingham, Mass.

"It is not that the resources aren't available, it is the time and money to take advantage of them aren't there or the knowledge of how [to prepare]," Gantz said.

Scott Morehart, service engineer specialist at life insurance company Modern Woodmen of America, in Rock Island, Ill., said his company has been preparing for the year 2000 for approximately three years.

"We've done lots of testing and fixing. All of our applications other than things like word processing, were developed in house," Morehart said. "[Preparing] was a matter of going through each and everyone of them and testing the code. On our mainframe and on the PCs we ran the date up to 2000 and entered some data on all the programs and ran end-of-year reports."

Morehart said that he does not expect anything to occur during the date rollover other than precautionary phone calls from customers. At his company, Morehart will be the lone staff member working at midnight, and programmers will be in the office periodically over the weekend to check reports.

"There is no contingency plan because we don't expect any problems. We've set aside Monday to correct anything and answer phone calls," Morehart said.

Another area for which small businesses have not prepared as well as larger companies is in the preparation of alternatives for the supply chain and disruption of goods. According to Gantz, two-thirds of large organizations have made arrangements for alternate supplies, but less than 40 percent of small companies have made such arrangements.

Smaller companies also have made fewer legal preparations in the event of year-2000 liability issues. According to IDC, approximately 80 percent of large companies have had lawyers review their contingency plans, compared to about 50 percent of small companies with less than 100 employees.

"Large companies have at least thought about the legal liability issue," Gantz said. "[Small businesses] are more vulnerable in that respect and the situation is worse outside the U.S."

The SBDC program not only aided small businesses in assessing systems for year-2000 compatibility, but it also addressed the issue of carefully documenting all remediation efforts, an area on which smaller businesses were not focusing.

Aside from the costs associated with upgrading old equipment, another year-2000 financial burden strapping small companies is the cost of overtime work for employees.

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"In some really small businesses, it may be that your only computer guy will have to come in," Gantz said. "Paying overtime for those people is a little more of a burden on the small company."

Morehart agrees.

"[Preparing or Y2K] was expensive in terms of overtime for our programmers, but other than that, it wasn't that costly," Morehart said.

But small businesses do have some advantages over larger corporations in facing the date change, Gantz said.

"The very small businesses often run on PCs, which are generally running newer software and hardware," Gantz said. "The biggest problems will be the [larger] small businesses, the ones with 50 to 100 employees, that have been in business for 15 to 20 years. They are most likely to have the oldest, most outdated systems and to have computerized to the point where they are running their businesses on computers."

Another advantage, Gantz said, is that the applications that small businesses run are generally not as complex as those of large companies, nor do the small business usually have a lot of linkages to other companies, which is another way to inherit year-2000 problems.

"I think A lot of small businesses can go home on Friday night and come back to work on Monday and worry about it then, and a lot of large companies can't," Gantz said.

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