Some economist analyzed all of the leveraged buyouts of the 1980s and made a startling discovery: In about 70 percent of the cases the companies — generally profitable when acquired — did not generate enough cash to pay off the debt taken on in financing the LBO.
Everyone involved in these transactions knew they would fail, but it didn’t matter, since they all ended up wealthier than when they started.
Why do groups of people who are individually smart seem to act stupidly so often? A group is smart when its members’ personal short-term interests coincide with the group’s long-term interests. Otherwise the group will do stupid things.
That, far more than a bunch of dumb CIOs caught off-guard when a century sneaked up on them from behind, explains why we have a huge year-2000 problem.
The year 2000 is a crisis because until it reached crisis proportions, making this year’s numbers was more important than investing resources in surviving past 1999. Understanding these dynamics should change how you set IS priorities.
I remember raising the year 2000 question back in 1994. We spent exactly one sentence discussing it. Since we lacked the resources to satisfy immediate demand, the year 2000 could wait until 1995, when with luck we would all have different jobs and it would be someone else’s problem. (No, none of us actually admitted to that thought process … maybe I was the only one that shallow.)
What problems do you have with your systems architecture or applications portfolio that you could fix with little stress if you started right now? I’ll bet you have at least one.
Maybe your particular problem is an ancient system with old, fragile code nobody really knows anymore. You can fix it by rewriting modules that require maintenance instead of simply tweaking them, even though the rewrites will take twice as long.
Or maybe you operate a batch legacy environment, and you know in your bones that the company needs to operate in real time. Figure out how to switch one class of updates at a time from the batch queue to online transaction processing and incorporate this into your overall IS strategy.
Use your year-2000 crisis as a lever to sell a long-term program of technology grooming, so you never again experience this kind of difficulty. I know that right now, if you’re a typical CIO or IT director, the year-2000 problem seems like your greatest challenge and these other projects seem distant at best. And I have almost no useful advice to give you on solving your immediate problem except for these very obvious points:
- Make sure you have enough programmers assigned to the project. Then add a few more for good luck.
- Assign or hire the absolute best project manager you can possibly find and afford to run the project.
- Pay more attention to testing than to any other part of the project.
The immense cost estimates for the year 2000 fix are misleading. Yes, organizations will spend huge sums. These sums will have little adverse impact on the economy, though, because for every company that spends there are others, or individual employees, who receive.
The real impact of the year-2000 problem will be to reward far-sightedness: Competitors that have already fixed the problem can now afford to invest in projects that yield a competitive advantage.