Y2K’s winter to freeze SMEs

1999-10-13

Two recent announcements gave an indication of the likely winners and losers at the turn of the Millennium. First off, the UK Financial Services Authority (FSA) stated that all high- and medium-impact companies in the financial sector were on schedule to complete, or had already completed their Y2K readiness programmes. In another announcement, according to Silicon.com, a study by the Cutter Consortium has found that 50% of US companies were planning a spending freeze on IT equipment between now and the end of the year.

In both cases, the companies which will be most affected are the small-to-medium sized enterprises or SMEs. The FSA report included only 400 out of a total of 8,000 financial services companies in its medium-to-high impact categories. The remaining 7,600 are the smaller companies who, if they have Y2K problems, will impact on a lesser number of “stakeholders” – depositors, policy-holders and investors. Unfortunately these are also the companies which lack the financial resources or in-house IT skills to evaluate the risk and deal with any suspected Y2K weaknesses. UK Government brochures, while well-written, only demonstrate the complexities involved in testing every PC, router and PABX for compliance, not to mention any outsourced services. For companies who have not started this process yet, the remaining 100 days are likely to be insufficient.

Similarly, it is the SME vendors who are likely to be most affected by any spending freeze. Again it is a question of resources – the larger companies have both the financial know-how and the hedged funds to carry them over until the predicted thaw at the end of January next year. Smaller companies do not have the luxury of digging in and waiting: most will survive but there will be plenty that do not.

Finally, on a lighter note (as we are accused of preaching too much doom and gloom about Y2K), it would appear that even the least prepared will steal a march on PLN, Indonesia's national electric board. When asked by an Indonesian newspaper about it's Y2K preparedness, a spokesman for the board replied "We can observe what happens (at midnight 2000) in Western Samoa, New Zealand and Australia and still have 6 hours to make plans.”

(First published 13 October 1999)