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Lessons of Y2K

Will the year 2000 computer problem be remembered as a tedious example of media hype or an epic failure to prepare for disaster?

In the final weeks of 1999, contradictory predictions about the much-anticipated software problem abound. But one thing is clear: even if nothing happens on January 1, 2000, fixing the so-called Y2K problem will have prompted one of the most expensive infrastructure investments in history. Unlike other infrastructure projects, however, this one will leave no visible legacy; in the best-case scenario, it will merely preserve the status quo.

Though precise figures will never be known, software industry experts estimate that governments and corporations have spent several hundred billion dollars globally to ensure that their computers continue to function properly when two-digit date codes go from “99” to “00” right after midnight on December 31. Such numbers are difficult to believe, but the IDB itself provides a case in point. With less than 2,500 employees, the Bank is a small institution by commercial standards; yet it needed $17 million to prepare all its computer, telecommunications and building infrastructure systems for Y2K. Large multinational commercial banks reportedly spent between $200 million and $600 million each.

Although outlays in Latin America and the Caribbean were modest compared to those in Europe and the United States, they were still eye-popping. Lee Tablewski, a senior research associate at the University of Miami’s North–South Center, has been tracking the Y2K phenomenon in Latin America and the Caribbean for several years. Based on personal interviews with the national Y2K coordinators from the eight countries listed in the graph on the right, Tablewski estimates that the region spent at least $15 billion on Y2K preparations.

Much of this money went to consultants and manufacturers of specialized software who performed the tedious job of scouring software programs for faulty date codes and subsequently “fixing” and testing them. Rather than fix old programs, however, many companies and organizations chose to solve their Y2K problem by simply buying brand new computers and software guaranteed to survive the date change. In this respect, Y2K may have had a silver lining. “There’s no question that it helped to modernize the infrastructure of organizations that planned ahead,” says Ricardo Miranda, coordinator of the IDB’s own Y2K activities.

Miranda also believes Y2K will be remembered as a blessing in disguise because it has forced companies and governments to recognize their interdependence and think seriously about disaster prevention and contingency planning in general. “There are certain networks, like those that control telephones and air-traffic control, that are inherently global,” he says. “Every country that is part of the network has to be prepared. But what Y2K has shown is that in many areas we are not prepared to respond rapidly to grave crises. We didn’t have even 1 percent of the contingency plans we need for these things. Now we are doing a little bit better, so that is a positive outcome.”

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