Statement before Bank for International Settlements

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Basle, Switzerland

Presented by Peter de Jager

April 8th 1998

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Greetings Ladies, Gentlemen, members of the press,

For the past 7 years I have devoted my life to the communication of a single, simple message.

•The computer systems upon which we depend are broken.

•They must be fixed by Jan 1st 2000 at the very latest.

•We are not very good at delivering projects of this type on time.

One would think that if I could prove the truth of these statements, then all reasonable people would see the danger and act accordingly.

Are the systems broken?

All you need do is look at our systems and you'll see they are.

Multinational companies who have chosen to look at their systems have returned with budgets in the 100's of millions of Pounds, Francs, Kroner, Yen, Baht, Marks, Dollars etc. Etc. It is a worldwide problem.

They have arrived at these figures, not because they have been conned by myself or any other smooth talking consultant or farseeing economist.

They have arrived at these figures because they have uncovered problems requiring huge budgets to fix.

Must they be fixed by Jan 1st 2000?

Speak to the Year 2000 manager at any multinational who has taken the time to look at their systems and you'll hear the evidence.

Ask them what would happen if they ignored the problem and you'll hear from them, albeit reluctantly, that if they ignored the problem they would lose the ability to do business in the 20th or 21st century.

That should not surprise you. The 20th century is the age of computers, the epoch of information. Slow the transfer of information and you choke the lifeblood of our society. The flow of information must continue.

You who have focused your life's work on the financial industry should know this. And yet, a recent survey by the World Bank has shown that a pathetically poor number of the member countries are even aware of the problem. What happens to finance when information stops?

How good are we at delivering IT projects on time?

Microsoft is one of the best software companies on earth. I recognize we could debate this, but the facts speak for themselves, they have sold more software than any other company in the history of computers.

Here is a question. Listen to your answer carefully, How often has Microsoft delivered any version of Windows on time? Never?

If the best of an industry has a lousy track record for on time delivery... why do we expect better from the average?

Look closer to home. Ask yourselves... In your own organization, over the past three years, how often has your IT department delivered projects on time?

This then is all you have to do to test the validity of my simple message. The systems are broken, we have a deadline, we're not good at delivery.

We need only look at our systems, listen to those who have looked, and think about the consequences of a late delivery.

But it would appear most human beings have ears, but cannot listen, have eyes, but cannot see, have minds, but cannot think.

There is no longer any legitimate debate over whether or not the Year 2000 problem is 'real.' Too many companies, organizations and governments have discovered that not only is the problem 'real' but it is larger than expected, more complex than imagined, and more time consuming than allowed for.

Whether or not we like it or have the courage to admit it, we do have a crisis on our hands.

One additional piece of information for you to consider.

Organizations who have not yet started this project in earnest will tell you not to worry... everything will be delivered on time.

Yet, companies who have been working on this problem since 1994, mostly financial institutions, will tell you, again albeit reluctantly, they will not, cannot, finish everything on time.

They have too much to do, too little time, too few resources, to fix everything they've found to be broken.

BUT they also no longer have any intention of finishing everything. These companies have finally accepted they are faced with a crisis and like in any crisis are now prepared to make strong, difficult decisions. They are deciding to leave unessential systems by the wayside in order to deliver what they must deliver to stay in business. They are focusing their available resources on their mission critical services.

The message here is not that you must prioritize, all good managers know this.

The message is that companies who started early now realize they are late, while companies who have started late are still suffering under the delusion everything will be delivered on time.

Without hesitation I can tell you this. After seven years of working on this issue, I know of no companies who will complete Year 2000 effortlessly, without risk of failure.

The Year 2000 problem will challenge the ingenuity, the resources and the leadership of any organization. It is without doubt, the biggest risk facing companies worldwide.

Before you shy away from that statement, labeling it hype and exaggeration, please remember my simple message and the associated evidence. The code is broken. The deadline is fixed. We're not good at meeting deadlines.

By itself the Year 2000 is a threat to any and all organizations, and hence to society.

To reduce that threat we need take action. To do that we need leadership, because the actions will involve both courage and sacrifice. To recognize the necessity to act, we must understand the unavoidable consequences of "The code is broken. The deadline is fixed. We're not good at meeting deadlines."

There are three pillar to a modern society we cannot allow to fall.

Finance. That's your job. The money must be accessible. It must be transferable, and people must have confidence in our ability to deliver both of these.

Utilities. Power, water, sewage, all of these must continue to flow... no humour intended. If government does not take immediate, real, action to ensure these services then angry citizens will demand answers as to why, when government was informed of the nature of the problem, they 'let' it happen.

Telecommunications. The phone lines are as important to our society as the roads were important to the Holy Roman Empire. Without reliable communications there are no global or even national economic empires.

And now I sail into dangerous political waters.

While I am an EEC citizen via my Irish heritage, I do not live in Europe. I have no in-depth understanding of either the politics of unification nor of the economics. I stand here with no ax to grind. Never the less I am compelled to comment on the Euro.

I have taken the time to fly here this morning from Washington, DC., I arrived at 7:00 am, I return home in a little less than 6 hours. I have invested 20 hrs to be here. I would beg your open minded indulgence for a little while longer.

My advice regarding the Euro?

Postpone it.

Remember, I know of no companies who will complete Year 2000 effortlessly, without risk of failure.

Remember, the year 2000 problem is simple. The code is broken. The deadline is fixed. We're not good at meeting deadlines.

Adding the Euro conversion project to the Year 2000 problem will double the workload and quadruple the risk of failure.

I know the thought of postponing the Unification of Europe because some programmer left off 2 digits is a ludicrous concept. But remember... The code is broken. The deadline is fixed. We're not good at meeting deadlines.

Even as I plead with you, and others, to realize both projects cannot, should not, be attempted at the same time. I know I'm wasting my breath, but I have no choice but to continue.

After any major failure there is always one great defense against blame and responsibility, 'nobody told me!'

I have removed 'Nobody told me!' as a valid defense from the future sessions of appointing blame. The Euro must be postponed in lieu of the Year 2000. Attempting both projects at the same time is dangerous in the extreme.

There will be some who will use my advice to further their own agenda. They will miss the point of my advice.

There will be others, perhaps a mere handful, who would like to see the Euro move forward, but regretfully, and reluctantly, admit the risk is too high. I hope their voices ring out loud and clear.

Europe is already far behind the curve in taking action on Year 2000, she has been distracted by the Euro, but to continue along this path, without admitting a mistake in timing has been made, is not an option.

Dr. Edward Yardeni addressed you earlier regarding the possibility of a recession due to Year 2000. I would suggest that no matter how accurate his predictions turn out to be worldwide, they will certainly be truer in Europe than elsewhere, especially if Europe proceeds blindly down this ill fated path.

I have been labeled a doomsayer and yet those who label me as such have never made any attempt to invalidate my basic statements. The code is broken. The deadline is fixed. We're not good at meeting deadlines.

I have been described as painting a gloomy picture. I'd like to suggest my only instrument is a lamp, not a paintbrush. That all I'm doing is shedding light on a painting already complete.

Despite my 'gloomy' message, I remain determinedly optimistic we can solve this man made problem. I believe we have enough people to solve this problem. That we have the tools necessary to solve the problem. That we have the skills required to solve the problem.

I hope however we can find leaders with sufficient courage and will to solve the problem.

I wish us well

Yours truly

Peter de Jager

pdejager@year2000.com