In-Depth

What hath the year 2000 wrought?

We have all been exposed to the rhetoric surrounding the year 2000, from doomsayers' cataclysmic predictions to "experts" who maintain that there will be no event at all, save for a few disruptions. Those of us who have been involved with year 2000 issues for some time, however, understand that the outcome will fall somewhere between the two extreme.

Never before in the history of IT has there been a globally pervasive and critical project with such an immovable end date. And as difficult as it may be at this time, companies should be asking some key questions. What year 2000 investments can provide future benefit? What have we learned that can be reused? What year 2000 skill sets can be carried over to future IT initiatives? What will be the major business/IT initiatives for the next millennium?

Many companies have benefited from their dealings with year 2000 projects. For example, organizations with inaccurate or even non-existent records of their applications and supporting infrastructure have had to conduct comprehensive inventories of their environments to determine the impact of year 2000. As a result, the majority of companies have identified and eliminated redundant application code and obsolete applications.

These inventories have covered not only internally developed and purchased applications, but infrastructure software, hardware, networks, desktops and end-user applications, and electronic interfaces with suppliers and customers. More recently, these inventories have been extended to include environments that are not traditionally supported by IT, such as laboratory and manufacturing plant equipment and building facilities that use embedded systems. For those companies that have established processes to maintain these inventories on an ongoing basis, comprehensive IT asset management has been established not only for year 2000, but beyond.

Asset management is a critical component to firms preparing risk management and business continuity scenarios. Identifying critical business processes lets companies map these processes to their supporting applications and infrastructure, thereby demonstrating the integral relationship of IT to the business. Using these relationships, and the business processes they support, firms can make decisions regarding IT investments. Business continuity and crisis management plans developed for potential Y2K failures can serve as models for other potential crises, assuming the plans are updated on a regular basis.

In addition, asset management can provide information that can be used to determine the total cost of ownership (TCO) for a company's desktop environment, for example, or for applications and infrastructure supporting a business process. By knowing all of the components of a given process, including the human resources required to maintain it, it is possible to make a business case for replacing some components in order to reduce TCO or to use outsourcing to contain maintenance costs.

Companies are also using the year 2000 to justify IT environment upgrades. The cost of maintaining and enhancing legacy systems to perform functions for which they were not originally designed is usually very high. Rather than remediating legacy applications -- which can be decades old and poorly documented -- companies are replacing them with new, internally developed or purchased applications. Assuming there is enough time to implement and thoroughly test these new applications, this is a good business decision and a sound investment.

Forward-looking companies will also upgrade their hardware, software and network infrastructures. However, the massive amount of IT resources devoted to year 2000 compliance by most companies during 1998 and 1999 will result in a post-year 2000 backlog of strategic projects required to move successful enterprises into the next millennium. This backlog will be further compounded by IT "lockdowns" or "freezes" during the third and/or fourth quarters of 1999. Lockdowns will be required to stabilize IT environments during the final, critical stages of year 2000 testing. This will result in freezing any but the most necessary upgrades to the software/hardware/network environment -- such as correcting problems uncovered during the final testing stages.

Furthermore, we can expect a significant amount of IT resources to be required in the first quarter of 2000. These resources will help address additional year 2000 problems as they occur and as "workaround" solutions are decommissioned. As organizations emerge from the "frenzy" of their year 2000 projects, they will need to determine where to deploy the financial and human resources previously dedicated to this effort, as well as the methodologies, knowledge base and skills resulting from these projects.

Where do we go from here?

Post-year 2000 applications will focus on the deployment of IT-enabled business initiatives designed to enhance customer care, gain market share, and define and capture new market segments. This will occur at the same time that companies will seek to contain IT expenditures by investing in initiatives designed for market growth and overhead reduction.

Two of the major initiatives will be implementing enterprise systems and working toward the concept of the extended enterprise. These enterprise-wide initiatives will use the Program Management Office (PMO) as an enabler, and will leverage the skills developed during year 2000 projects. All of the current "hot" technologies, such as electronic commerce, Web-enabled systems, data marts and workgroup computing, will be incorporated.

Most companies successfully implementing a year 2000 project have established a PMO to coordinate both the technical and business tasks required for this massive effort. Although PMOs have been successfully used for major projects in the past, the year 2000 has brought about an
industry-wide resurgence of their use. Year 2000 PMOs are implemented in many ways, depending on individual company culture. From virtual organizations in decentralized enterprises to formally staffed departments in centralized companies, the objective is to bring the year 2000 effort to a successful completion.

The organizational structure of the year 2000 PMO, as well as the skills of its members, can be applied to any major IT initiative undertaken in the future. Although some of the tasks will differ depending on the project, the objective remains the same. Therefore, as companies wind down their Y2K efforts and begin to address major enterprise-wide projects such as enterprise resource planning (ERP) or extended enterprise implementations, the continuation of the PMO structure should be viewed as a critical success factor.

Prior to year 2000 projects, many companies were already implementing ERP systems -- such as SAP or PeopleSoft -- in order to replace legacy systems. However, the year 2000 has had a dual effect on the implementation of enterprise systems. Some companies have accelerated or begun implementing year 2000-compliant enterprise systems based on the cost and timeframe required to bring their own legacy systems into a state of compliance. Others have decelerated or delayed implementations if they felt they could not execute the plan in time to meet their year 2000 schedules.

Both cases will lead to an increased demand for enterprise system implementations in 2000 and beyond. For organizations that chose to implement enterprise system modules as a way to avoid expensive remediation of their legacy applications, the implementation of additional modules is a logical choice. For those companies that delay their enterprise system implementations, there will be a pent-up demand to accelerate implementation and to recover lost time.

The year 2000 will provide several reusable components for enterprise system implementations. First, the organizational structure of the PMO and the skills of its members can be directly applied to enterprise system projects. Second, the identification of business processes and their dependencies on applications and supporting infrastructure, developed
during the year 2000 risk management process, can provide valuable input in planning and prioritizing implementation of enterprise system modules. Third, the testing strategy, change management and quality assurance skills developed for testing can be directly applied to enterprise system projects.

The extended enterprise

The explosive growth and success of electronic commerce and the Internet, coupled with the pent-up demand for deployment of strategic business initiatives, will drive companies to implement extended enterprise solutions. With the knowledge gained about interdependencies and the importance of customer and supplier relationships during year 2000 projects, companies will begin to consider their business partners as members of an "extended enterprise" rather than as just external entities. This implies a partnership between the enterprise and its customers and suppliers -- one that shares more information, but that still maintains the confidentiality of proprietary and competitive data. It is also a partnership that requires teams of business and IT resources to work closely with business partners in order to design and deploy market-driven solutions.

This new partnership -- Customer Relationship Management (CRM) -- also requires the integration of Web-enabled applications, data warehousing and groupware with either legacy or enterprise systems, which will continue to provide infrastructure processing. This customer-collaborative business strategy further requires the deployment of focused knowledge management to the customer in order to gain or retain market share. Customers will continue to demand more personalized services in the future, and those companies that are able to quickly respond with these services will be rewarded with expanded market share.

Moving toward the extended enterprise will also increase the demand for infrastructure upgrades, some of which will
already be in place as a result of year 2000 activities. These infrastructure upgrades will revolve around Web architecture, data management, workflow management and application enablement tools. New business frameworks will also be required to enable the extended enterprise.

Global business opportunities

The third initiative designed for market growth and overhead reduction will be preparing for the European monetary unit, the Euro. While most of the Euro effort to-date has been concentrated in Europe, U.S. companies that do business in Europe will need to address this issue.

U.S. firms doing business globally will need to assess the impact of the Euro from both a business and technical perspective. The Euro was phased in on January 1, 1999, with the introduction of a common currency (the Euro) for member nations. It culminates in July 2002 with the withdrawal of those individual national currencies. Although financial institutions, notably banks and security houses, have been addressing the issue, many other U.S. companies doing business in the European market have not yet addressed the impact of the Euro.

The Euro can provide new business opportunities within the European market, and companies need to understand these potential opportunities in order to strategize and decide what action to take to preserve or expand market share. Inaction, on the other hand, could lead to a possible loss of market share. At the very least, companies will need to analyze their financial processes and systems, determine the changes required, and then decide whether remediation (à la year 2000), redevelopment or purchasing software that incorporates Euro processing is the best choice.

Skill sets of the future

The year 2000 has resulted in the development or enhancement of IT staff skills that can, and should, be applied to post-Y2K initiatives. The skills of those engaged in PMO activities -- communications, risk management and quality assurance -- can be leveraged by using them for major new initiatives, while the knowledge and experience of the people possessing these skills can also be reused.

Year 2000 testing has forced companies to concentrate on their testing and quality assurance processes, and change management environments. New and/or refined testing strategies and processes, as well as strong change management environments should be used to expand the year 2000 test environment to an enterprise test environment.

Those participating in year 2000 risk management/business continuity exercises have developed a repository of knowledge that links business processes with their IT dependencies. This knowledge can be used post-year 2000 to assist in deciding future business, as well as IT strategies and investments.

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