Y2K Survival Strategies
Mark Hebenstreit is a toy maker, not a tech guy. But he knows he hasn't done enough thinking about the millennium bug. "I'm almost embarrassed because I'm so ignorant about this year 2000 stuff," he says, shrugging.
Hebenstreit is founder and CEO of a small but growing toy company called Hog Wild. Since his products -- self-tying shoelaces, forehead propellers, giraffe-shaped chopsticks -- are made in Asia, his operation is small: a staff of three and three PCs. Like most entrepreneurs, he has read about the Y2K problem. He just hasn't spent much time on it. "I guess I'm naïve," he says. "I haven't paid attention to the details of this. Maybe I should."
Time is running short, even for business owners who have begun grappling with the problem. Of the dozens of CEOs Inc. contacted for this story, the majority said they were either "all done" with necessary Y2K upgrades or at least on schedule. Yet nearly all of them are still worried about the potential for disaster.
A lot of CEOs are coming up with solutions of their own. Their plans may not be perfect; not even the most tech-savvy entrepreneur can offer a solution guaranteed to squash the millennium bug. But their stories do offer tools and techniques that you can use to help ensure a glitch-free ride into the year 2000.
Company: Thoits Insurance Service Inc.; Palo Alto, Calif.
Stats: 109 years old, 51 employees, $6.2 million in revenues
System: A local area network (LAN) that links 70 PCs to six servers
Strategy: Leave no chip unconverted to Y2K compliance
Estimated cost of Y2K remedy: $240,000
Turn Mark Hebenstreit inside out and you might get Don Way -- at least when it comes to attacking the millennium bug. Way, CEO of Thoits Insurance Service, in Palo Alto, Calif., has thought about Y2K comprehensively. He is spending buckets of cash to ensure that his 109-year-old business will survive its second fin de siècle. His approach: replace everything. Only Way really means everything.
Thoits is already a full year into a $240,000 systemwide upgrade. Its aging hardware, including six servers and about 70 individual workstations, is being replaced with new machines. By New Year's Eve 1999, all its computers will be Y2K compliant.
"We're replacing a half dozen PCs at a time," Way says. "We wanted to give people laptops, or notebooks, or whatever you call them. We're just doing it sooner now." That's just the beginning. Thoits has also invested in a new telephone switch and new fax machines, out of fear that embedded chips might hiccup when the millennium turns.
Way's company is based right in the heart of Silicon Valley. That's where he gets that extra dose of paranoia. Thoits is surrounded by dozens of chip makers and code writers. And that valley culture -- which first discerned the Y2K bug and then panicked about it -- informs every move Way makes.
He worries that the bug will infiltrate his systems from the outside, despite all his filters and firewalls. There's not much he can do, though, beyond trusting the companies he does business with. "Most of the other networks we interact with belong to big insurance companies, like the Hartford," Way says, adding that he's confident they will handle the problem.
He's less sure of smaller fry. "I've turned down several offers to link up with smaller businesses," he says. After all, he's in insurance. He's averse to risk by nature.
A measured response
Company: Bregman & Co.; Bethesda, Md.
Stats: 14 years old, 47 employees, $3.6 million in revenues
System: A LAN linking 15 networked PCs to one server; employees use 20 more unnetworked PCs in the field
Strategy: Disasters are easier the second time around
Estimated cost of Y2K remedy: $5,000 to $7,000 so far
Last July, Mona Bregman's environmental consulting firm suffered a major tech disaster. She had to shut down her entire network and hire a consultant to rebuild it. "We had to redo everything," she says with a sigh.
It was a nightmare, but it had a silver lining: it made Y2K compliance easier. While the consultant fixed the short-term problem, he also worked to make the company's system millennium-bug-proof.
Bregman has been interested in the Y2K bug for a long time, but she is no alarmist. "I pick everybody's brain that I can," she says, "and from what I've been able to gather, the places that will be affected the most are the ones that issue checks or other materials that are dated month after month."
That would not be Bregman & Co. Its network handles basic word processing, research over the Internet, and some database management. It's not even directly linked to her clients -- the largest of which is the federal government -- so she doesn't worry about exterior threats.
But Bregman can afford to be relaxed. She has steady access to free expert advice, since her daughter has worked on Y2K projects for IBM. "Even though she lives a thousand miles away, I can still call her," says Bregman. "She said to me, 'Hold off, Mom. Software programs are going to come through to make the adjustments you'll need. You're OK if you have newer equipment.' "
With advice like that, who needs to panic? "I get faxes like crazy," Bregman says. "They say, 'We're going to fix you,' but I just toss them." She has her own prevention plans. The few old workstations she still uses will be replaced next year at a cost of $5,000 to $7,000. And there could be more expenses. "Maybe in November 1999, I'll ask for bank-account certification -- just something that tells us how much we have in case our funds disappear or that sort of thing," she says. "I'll let you know in the year 2000."
Company: Christidis Lauster Radu Architects, New York City
Stats: 15 years old, 12 employees, $1.1 million in revenues
System: A LAN that links 12 PowerPCs to three servers
Strategy: Thank you, Steve Jobs!
Estimated cost of Y2K remedy: Zero
Chuck Lauster loves talking about the Y2K bug. Why not? It's not his problem. Architect Lauster is principal and founder of an all-Mac shop. Macs are made Y2K ready and have been for years. The programming code for the Mac operating system readily distinguishes between 1900 and 2000 because it uses all four digits to record years. IBM-compatible PCs use just the last two. Hence the bug.
"This has always been a Mac office," Lauster says with pleasure. But then there's that pesky outside world to think about. Lauster designs buildings that are full of chips. Some systems could be affected by the millennium bug. Might a security system break down? What if the elevators stop running?
"We point out these problems to clients routinely now," Lauster says. "Some people don't realize that the machines they're using are really computers. We have clients who choose to install systems that have this problem. Of course, we mention that for Macs, Y2K is not a problem."
Batten down the hatches
Company: Spencer Reed Group; Overland Park, Kans.
Stats: 8 years old, 125 employees, $50 million in revenues
System: A wide area network connecting about 150 workstations to 27 servers, spread among 24 regional offices
Strategy: Making payroll is Job #1
Estimated cost of Y2K remedy: $75,000
Spencer Reed executive vice-president Bill Solon has to get the checks into the mail. The staffing company employs more than 2,500 temp and contract workers and has to pay each one every Friday. No checks, no workers -- and no business for Spencer Reed. "What our company does, besides finding people, is make sure they get paid," he says. "When your relationship is based on that paycheck, there's not much room for system problems."
If the payroll system goes down in any given week, the company can kiss a big piece of its workforce good-bye. "A lot of times, temps and contractors don't feel loyalty to their employer," Solon says, "so the problem if the check is late or inaccurate is more serious."
There's not much loyalty on the customer side, either. Solon has already heard from a number of Spencer Reed customers demanding assurances that the company has Y2K-proofed its systems. He knows he has to do his best to provide a smooth transition to the new millennium, or he'll risk losing both workers and customers to an aggressive competitor.
His response? A statement in writing that Spencer Reed will test and upgrade all its technology. He's also developing a backup system to issue paper checks on the first Friday in the year 2000, just in case.
Of course, any pledge that Solon makes has to be conditional. There's no way to be absolutely certain that the bug won't bite. "I am developing some language that I'm going to give them," he says. "But we feel like we're not going to have any system problems getting paychecks to people on time."
The best offense is a good defense
Company: Survival Inc., Seattle
Stats: 12 years old, 10 employees, $3 million in revenues
System: A LAN that connects 12 PCs to one server
Strategy: Send in the marines, figuratively speaking
Estimated cost of Y2K remedy: $5,000
For Lee Brillhart, survival isn't just an imperative -- it's a market. He is chairman and CEO of Survival Inc., which makes flak jackets and chemical-warfare-survival kits for the U.S. Air Force, the Secret Service, and other deadly customers. There's no way he'll let some puny computer glitch bring his business to its knees.
Brillhart's company doesn't have a lot of sensitive technology. "Our production line is not superautomated," he says, though he does have some PCs to tend to. "We're reviewing our internal stuff and we've downloaded some software patches."
But Brillhart subcontracts out a lot of his production to smaller firms. It's their systems that concern him. "We're worried about what their exposure to this might be," he says. "So we'll have somebody go in and make sure that their systems -- which may be older -- are repaired."
Survival Inc. is spending $5,000 to hire consultants, who will go in and test the three subcontractor systems it is linked with. "They supply some pretty important stuff to us, so we want to be darn sure they're in good shape," says Brillhart.
Of particular concern: inventory and material resource planning, or MRP, data. "We use a package for MRP, inventory management and control, and for purchasing management," Brillhart says. "We base a lot of our operations decisions on it. What if there is any erroneous data in there -- the wrong information about what we have in stock at a satellite location or a vendor location?" That's why he's sending his own strike force out to every subcontractor.
Fully 75% of Brillhart's sales come from the government. Unlike other government contractors, he won't fret about whether his big customer can upgrade its technology in time. "It doesn't matter whether or not they're Y2K compliant," he says. "Their systems are so poor that we get most of our orders by fax or phone anyway." Imagine that -- old-fashioned commerce with hardly a computer in sight. It gives you hope that maybe we can survive this Y2K thing after all.
Mike Hofman is a reporter at Inc.
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