Ed Yourden, How can companies spend so much money on y2k fixes and not be showing on the economy?Isn't the money taking away from thier profit margin? And why doesn't the stock market show any signs of this?I don't understand.Is the cost of fixing being shifted to later? This is a serious question and might have been addressed already.If so tell me where.Thanks in advance for your response. I am glad there is a forum like yours to go to for answers. Traveler

-- traveling stranger (robq@mindspring.com), March 31, 1999

Answers

Traveling stranger,

At a "macro" level, the Gartner Group's original estimate of the cost of Y2K remediation would probably be in the range of $600 billion. Actually, that's probably the worldwide estimate, but even if it represents just U.S. spending, it turns out to be one-tenth of one percent of the GNP. For individual companies, one would think that the Y2K spending would be visible as an impact on profits, but Wall Street tends to ignore it as a "one-time" unusual/extraordinary item.

What the economists and Wall Street analysts don't seem to understand is that the $600 billion expenditure may not have been enough -- i.e., some mission-critical systems may not have been finished, and/or there may have been some serious undiscovered bugs that will disrupt things in 2000.

Ed

-- Ed Yourdon (ed@yourdon.com), April 01, 1999.

Ah'm not Ed but if you look at the stats on newly uncreated jobs, and look where they used to be, you will see at least some correlation to the spending on Y2 remediation. A couple of teh banks have cut literally thousands of jobs.

chuck

-- Chuck, a night driver (reinzoo@en.com), March 31, 1999.

There may be another component to this as well. For many companies, the money that was spent on Y2K projects simply wasn't spent on other projects, so the total expenditures may not have gone up that much.

This was the case for my employer and several other large retailers I know. By committing resources to Y2K projects we made the implicit decision not to commit them to other projects. Our total IT expenditure over the past 3 1/2 years that we have been working on Y2K is not noticeably larger than it would have been without Y2K. What is different is that other projects that would have been undertaken during that time were either postponed or abandoned. It was simply a matter of prioritization.

-- Paul Neuhardt (neuhardt@ultranet.com), April 01, 1999.

Ed,

The USA has something like a $6 trillion economy. $600 billion would represent ~10% of GNP.

-- Nathan (nospam@all.com), April 01, 1999.