By David Orenstein

04/26/99 Wal-Mart Stores Inc. will spend more than twice as much as it previously expected to solve year 2000 problems and is seeing some deadlines slip. But at $27 million, the new Y2K tab for the nation's largest retailer is still only a fraction of any of its major competitors'.

In its annual shareholders report filed last week with the Securities and Exchange Commission, $137.6 billion Wal-Mart said it had spent only $8 million on year 2000 by the end of January.

It will spend another $19 million this year to test its converted systems and replace noncompliant hardware. In previous reports, Wal-Mart had said its spending would total $12 million. Spokeswoman Jessica Moser declined to explain how the company's estimated expenses have more than doubled.

But recent statements from other retailers show their spending is much higher, ranging from $46 million to $75 million. Several analysts said Wal-Mart's newer systems are keeping its Y2K costs lower than even its largest competitors, which are a fraction of its size.

Rather than heightened efficiency, however, Wal-Mart's year 2000 bill might really be a product of the unclear reporting requirements the SEC has imposed on companies, said Cathy Hotka, vice president of IT at the National Retail Federation (NRF) in Washington.

The NRF is a trade association that includes virtually all the major retailers except Wal-Mart.

Wide disparities in Y2K spending among airlines, for example, have been chalked up to reporting differences rather than major differences in IT sophistication [CW, Feb. 22].

Wal-Mart reported that all its internal systems have been converted and that its critical systems have been tested. A second round of testing began last month, and a third is planned for October.

But tests with business partners and suppliers will be completed in October instead of July, as Wal-Mart previously reported. The company's formation of a contingency plan was also delayed to October.

But analysts gave Wal-Mart credit for its in-house efforts and business-to-business links. "Wal-Mart is ahead in implementing [new] systems to optimize a whole range of critical retail business processes. [It] hasn't been penny-wise and dollar-foolish," said Greg Girard, an analyst at AMR Research Inc. in Boston.

Link

-- (trend@watcher.now), April 27, 1999

Answers

It's worth noting that Walmart's 1999-2000 fiscal year began on Feb 1, 1999. More evidence that the FY rollovers, including the much more visible Apr 1 dates for NY State and Canada, have not (yet) provided any visible evidence of significant Y2K problems.

-- Ed Yourdon (ed@yourdon.com), April 27, 1999.

Which, if ANY of us had used an ounce of thinking cap timeshare, would have been the expected state of affairs and we wouldn't all be defending or explaining this to --bks-- and CET etc.

Chuck

-- chuck, a Night Driver (rienzoo@en.com), April 27, 1999.

Can they really create a contingency plan between Oct and Dec?

-- Mitchell Barnes (spanda@inreach.com), April 28, 1999.

Perhaps the increased costs are due to addition remediation found necessary after their roll over to the new fiscal year. Notice they said that WalMart has "new systems" too. Are new systems harder or easier to fix than older systems? If easier, one would think that would lower the costs instead of raising them - unless they turn out to be less compliant rather than more.

-- Valkyrie (anon@please.net), April 28, 1999.

What ever happened to the need to have all the repairs DONE by 1/99 to allow for a full year of testing???

-- winna (??@??.com), April 28, 1999.