Other IS pros will leave for the lucrative new business of providing expert witness testimony. Still others will be consultants to law firms and perhaps part of the CEO’s defense team.
The cases will focus on the same question that dominated the Watergate and Iran-Contra hearings: "What did the President know and when did he know it?" But the extra question for Milleniumgate will be, "And what did the President then do about it?"
CEOs won’t be able to plead that they weren’t informed of the issue; ignorance won’t be a plausible defense. They will have to show that, once informed, they personally acted as leaders in a business crisis: that they sanctioned the full, needed investment for the technical work, ordered an in-depth business risk assessment (economic, safety, organizational, supply chain, contract performance, and the like) and put in place a contingency plan for handling any crisis created by the year 2000 fallout. The minutes of their top management meetings and boards of directors meetings will be scrutinized for evidence of the attention they paid and the progress reports they routinely got.
The court cases brought by shareholders, customers, insurers, lenders and employees (who lose benefits payments for a few months or lose their health care insurance), will be less about the damage from failures to fix the date problem than about accountability. CEOs can argue in 2001 that it isn’t their firms' fault if they couldn't meet contracted deliveries of parts because European or Japanese trading partners' systems crashed. But that excuse won’t wash. The lawyers will be asking, "Did you show due diligence in risk assessment, contingency planning, monitoring and investment?"
RISING TO THE CHALLENGE
My estimate is that about 30% of CEOs will be able to show that they met the business responsibility here in the U.S. But in Europe, the figures are dreadful. More than 90% of the CEOs I work with there find the entire millennium issue irrelevant. They don’t know much except that it’s big, they don’t know what their CIOs are doing about it, and they’re all still looking for ways to cut IS costs.
Computing Japan reported in its June issue that very few executives there are knowledgeable about the year 2000 problem. Only an estimated 30% of Japanese programmers have the skills needed to deal with old Cobol code, much of which includes English terms. Just about every large U.S. firm does business with European and Japanese companies. How they handle year 2000 problem is now part of your own company’s business risk profile.
Year 2000 is not a computer problem anymore. It isn’t a company, industry or U.S. problem either - it’s a global interdependency problem. Even if an individual company manages to locate, change and test all the needed fixes in its system, it will be affected by the other firms that haven’t done so. That’s an inevitability - the consequences may be trivial or massive, but it’s the job of the CEO to mobilize to prevent the crisis becoming a disaster.
IS has to get that across to senior businesspeople. The lawyers are ready and waiting. A lawyer recently told me that the profession is salivating at the forthcoming opportunities and that, already insurance firms are refusing to issue liability insurance that covers outside directors against year 2000-related lawsuits. That lawyer's estimate of the total year 2000 liability is at least $1 trillion.
Perhaps the next new job title is going to be CLO – chief litigation officer.
Keen can be contacted at www.peterkeen.com. His new book, The Process Edge: Creating Value Where It Counts, was published in June by Harvard Business School Press.
© 1997 Keen Innovations. All Rights Reserved.