Memo re: Y2K Problem

Memo re: Y2K Problem

November 1, 1993

From: Thomas Cook, Department Head, Management Information Systems, AB Corporation

To: Irving M. d’Bose, Chief Executive Officer, AB Corporation

Re: The Y2K or Year 2000 Problem

I need to bring an important issue to your attention. As you know, our current management information system has several limitations, including the lack of integration between the general ledger system (GLS), the accounts receivable system (ARS), the IOTECH system that handles order entry, warehouse inventory control, and shipping, and the personal computers being used to track customer service issues and complaints. Information has to be entered and re-entered at several points in time and the GLS, ARS, and IOTECH system have been modified so many times that constant adjustments are needed just to keep them running. You may recall the problems in February 1992 when programmer Ernie Tyson took a much-needed vacation and the GLS system would not process customer bills. Ernie had to cut his vacation short, fly back, and write new software to remind the system that 1992 was a leap year with an extra day.

Concerns over the management information systems’ viability have been heightened because of the impending millennium change in the year 2000. The potential problems relating to the millennium change include:

The GLS, ARS, and IOTECH systems all automatically record the year value in all transaction records as a two digit number (e.g., A91″ for 1991, A92″ for 1992, etc.). The system clock automatically increments the year counter at midnight on December 31 and saves all old data. However, when the calendar increments at midnight on Dec. 31, 1999, the two-digit counter will increment to A00″ and the systems will erase all data with greater year values so that it can begin counting at 00, 01, 02, etc. These three systems, like most mainframe systems designed before 1990, treat any year value greater than the current year value as invalid data and erase the offending information.

The numerous computers used in computer-aided manufacturing rely on chips with embedded dates, although the date may not be displayed. For example, when the machine lathe control unit reports it completes a job at 11:15 a.m., its internal processor records the time as 11:15 11/1/93. These chips need to be located and reprogrammed because it is uncertain how they will react to the millennium change when the year value will be A00.@

The applications area reports that thousands of lines of computer program coding will need to be rewritten because each line of code is embedded with the date it was created. Again, when the clock rolls over on 12/31/99, it is uncertain what effect this will have on the systems’ ability to read the coding.


The Y2K problem, as the industry is beginning to call this problem, is anticipated to affect over 60 percent of US domestic mainframe users. One international air carrier, KLM, has announced it plans on not flying on 1/1/2000 to ensure the Y2K problem does not adversely affect operations.

The Management Information Systems group recommends that we replace the GLS, ARS, and IOTECH software and hardware systems to resolve both the integration and the Y2K problems. I concur with their decision.


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Authors of the article
Wayne L. Strom, PhD
Wayne L. Strom, PhD, is a professor of behavioral science at Pepperdine’s Graziadio School of Business and Management. As an active consultant to executives and organizations, Dr. Strom has worked with a long list of local and multinational corporations in Europe, Asia, and the United States, including ABC-TV, Baxter Healthcare, CB-Richard Ellis, Citicorp, Consolidated Capital, The Culver Studios, SmithKline, Southern California Edison, Toshiba America, the U.S. Department of Agriculture, and Yamaha. His current focus is on leadership processes for corporate renewal and the development of businesses as continuous improvement/learning organizations. He has served as associate dean, director of graduate programs, and chair of various academic committees. In 1986, he founded the Pepperdine Civic Leadership project, and in 1991, he was selected as a Harriet and Charles Luckman Distinguished Teaching Fellow in 1991. Currently he enlists executives in coaching employable but unemployed and homeless men and women for job searching skills.
W. Scott Sherman, PhD
W. Scott Sherman, PhD, earned his doctorate in Business from Texas A&M University after working for more than 20 years in the newspaper industry. Dr. Sherman has taught at Texas A&M University, Pepperdine University, and Texas A&M-Corpus Christi. Sherman has published in the Journal of Business Entrepreneurship, The Academy of Management Review, and as a contributing author to several books on leadership in the 21st Century sponsored by the U.S. Army. He is also the founding editor of the Graziadio Business Review. Sherman now lives in his native Texas, teaches strategy and organizational change at Texas A&M University-Corpus Christi, does research and consulting with a variety of organizations and follows his avocational passion of landscape photography.
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