Y2K, the Bad: Fear, hype and the blame game

Tech-wise, Millennium Eve was so quiet, some started to wonder -- did IT overspend on Y2K?

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Stuart McGill was VP of Y2K business at programming tools vendor Micro Focus, where he is now chief technology officer. He's not sure that the risks were accurately presented to management in all cases. "The most likely consequence [of not fixing Y2K issues] would have been irritation rather than disaster," he contends, adding that some IT organizations probably should have been clearer with management about that.

Overhyped or not, the experience left many CIOs feeling as though IT got a bum rap after working at a furious pace. Israel, for example, had managed a team of 37 people who successfully worked on 37,000 systems in the span of just ten months. But after it was all over, he says, he still had to explain to the CFO why it was money well spent.

There's a lesson that came out of Y2K, says Hudson. "No matter what the media says, don't overhype a crisis. A lot of IT people just said, 'You've read the papers. I need the money.' They used the fear factor." And, as a result, "there were credibility issues there." Those doubts about IT were "unfair and unfounded," Hudson says, "but nevertheless they happened."

On the other hand, IT executives who gave more detailed and accurate assessments of risks and costs fared better on the reputation front, he says.

Y2K hangover was a long-term budget-buster

After the Y2K crisis abated, IT executives faced a New Year's hangover of downward pressure on budgets.

"Immediately after Y2K, spending on mainframe and critical systems seemed to fall away," observes McGill. While his company made money selling tools used to fix Y2K issues, even he thinks IT spent "slightly too much" on Y2K.

Indeed, a 2006 IDC report pegged total spending for Y2K remediation and contingencies in the U.S at $134 billion. If that work hadn't been done, IDC calculated, those companies would have experienced a potential $97 billion in lost revenue. That means Y2K remediation cost $37 billion more than the potential damage would have, explains IDC analyst John Gantz.

Worldwide, IDC estimated that organizations spent $308 billion to prevent $237 billion in potential lost revenue, an overspending of $71 billion.

In many organizations, that money had been diverted away from other parts of the business to handle Y2K remediation. In the aftermath, business leaders felt they'd spent enough on modernizing IT and needed to focus next on those other areas. As a result, IT budgets went down and come didn't come back for a few years, says McGill.

Israel agrees with that assessment. Post-millennium, he says, the prevailing attitude was, "You spent so much in 1999, what more could you possibly need?"

Be sure not to miss "Y2K, the Good" and "Y2K, the Crazy".

See more in-depth features

Copyright © 2009 IDG Communications, Inc.

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