Gartner Shows Rise in Y2K-Related IT Spending

The gap between leaders and laggards has widened among companies and countries addressing the year-2000 issue, according to the most recent quarterly report on the issue released here today by the Gartner Group at its Spring Symposium/ITxpo 99.

In addition, 1998 IT spending on year-2000 issues increased to 15 percent to 30 percent of total IT budgets, compared with 5 percent spent in 1997, according to Lou Marcoccio, research director for year 2000 at Gartner.

The new numbers were part of the Gartner Group's most recent quarterly status report on companies' and countries' efforts to combat the year-2000 problem.

Other findings include that much of year-2000 budgets has shifted from IT departments to other departments within corporations as they begin risk assessment and contingency planning. By the end of calendar year 1999, 2.5 times to three times of year-2000 spending will be outside of the IT department, Marcoccio said.

Only 8 percent to 10 percent of year-2000 failures will occur in the two weeks around January 1. Failures will begin to increase in July of this year and then again in October as new fiscal years begin. Twenty-five percent of failures will occur this year, Marcoccio said.

Next year will see 55 percent of year-2000 failures.

That may spell trouble for many companies in the midst of contingency planning, Marcoccio said, because most are preparing for January 1 failures and not those that may happen as soon as three months from now.

In the area of litigation, lawsuits filed have increased from three at the beginning of this year to 80 currently, mostly made up of end users suing software providers.

Most packaged software for the largest of mainframes is still not year-2000-compliant. However, the numbers are improving. Currently 81 percent is not compliant, compared with 88 percent a few quarters ago, Marcoccio said.

On a smaller scale, commercial software companies that have released year-2000-compliant versions of their products may not be putting subsequent upgrades under the same scrutiny. Six percent of commercial software upgrades after the year 2000 upgrade were not found to be compliant.

Several countries and industries have made tremendous progress in their year-2000 projects over the last quarter, Marcoccio said. Mexican and Hong Kong banks are among those that have made great strides. Large companies in Japan and France have also improved.

Pharmaceutical companies, discrete manufacturers, and companies in the U.S. food processing industry have also made great progress, Marcoccio said.

Large U.S. utility companies have also improved, including power, water, and telecommunications. However, utilities owned by local municipalities are still lagging behind the rest of the industry. In addition, utility companies beyond North America are not doing as well.

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