The Day The World Shuts Down

Drink deep from your champagne glasses as the ball drops in times square to usher in the year 2000. Whether you imbibe or not, the hangover may begin immediately. The power may go out. Or the credit card you pull out to pay for dinner may no longer be valid. If you try an ATM to get cash, that may not work, either. Or the elevator that took you up to the party ballroom may be stuck on the ground floor. Or the parking garage you drove into earlier in the evening may charge you more than your yearly salary. Or your car might not start. Or the traffic lights might be on the blink. Or, when you get home, the phones may not work. The mail may show up, but your magazine subscriptions will have stopped, your government check may not arrive, your insurance policies may have expired.

Or you may be out of a job. When you show up for work after the holiday, the factory or office building might be locked up, with a handwritten sign taped to the wall: OUT OF BUSINESS DUE TO COMPUTER ERROR.

Could it really happen? Could the most anticipated New Year's Eve party in our lifetimes really usher in a digital nightmare when our wired-up-the-wazoo civilization grinds to a halt? Incredibly, according to computer experts, corporate information officers, congressional leaders and basically anyone who's given the matter a fair hearing, the answer is yes, yes, 2,000 times yes! Yes - nless we successfully complete the most ambitious and costly technology project in history, one where the payoff comes not in amassing riches or extending Web access, but securing raw survival.

What's the problem? It's called, variously, the Year 2000 Problem, Y2K or the Millennium Bug. It represents the ultimate indignity: the world laid low by two lousy digits. The trouble is rooted in a seemingly trivial space-saving programming trick - dropping the first two numbers of the date, abbreviating, say, the year 1951 to "51." This digital relic from the days when every byte of computer storage was precious was supposed to have been long gone by now, but the practice became standard. While any idiot familiar with the situation could figure out that the world's computers were on a collision course with the millennium, no one wanted to be the one to bring it up to management. And, really, which executive would welcome a message from nerddom that a few million bucks would be required to fix some obscure problem that wouldn't show up for several years?

So only now, as the centurial countdown begins, are we learning that the digit-dropping trick has changed from clever to catastrophic. Because virtually all the mainframe computers that keep the world humming are riddled with software that refuses to recognize that when 1999 runs out, the year 2000 follows. When that date arrives, the computers are going to get very confused. (PCs aren't as affected; sidebar.) So that seemingly innocuous trick now affects everything from ATMs to weapons systems. Virtually every government, state and municipality, as well as every large, midsize and small business in the world, is going to have to deal with this - in fact, if they haven't started already it's just about too late. Fixing the problem requires painstaking work. The bill for all this? Gartner Group estimates it could go as high as $600 billion. That amount could easily fund a year's worth of all U.S. educational costs, preschool through grad school. It's Bill Gates times 30!

That tab doesn't include the litigation that will inevitably follow the system failures. "You can make some very reasonable extrapolations about litigation that take you over $1 trillion, and those are very conservative estimates," says Dean Morehous, a San Francisco lawyer. (Conservative or not, this is more than three times the yearly cost of all civil litigation in the United States.)

Come on, you say. Two measly digits? Can't we just unleash some sort of robo-program on all that computer code and clean it up? Well, no. Forget about a silver bullet. It seems that in most mainframe programs, the date appears more often than "M*A*S*H" reruns on television - about once every 50 lines of code. Typically, it's hard to find those particular lines, because the original programs, often written in the ancient COBOL computer language, are quirky and undocumented. After all that analysis, you have to figure out how to rewrite the lines to correctly process the date. Only then comes the most time-consuming step: testing the rewritten program.

It's a torturous process, but an absolutely necessary one. Because if we don't swat the millennium Bug, we'll have troubles everywhere.

When the Hawaiian Electric utility in Honolulu ran tests on its system to see if it would be affected by the Y2K Bug, "basically, it just stopped working," says systems analyst Wendell Ito. If the problem had gone unaddressed, not only would some customers have potentially lost power, but others could have got their juice at a higher frequency, in which case, "the clocks would go faster, and some things could blow up," explains Ito. (Hawaiian Electric revamped the software and now claims to be ready for the year 2000.) Another concern is nuclear power; the Nuclear Regulatory Commission says that the Bug might affect "security control, radiation monitoring . . . and accumulated burn-up programs [which involve calculations to estimate the hazard posed by radioac- tive fuel]."

"If no one dealt with the year 2000 Bug, the [phone] network would not operate properly," says Eric Sumner Jr., a Lucent chief technology officer. He's not talking about dial tones, but things like billing (watch out for 100-year charges). Certain commercial operations that run phone systems by computer could also go silent if the software isn't fixed.

Besides the expected mess in billing systems, insurance claims and patient records, hospitals and doctors have to worry about embedded chips - microprocessors inside all sorts of devices that sometimes have date-sensitive controls. The year 2000 won't make pacemakers stop dead, but it could affect the data readouts it reports to physicians.

NEWSWEEK has obtained an internal Pentagon study listing the Y2K impact on weapons and battlefield technologies. In their current state, "a year 2000 problem exists" in several key military technologies and they will require upgrading or adjustments. One intelligence system reverts to the year 1900, another reboots to 1969. The report confidently states that as far as nuclear devices like Trident missiles are concerned, "there are no major obstacles which will prevent them from being totally Year 2000 compliant by Jan. 1999."

Banks and other financial institutions generally will go bonkers if they don't fix the year 2000 problem. The Senate Banking Committee is even worried that vertiginous computers might automatically erase the last 99 years' worth of bank records. Some Y2K consultants are advising consumers to make sure they don't enter the 1999 holiday without obtaining hard-copy evidence of their assets. According to Jack Webb of HONOR Technologies, Inc., ATMs won't work without fixes.

In Britain computers at the Marks & Spencer company have already mistakenly ordered the destruction of tons of corned beef, believing they were more than 100 years old.

"We're still in the assessment stage, determining how big the problem is," says Dennis DeGaetano of the Federal Aviation Administration. One possible danger is computer lockup: while planes will keep moving at 12:01 a.m. on Jan. 1, 2000, the screens monitoring them, if not upgraded, might lock. Or the computers might know where the planes were, but mix them up with flights recorded at the same time on a previous day. ("You can bet we're going to fix it," says DeGaetano.)

Ford Motor Co. reports that if the Bug isn't fixed, its buildings could literally shut down - the factories have security systems linked to the year. "Obviously, if you don't fix it, your business will stop in the year 2000," says Ford's David Principato. Even if a manufacturing company aggressively solves its own problem, though, it might be flummoxed by a supplier who delivers widgets in the wrong century.

Larry Martin, CEO of Data Dimensions, warns that if not adjusted, "on Jan. 1, 2000, a lot of elevators could be dropping to the bottom of buildings," heading to the basement for inspections they believe are overdue. Similarly, automobiles have as many as 100 chips; if they are calendar-challenged, experts say, forget about driving. Computerized sprinkler systems could initiate icy midwinter drenchings.

Like leaves rustling before a tornado, there have already been harbingers of a bureaucratic meltdown. At a state prison, a computer glitch misread the release date of prisoners and freed them prematurely. In Kansas, a 104-year-old woman was given a notice to enter kindergarten. Visa has had to recall some credit cards with expiration dates three years hence - the machines reading them thought they had expired in the McKinley administration.

The $600 billion question is whether we'll fix the Bug in time. The good news is that the computer industry is finally responding to the challenge. For months now, squadrons of digital Jeremiahs have been addressing tech conferences with tales of impending apocalypse. The most sought-after is Peter de Jager, a bearded Canadian who scares the pants off audiences on a near-daily basis. "If we shout from the rooftops, they accuse us of hype," he complains. "But if we whisper in an alley, no one will listen." Last week in Boston de Jager demonstrated the rooftop approach: "If you're not changing code by November of this year," he warned, "you will not get this thing done on time - it's that simple. We still don't get it."

But we're starting to. Most major corporations now have year 2000 task forces, with full-time workers funded by multimillion-dollar budgets, to fix a problem that their bosses finally understand. They're aided by an army of consultants and specialized companies. Some, like Data Dimensions, offer full Y2K service, providing tools, programmers and guidance. Others, like Peritus, sell special software to help find offending code and, sometimes, even convert it. (The final, most arduous stage, testing, still defies automation.) These firms are the new darlings of Wall Street. But buyer beware - consultants are coming out of the woodwork to exploit the desperation of late-coming companies. Someone might promise a phalanx of brilliant programmers to fix the Bug, but "for all you know, it could be 10 people in a garage doing it by hand," says Ted Swoyer, a Peritus exec. Still, the creation of a Y2K-fixing infrastructure is encouraging.

It's not uncommon to find gung-ho efforts like the one at Merrill Lynch: an 80-person Y2K division working in shifts, 24 hours a day, seven days a week. It'll cost the company $200 million, a sum that could hire Michael Eisner and fire Mike Ovitz. "Our return on investment is zero," says senior VP Howard Sorgen. "This will just enable us to stay in business."

So maybe we're not in for a full-scale disaster. Let us assume - oh God let it be true - that those in charge of life-sustaining applications and services will keep their promises to fix what needs fixing. The costs and liabilities of not doing so are too huge not to. (On the other hand, when did you last see a huge software project that met its deadline and worked perfectly? Just asking.) Still, there will almost certainly be severe dislocations because of the mind-boggling enormity of the problem.

Even the most diligent companies don't have total confidence they can fix everything. Consider BankBoston, the 15th largest commercial bank in the United States. Early in 1995, the company realized that "it was a problem that could bring an institution to its knees," says David Iacino, who heads the bank's Team 2000. To stop a meltdown, BankBoston has to probe 60 million lines of code. The harder BankBoston works at solving the problem - it now has 40 people working full time on it - the more complicated it seems. "Every day, when we see something new we haven't thought about, we get additional angst," says Iacino.

Of the 200 BankBoston applications that need revamping, only a handful have been completed so far. BankBoston is now separating the essential work from the noncritical, and if the Bug causes less dire problems, like the heavy vault doors swinging open on New Year's Eve, it'll just cope: "Vaults are physical things," says Iacino. "If push comes to shove, we can put a guard in front."

Now, if BankBoston, which started early and has been driving hard, is already thinking triage, what is going to happen to institutions that are still negotiating in the face of a nonnegotiable deadline? The Gartner Group is estimating that half of all businesses are going to fall short. "There's still a large number of folks out there who haven't started," says Matt Hotle, Gartner's research director.

As businesses finally come to terms with the inevitable, it's going to be panic time. In about a year, expect most of the commercial world to be totally obsessed with the Bug. "Pretty soon we have to just flat stop doing other work," says Leo Verheul of California's Department of Motor Vehicles.

But no amount of money or resources will postpone the year 2000. It will arrive on time, even if all too many computers fail to recognize its presence.

"It's staggering to start doing mind games on what percentage of companies will go out of business," says Gartner's Hotle. "What is the impact to the economy of 1 percent going out of business?" Or maybe more: Y2K expert Capers Jones predicts that more than 5 percent of all businesses will go bust. This would throw hundreds of thousands of people into the unemployment lines--applying for checks that may or may not come, depending on whether the government has successfully solved its Y2K problem.

What is the U.S. government doing? Not enough."It's ironic that this administration that prides itself on being so high tech is not really facing up to the potential disaster that is down the road a little bit," says Sen. Fred Thompson. If Y2K indeed becomes a calamity, it may well be the vice president who suffers - imagine Al Gore's spending the entire election campaign explaining why he didn't foresee the crisis. (Gore declined to speak to NEWSWEEK on the Y2K problem.)

Here's the recipe for a federal breakdown: not enough time and not enough money. While the Office of Management and Budget claims the problem can be fixed for $2.3 billion, most experts think it will take $30 billion. Rep. Stephen Horn held hearings last year to see if the federal agencies were taking steps "to prevent a possible computer disaster," and was flabbergasted at the lack of preparedness. His committee assigned each department a letter grade. A few, notably Social Security, were given A's. (The SSA has been working on the problem for eight years and now has it 65 percent licked; at that rate it will almost make the deadline.) Those with no plan in place - NASA, the Veterans Administration -got D's. Special dishonor was given to places where inaction could be critical, yet complacency still ruled, like the departments of Labor, Energy and Transportation.

State governments are also up against the 2000 wall. California, for instance, finished its inventory last December and found that more than half of its 2,600 computer systems required fixes. Of those, 450 systems are considered "mission critical," says the state's chief information officer John Thomas Flynn. These include computers that control toll bridges, traffic lights, lottery payments, prisoner releases, welfare checks, tax collection and the handling of toxic chemicals.

As bad as it seems in the United States, the rest of the world is lagging far behind in fixing the problem. Britain has recently awakened to the crisis - a survey late last year showed that 90 percent of board directors knew of it - but the head of Britain's Taskforce 2000, Robin Guenier, worries that only a fraction really understand what's required. "I'm not saying we're doomed, but if we are not doing better in six months, I really will be worried," he says. He expects the cost to top $50 billion. On the Continent, things are much worse; most of the information-processing energy is devoted to the Euro-currency, and observers fear that when countries like Germany and France finally tackle 2000, it might be too late.

Russia seems complacent. Recently Mikhail Gorbachev met with Representative Horn in Washington, expressing concern about how far behind Russia is in dealing with the Bug; Gorbachev raised its possible impact on the country's nuclear safeguards.

The list can go on, and on and on. "It's like an iceberg," says Leon Kappelman, an academic and Y2K consultant. "I would certainly be uncomfortable if Wall Street were to close for a few days, but I can live with that. But what if the water system starts sending water out before it's safe? Or a chemical plant goes nuts? Anybody who tells you "Oh, it's OK' without knowing that it's been tested is in denial."

It's tough out there on the front lines of Y2K. And in less than a thousand days, it might be tough everywhere. "There are two kinds of people," says Nigel Martin-Jones of Data Dimensions. "Those who aren't working on it and aren't worried, and those who are working on it and are terrified."

Tick, tick, tick, tick, tick.

PHOTO (COLOR): HOSPITALS: Everything from neonatal monitors, X-ray machines and CT scanners to patient-record databases, prescription-dispensing equipment and blood-bank dating systems needs to be evaluated. In most cases, hospitals have to rely on manufacturers to do the testing.

PHOTO (COLOR): ELEVATORS: Might shut down, thinking they're overdue for maintenance

PHOTO (COLOR): TELEPHONE SYSTEMS: Some consultants think the network might crash. The big carriers insist there's no way that will happen, but admit it's possible you'll get a bill that says you made a long-distance call to Grandma that lasted 100 years. People who work in offices might have bigger problems: dead phones.

PHOTO (COLOR): POWER GRIDS: Turbine and control-room failures could lead to outages and blackouts

PHOTO (COLOR): BANKING: 'It's a problem that could bring an institution to its knees,' says David Iacino, who heads a year 2000 task force at BankBoston. The company has to test and fix 60 million lines of code in 200 applications. 'Every day we see something new that we hadn't thought about.'

PHOTO (COLOR): AUTOMATIC TELLER: Whoops, it thinks it's 1900 and you're broke.

DANTE CHINNI

One of the most perplexing aspects of the millennium bug is the fact that no one really knows what will happen. Best guess: no apocalypse, but lots of trouble.

At midnight, the nation's air-traffic-control systems go dead. Some planes lose the ability to navigate properly. Chaos in the skies.

Travelers get very familiar with the airport lounge. Airlines' fleets stay aloft, but delays abound. The bottom line: stay home and watch bowl games.

Security systems leave workers locked outside the front gate. Assembly lines stop moving. Those 1999 models remain on showroom floors.

The big companies get their act together, but suppliers have problems that slow shipments; 1999 models stay on showroom floors.

The entire financial infrastructure, including the stock market, goes haywire. Balances, records, transactions are lost.

Some patrons may be temporarily shut out of their accounts. Electronic wire transfers may be disrupted. It may be best to keep a few dollars under the mattress.

As the ball drops in Times Square, hospital machinery, like IV units and cardiac monitors, suddenly shuts down. The last thing the patients see is Dick Clark.

Hospital paperwork, billing and patient records get fouled up. Suppliers lose records; tongue depressors become scarce.

Aooouga! Aooouga! Control chip opens the wrong release valve. Radiation problems make Three Mile Island look like a picnic.

Safety systems suffer small problems. Minor malfunctions cause short-term shutdowns. Stock up on candles and flashlight batteries.

Defense systems weakened by software snafus. Global positioning satellites get lost, leaving the nation vulnerable.

Some old battlefield equipment is junked rather than fixed. High-tech systems get even more temperamental. Faltering programs order $200 hammers.

feds lose track of government-benefits recipients. The IRS figures your tax bill is equal to the national debt. Deadly viruses kept under computer lock are released.

Though it got a late start on the bug, most major systems are intact. Some benefits checks are late. Techno-veep Gore takes a hit.