Ten Tech Blunders: Whoops, We Stepped in It!: Page 10

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10) The Costs of Y2K

The blunder:

The mother of all cost overruns, with the most inflated invoices in the history of technology, occurred at the end of the 1990s.

What Happened:

There will always be a debate as to whether Y2K was a hoax.

In the opinion of some, the anxiety about what would happen when the date changed over to 2000 was overblown – wildly so. The build-up, the saturated media coverage, the companies so focused on it: it was a colossal misunderstanding.

This camp points to the fact that very little happened on January 1, 2000. Not only did large U.S. companies experience no major meltdowns, but schools and small businesses – many of whom didn’t prepare – were unaffected. Moreover, many countries around the world who did next to nothing, like China and Russian, saw no rash of major problems. So the Y2K madness was just a hoax, some believe.

On the other hand, many experts note that it is precisely because of the preparation that big U.S. companies had no major problems. If not for the Herculean effort spent overhauling IT systems, all hell would have broken out by 12:05 AM on January 1, 2000. These experts point to those calling Y2K a hoax and start fuming: “What do you mean it’s a hoax – we solved the problem, that’s why nothing happened!

Though the argument will rage on, it’s safe to assume that the preparation really did make a big, big difference. Y2K was not a hoax.

Read enough descriptions from honest, knowledgeable programmers about the work they did and you’ll realize the task was real. Many diagnostic tests showed conclusively that systems would have failed if not for remedial action.

However, there is an area in which Y2K really was a folly: the costs.

According to a 1999 estimate by the U.S. Department of Commerce – a government agency, and therefore not prone to inflate predicted costs – Y2K costs would reach $100 billion, and possibly as high as $114 billion. Probably more accurate, the Gartner Group calculated U.S.-based Y2K costs at $150 billion to $225 billion.

Think about it: there are 300 million people in the U.S.; even at the lowest figure of $100 billion, we spent…$333 for every single human across this huge country of ours. The mind staggers.

If that’s not enough, look at worldwide Y2K expenditures. Cap Gemini America estimated $858 billion; the Gartner Group guesstimated $600 billion; and IDC calculated a mere $300 billion. Take the middle figure, $600 billion, divide it by the world population of 6 billion, and you realize – you better be sitting down – we spent $100 for every man, woman and child on the entire planet. Wow. A great silence is heard as the audience sits stunned.

While the work was definitely needed, there were some people made a whole lot of money from Y2K.

Moral of the story:

Cost overruns are commonplace in high end tech projects. But add a dose of fear/anxiety/worry to the project, and the invoice can assume truly oceanic proportions.

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