Anna Bathon NationsBank

Theresa Beldner Enterprise Rent-A-Car

Julie Bergh MasterCard International

Tim Bonno Southwestern Bell Telephone

Dean Donnelly Guardsmark, Inc.

Linda Jensen Southwestern Bell Telephone

Judy Kocinski NationsBank Life Safety

Herman Kriegshauser Kriegshauser Mortuaries

Virgil Mueller Comdisco Continuity Services

Melvyn Musson Musson Consulting Group

Timothy Proost A. G. Edwards & Sons, Inc.

Tom Roeseler NationsBank Contingency Management

Angela Swartz Enterprise Rent-A-Car

The regular general business meeting was held at the NationsBank Plaza offices on Thursday, February 19, 1998, and began at 3:00 p.m.

Tom Roeseler welcomed any new members and guests present; namely, Theresa Beldner of Enterprise Rent-A-Car, Dean Donnelly of Guardsmark, and Melvyn Musson of Musson Consulting Group. He informed the group there were handouts in the back of the room, if anyone were interested in picking them up on their way out. These two handouts were pertaining to Comdisco’s "Planning Suite" of recovery planning software packages and Mail-Gard’s disaster recovery offerings.

The next topic was a review of the Board of Directors Meeting held on February 10, 1998. Copies of these Board minutes were distributed to meeting participants and discussed. One point highlighted was the announcement of a new Board position -- President Emeritus. This position will be held by Tim Bonno during the current term and will then be held by past presidents as they leave the board. Copies of these Board minutes may be obtained by contacting Anna Bathon at 314/466-3509 or e-mail at bathon@nationsbank.asset-mgt.com.

Status of the current membership drive was discussed. Anna Bathon indicated that there had been several inquiries regarding the MCPF received, particularly as a result of this mailing. She felt several new memberships would be realized. Tom Roeseler, forum president, commented that the Board was considering offering an incentive bonus quarterly if current members bring a guest and the guest joins. More details on this will be forthcoming. He also reminded the group that by keeping their membership current, they will receive information pertaining to all meeting notices and minutes, as well as special workshops or seminars, and other activities the MCPF may be involved in.

There being no new business or any other announcements to make, Tom introduced the group to the guest speaker -- Julie Bergh with MasterCard. Her topic of discussion was Year 2000 - What’s It All About.

FEATURED PRESENTATION

JULIE BERGH, MasterCard International

YEAR 2000 - What’s It All About

The Year 2000 (Y2K) problem is a challenge without precedent and one that must be understood in order to deal with it.

Assumptions

* Views expressed are those of Julie Bergh, not those of MasterCard International.

* Will not discuss how MasterCard is handling the Y2K issue.

* Information presented is a compilation of material over the past two years from various sources.

Background

* Increased frustration as each new fix uncovers yet another problem.

* To address issues correctly, organizations must recognize level of interdependence between commercial and public sectors, between each link of the supply chain, between IT and non-IT systems.

* Has elements of both technical and business issue, but best seen as business issue with technical implications.

* Many senior managers remain unconvinced of the scope of the Y2K problem.

Definition

* Magnetic storage expense.

* Problems arise when date changes from December 31, 1999, to January 1, 2000.

* Largest single computer problem in history.

* Computer systems within organizations are very tightly integrated.

* What will happen if these systems are left untouched?

* Variety of date manipulation -- arithmetic, branching, format, data storage, extended semantics.

Why People are Ignoring the Problem

* No budget.

* Organization has outsourced IT function; vendor is taking care of it.

* Problem is exaggerated.

* Plenty of time -- it’s only 1998.

* Will use one of many automated tools and everything will be fixed without staff intervention.

* Don’t have a mainframe computer.

Current Impact

* Applications experiencing date-related problems now include:

- Brussels stock exchange - Hospitals

- Health benefits systems - New Zealand smelter company

- School systems - Arizona state lottery

Potential Impact on Organizations

* Archives of computer tapes and files * Medications

* ATMs lock customers out * Invoices

* Shipping orders incorrect * Interest calculations

* Manufacturing processes interrupted * Personnel records

* Data center scheduling systems * Accounts payable/receivable

* Doors open on Saturday * Payroll

* Access codes are cancelled * General Ledger

 

Potential Impact on Individuals

* Telephone bills * Traffic lights

* Mortgages * Air travel

* Credit Cards * Personal computers

* Bank Accounts * Food purchases

* Automobiles * Insurance

Related Problems

* Leap Year * Date in key

* Day of the week * Viruses

* Year 1999 * The "Euro"

Timetable Options

* No flexibility for timetable

* Completion date is finite

* Use 1999 for testing

* Studies show IT projects completed on time and with full functionality number less than 25%

Anticipated Benefits of Proper Resolution

* Improve understanding of software applications

* Retire or archive outdated and obsolete systems

* Establish improved relationships with vendors and suppliers

* Take stock of hardware inventories

* Take stock of software inventories

* Improve competitive position

* Streamline operations for 21st century

* Acquire improved understanding of people resources.

Projected Solution Costs

* Estimated to be between $300 billion and $600 billion dollars

* Efforts include finding and fixing problem in millions of aging software applications

* Cost needs to be expensed quarterly as it occurs and not capitalized (FASB rule) -- not an unforeseen problem.

Litigation Costs

* Clients whose finances or investments damaged.

* Shareholders or organizations whose software does not safely make Y2K transition.

* Deaths or injuries derived from Y2K.

* Class action litigation.

Legal Concerns

* Property leases * Director and Officer Insurance

* Loan agreements * License review

* Warranties * Contracts

Strategic Guidelines for Problem Resolution

* Senior management sponsorship * Project plan

* Senior management needs to identify critical issues * Dependencies

* Steering Committee * Organization’s definition of Y2K compliance

* Enterprise-wide communication plan

 

 

Project Management Process

* Inventory * Modify

* Assessment * Test -- include full scale testing

* Strategy or solution * Implement

Inventory

* Production systems * Communications software

* Vendor packages * Facility concerns

* External applications * Each location and cross check

* End user systems * Supply chain

* Server-based systems * Systems hardware and software

Assessment

* Perform an assessment of Y2K impact on organization.

* Prepare analysis of areas affected by Y2K to identify magnitude.

* Prepare risk assessment and statement of impact Y2K will have on the organization.

* Determine mission critical applications by prioritization.

* Determine categories.

Strategy or Solution

* Determine whether system will be: retired -- do nothing -- replaced -- modified.

* Establish in-house ‘date standard’.

* DO NOT purchase software not certified as Y2K compliant.

* Complete by 12/31/98 to allow full year to test.

Modify

* Make required changes to systems.

* Document all changes made to correct Y2K problem.

* Coordinate with vendors that provide services.

* Take opportunity to document older systems.

Testing

* Approximately 50% of time allocated should be dedicated to testing.

* Develop and follow structured approach.

* Create test plan to include all possible scenarios.

* Test thoroughly and well before December 31, 1999.

* High risk systems.

* Regression testing.

* Compliance certification.

* Disaster recovery.

Date Testing Scenarios

* Begin/end of week * Holidays that vary from year to year

* Begin/end of month * Holidays that are fixed from year to year

* Begin/end of accounting period * Any holidays that are calculated

* Begin/end of quarter * February 29

* Begin/end of half year * Begin/end of calendar year

* Begin/end of financial year * Any dates that are calculated from non-Gregorian calendar

 

 

Implementation

* Move systems into production using proper change control procedures.

* Roll out modified systems to other locations within organization.

* Implement all changes by December 31, 1998, to allow complete year of testing.

Other Considerations

* Government and regulatory agencies

* Vendor preparation

* Vendor tools

"Silver Bullet" Solution

* Some vendors claim they have the "silver bullet" that will solve Y2K.

* Due to highly diverse nature of applications, existence of a silver bullet is highly unlikely.

* Organization should use available tools to reduce workload and supplement work done by in-house staff and outside consultants.

* Organizations waiting for "silver bullet" unable to complete minimal amount of work necessary.

Contingency Planning

* Change business model * Manual backup

* Embedded systems * Operate in degraded mode

* Systems that will not be completed on time * Operations, products, etc. -- what can you do without?

* Test the contingency plan * Obtain contracts now

* Obtain potential new trading partners * Order extra supplies

* How long to do manually * Outside resources

* Temporary changes in operations

Summary

* What level of disruption did the UPS strike have on your business?

* In the U.S., 10-15% of community banks are still not aware of Y2K problem and how it will affect them.

* Continental Europe is well behind the U.S. in addressing their Y2K problems.

* Asia is even further behind the curve.

Available Websites

* www.year2000.com

* www.software.ibm.com/year2000

* www.itaa.org/year2000.htm

680 DAYS UNTIL JANUARY 1, 2000.

Copies of the handouts of Julie’s presentation and associated materials may be obtained by contacting Anna Bathon at 314/466-3509 or e-mail at bathon@nationsbank.asset-mgt.com.

The next meeting of the MCPF group will be held on Thursday, March 19, 1998, 3:00 p.m., at MasterCard International in West Port. The featured topic will be Contingency Awareness and Training presented by Michael Cannon of NationsBank.

This meeting was adjourned at 4:45 p.m.

Recorded by: Anna M. Bathon