Australian organisations will face severe business disruptions as early as 1998 if they fail to take immediate action on the Millennium issue, reports an international survey by leading management consulting firm, PA Consulting Group.
The fourth Millennium survey by PA revealed that 96% of Australian businesses are fully aware of the Millennium problem but only 32% have fully completed an audit, the first step towards Year 2000 compliance.
The survey of approximately 1000 public and private organisations in 15 countries, including Australia, showed Australian organisations are closely following most Millennium trends emerging globally. A majority expect the Millennium bug to impact business in 1998 and intend to complete their Millennium projects in the same time frame.
"It's disturbing so many Australian businesses have not yet moved beyond the first phase of compliance," said a spokesman for PA Consulting Group. "Our research shows most businesses will fail to fix the problem in time, despite their good intentions. At the very least, this tight time frame will put enormous pressure on resources and quality control."
Of the 78 organisations surveyed in Australia, 56% indicated they have a formal Year 2000 programme in place but 22% were not able to determine how they planned to provide resources.
"Figuring out what resources are needed to fix the problem is a daunting task even for the largest organisation. It is almost impossible for organisations to make assessments of their own businesses without the right resources, project management and IT skills," said the spokesman.
Organisations currently tackling the problem are finding the solution is considerably more expensive than first estimated. Globally, a cost of US$4.7 billion to fix the problem was estimated. Australian organisations estimated that, on average, the problem would cost US$1 million. Some larger organisations have committed over $100million to fix the problem.
Compounding the problem, only 54% of senior managers are now fully aware of the implications and therefore the likely costs involved.
"This is as much a business issue as a technology one which senior managers must recognise. It's critical that they drive compliance and ensure the right strategies and measures are in place," he said.
The importance of adequate resources to resolve the problem surfaced as a significant consideration for organisations with 44% of planned human resource estimated to be sourced externally.
"The widely held industry view that a skills shortage is beginning to occur is now being substantiated. Organisations without a clear idea of the effort required to manage the problem will find themselves fiercely competing for technical and project management skills."
"Not only do organisations need to achieve compliance for themselves but they must also be aware if Year 2000 measures have been implemented by organisations they do business with."
Increasingly Australian businesses are relying on technology replacement strategies in the form of software packages and products rather than renovation strategies.
"Although some organisations are making positive moves to introduce new technology to address the Millennium problem, such releases will likely take the testing and implementation process beyond 1998."
"It's important for businesses to take this opportunity to consider how they can gain the most advantage from what is likely to be an accelerated programme of investment."
Least prepared for the brunt of the Millennium problem are smaller organisations. Only 43% of senior managers are aware of the problem as compared to 73% in largest organisations.
"Smaller organisations are in danger of being hardest hit by the problem with severe effects on the day-to-day running of their businesses. Some small businesses are doomed through sheer ignorance, a trend that has been evident for some time in our research."
