While it may seem that the entire software industry is tied up with resolving the Year 2000 programming problem, there are numerous companies that don’t concentrate solely on that issue.
But executives from such companies said they aren’t taking a back seat to their Y2K-focused competitors. In some cases, the issue has even generated new business for companies with Y2K compliant software that can replace older, non-compliant systems.
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At least one area company, Nestor, Inc. (OTC: NEST), of Providence, has reported some troubles finalizing deals with companies still grappling with the costs of making their systems Y2K compliant. In Nestor’s third quarter report President and Chief Executive Officer David Fox stated: “Financial organizations’ IT decision-making processes are still being hindered by Y2K project issues.” In addition, Fox noted sales were low last quarter for the company’s top product PRISM, which detects fraud for large financial institutions. PRISM’s revenues were low “not because we didn’t have the deals in the pipeline, but because these market issues made it more difficult to close them. We anticipate that these factors will be less pervasive in the new year as financial organization’s IT resources begin to free up,” Fox stated.
Nestor’s products, however, tend to have a higher ticket price than some other locally produced software. For instance its latest launch, CampaignOne, is a marketing tool that costs about $250,000, according to a Nestor marketing executive.
Executives from other software companies, which produce relatively less expensive products, said for the most part they haven’t seen companies holding off investing in new technology because of budget constraints. Although some have noticed that projects are delayed because clients’ IT departments are swamped.
Some computer systems could be affected at the turn of the century, because they are set up to only recognize the year with a two digit number. It is believed that when the year 2000 arrives some computers will operate as if it is 1900, which could foul up record keeping for a range of industries from banking to utilities.
Charles Ritter, president of Jordan Apostal, Ritter Associates, Inc., in North Kingstown said his company’s highly specialized engineering software hasn’t been affected by limited budget money.
“That’s not one we’ve heard yet; we might, as things get nuttier as it gets closer,” Ritter said. “Yes it’s serious to spend $10,000, $20,000, but it’s not a quarter-of-a-million-dollars serious.”
Though JAR’s potential customers are very concerned about making sure the software is Y2K compliant, he said, it simulates the physical response of a new design, whether it is a new toy or a satellite, before it is built.
“It’s pretty mission critical,” he said of the company’s software. “You can only postpone that for so long, then you have to have a new product — your competitor will.”
“We haven’t had that problem yet, I can see how it would happen,” said Bill McCaffrey, director of marketing for Vector Software Inc., in North Kingstown.
Vector sells automated test tools for software developers and works with Fortune 100 companies such as Lockheed Martin and Boeing. Much of the work Vector’s clients conduct is defense-related and relies on contract money and not capital budgets.
“I’d say at this time it’s not a concern, only because we know where the companies’ we’re dealing with money comes from,” McCaffrey said.
“Certainly the Y2K issue is a much higher percent of the budget than they (businesses) had anticipated,” said Douglas Beimler, regional vice president for CIBER, Inc., in Providence. Beimler cited an article in the Nov. 16 Information Week magazine, in which some companies reported their Y2K costs are about 20 percent higher than expected. For instance, the magazine reported that Merrill Lynch raised its estimated cost from $300 million to $400 million.
Despite the increasing Y2K costs CIBER, which focuses on LAN and WAN implementation for large companies, is seeing more clients “coming to a close on the Y2K effort,” he said. That’s freeing up money for investing in new technology.
CIBER also has a division that helps companies become Y2K compliant, which has resulted in “spin-off work,” Beimler said. “Essentially after you remediate and fix all the codes and test it, you know the application as well as anybody. They say will you keep up the application for us until we retire it? It’s big, big business.”
“I don’t think we have lost any sales because of our prospects’ budgets. I think what’s happening on our side is that we’re gaining sales because we have Y2K compliant software,” said Sharon E. Stasko, president of Vertére in Middletown. She estimates a small percentage of the new customers for Vertére’s inventory control software purchased it, because they had to replace non-compliant programs.
Also, she added some customers, including some colleges, are using the software to track computer equipment located at multiple facilities and generate Y2K status reports.
“We may not be hearing from the people who don’t have the budgets,” Stasko said. Although, she added, some companies have noted “their IT departments are just too overloaded” to take on any new responsibilities.
Salvatore Sauco, vice president of ProSystems in Cranston, said “these are just things they need so they’re buying them.” ProSystems produces accounting, jewelry, manufacturing and inventory software.
“I haven’t seen a lot of people not doing projects because of Y2K, but we might not even know that,” Sauco said. “It would be ridiculous for them to come to us and say, ‘We want to do this project, but we can’t afford it because of Y2K. Tell us how much it’s going to cost?'”
