Home / Special Report / The cost of moving forward
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The cost of moving forward
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Rochester Gas and Electric Corp.
Total estimated cost: $15 million

RG&E identified the need to address Y2K issues early, and in June 1996 established its Y2K Project. The company has assigned some 40 full-time-equivalent staff to work on the project and retained outside consultants.
The company expects to fund the project internally and estimates it will cost some $15 million through Jan. 1, 2000, with $4.6 million of the costs spent through Sept. 30.
The Y2K Project has completed identification and assessment of internally developed applications and has begun fixing activities. RG&E has implemented a new Y2K-ready customer-information and billing system. Starting in April 1998 and continuing through the first half of 1999, the company was to be replacing its PC workstations and software with Y2K-ready equipment and software. RG&E expected to complete the fixing phase by year-end 1998.
Testing for Y2K readiness has begun. Device identification, assessment and fixing are under way and are expected to be completed in the first half of 1999. The company is expected to complete its survey of critical external parties during the fourth quarter of 1998. Testing of individual applications and devices, as well as systems, will take place primarily in the first half of 1999, with completion of all activities by the third quarter of 1999.
The company will use its business recovery plan for any Y2K contingencies to ensure the integrity of its energy and financial systems. Contingency planning began in October 1998 and is expected to be completed by June.
Energet!x, the company’s wholly owned subsidiary, estimates the cost of its Y2K modifications to be less than $100,000.

Seneca Foods Corp.
Total estimated cost: $750,000

Seneca Foods’ Y2K-compliance project is not expected to exceed $750,000. The identification of all equipment with date-sensitive operating controls has been completed. An inventory of its systems assets also has been completed.
All critical systems are scheduled for replacement or modification by June 30, with testing complete by Sept. 30.

Student Loan Corp.
Total estimated cost: $4.3 million

The company had expected to substantially complete Y2K-compliance implementation by year-end 1998, leaving 1999 primarily for full-integration testing and production assurance. Officials budgeted $2.3 million in Y2K-related costs in 1998 and $2 million in 1999.
Chiefly all lines of code in the company’s business applications are through the modification phase, and the majority have been tested and certified. In addition, the majority of business applications scheduled for removal have been removed as part of the company’s ongoing technology expenditures.
The company is also addressing outside Y2K issues. Substantially all of the company’s facilities and related systems have been investigated, and modification and certification are under way.
Student Loan Corp. is creating contingency plans intended to address risks associated with its Y2K effort. Contingency planning will take place during 1999.

Sybron International Corp.
Total estimated costs: $4,097,000

Sybron has a corporatewide initiative involving top-level executives. The company had nearly completed the project by early 1999, and its goal is to substantially complete it by March 31. The company expects to then develop a contingency plan.
The company’s local subsidiary is Nalge Nunc International Inc.
In most cases, the company is upgrading existing software to versions that are Y2K-compliant. Some entire software platforms are being replaced with more current compliant systems. Internally developed software is being reprogrammed, and hardware is being replaced.
Sybron estimates it will spend more than $4 million on its Y2K effort.

Ultralife Batteries Inc.
Total estimated cost: $400,000 to $600,000

Ultralife is reviewing all business systems, testing equipment, surveying key material suppliers and completing its upgrades.
The company’s review and assessment has determined present U.S. accounting systems are not Y2K-compliant.
Ultralife also has an ongoing project to select and install an enterprisewide software system to improve the flow of management information and control of operations. The company has specified that the software system must be Y2K-compliant. This project began last year and is expected to be completed during 1999. Total costs of this project–including hardware, software, consulting and implementation costs–are estimated to be between $400,000 and $600,000.
In addition, the company has contacted its key suppliers and vendors to assess readiness and compliance. Ultralife has issued documentation to key vendors and suppliers. It is receiving assurances from these companies that all new equipment purchased is Y2K-compliant, and that it will have a supply of materials necessary to continue smooth operations.

Xerox Corp.
Total estimated cost: $135 million

Xerox’s Y2K project has five major sections: IT, and the non-IT areas of facilities, vendor-compliance, product-compliance and facilities-management products and services. Xerox had begun in 1993 a project to replace the majority of its legacy systems, which in many cases date back to the 1960s.
The status for each area:
–Applications–The company expected some 90 percent of its applications would be compliant by year-end 1998, with the balance in early 1999.
–Compute–The company expected 100 percent compliance by year-end 1998.
–Infrastructure–32 percent of networks, servers and work stations had been upgraded by late 1998, with the remainder scheduled for upgrading by mid-1999.
–Telecommunications–23 percent of components critical to internal missions are Y2K-compliant and 51 percent are in the implementation stage, while the remaining 26 percent are in the programming stage. The company expects to achieve compliance in this area by mid-1999.
Xerox’s Y2K project timeline required a majority of application systems fixed by Dec. 31, 1998. Roughly 90 percent to 95 percent of applications were expected to be compliant by that date.
The company is assessing its facilities components–including electrical systems, elevators, access control and security systems. Xerox expects compliance by Aug. 1.
The company began its efforts in vendor compliance in November 1997. Due to the poor response rate and the low-level of confidence gained from responses to surveys, officials decided to focus their efforts on two fronts. First, the company began to evaluate the status of sole source/key proprietary suppliers and non-production suppliers to determine alternatives and contingency plans. Second, the company plans to acquire additional inventory by Dec. 31 to ensure continuity of service.
Xerox says 77 percent of its own products are Y2K compliant. An additional 11 percent are not being assessed for compliance because the products have reached their end of life. The remaining 12 percent will be made compliant by June 30. In facilities management, the company is inventorying and assessing third-party components. Complete remediation is expected by March 31.
Xerox projects its Y2K costs at $85 million during 1998 and $50 million in 1999.

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The cost of moving forward
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FNB Rochester Corp.
Total estimated cost: $667,000

FNB began developing its Y2K strategy in October 1996. It currently is addressing the data-processing and business impacts. An ongoing phase is in effect to educate employees and customers and to determine which systems and services will be affected.
FNB has determined the size and complexity of the problem by identifying all hardware, software, networks, ATMs and other devices that may be affected by the Y2K date change, and has prioritized its list of applications and systems to address. The bank believes that substantially all possible Y2K situations have been identified.
First National Bank has opted not to rely on vendor or third-party certification as acceptable validation for systems processed in-house. As vendors provide upgraded software or enhancements, testing will be conducted to determine if the software or enhancements meet FNB’s requirements for Y2K readiness.
Test plans have been written for all mission-critical systems and testing is in process. FNB intends to review proxy testing completed for service bureau arrangements. Additional independent critical testing will be completed as necessary.
The validation phase for these mission-critical systems was targeted to be substantially completed by Dec. 31, 1998, except for the core processing system, which is being converted. Management expects to perform Y2K tests on the new system as well, with the tests expected to be completed in the first quarter of 1999.
By Jan. 1, 2000, FNB will have tested each mission-critical application.
In addition, a risk assessment for large commercial borrowers is substantially completed. Of the respondents to an FNB survey, 14 borrowers, with $12.4 million in loans, have been rated high-risk. Management intends to follow the progress of each high- and moderate-risk customer and to update risk ratings in 1999.
New and renewed commercial borrowers also are being assigned a risk rating, and are required to sign a Y2K addendum where the borrower agrees to take all measures necessary to assure the borrower’s IT is Y2K-compliant.
A large deposit outflow in the year 2000 could impact FNB’s liquidity. A review of large depositors indicates approximately $40 million in balances potentially at risk due to Y2K.
The total projected expense for Y2K is $667,000, with testing, remediation and staff expense projected at $279,000, or 41.8 percent. Software and equipment purchases are projected at $192,000, or 28.8 percent of the total, and contingency planning at $196,000, or 29.4 percent. All expenses related to the Year 2000 are expected to be paid out of FNB’s earnings.

FiberNet Telecom Group Inc.
(company did not disclose costs)

As a result of modifications or upgrades planned, the company says the Y2K issue will not pose significant problems for the company’s business, operations or operating systems. The company expects that any additional modifications or upgrades to software or hardware required for Y2K compatibility will be accomplished using existing resources and have no material impact.
The company will contact customers, suppliers and other critical business partners to determine if they have an effective plan. FiberNet is just over a year old and is in the development phase.

Frontier Corp.
Total estimated cost: $12 million

Frontier has developed plans to assess and make Y2K-compliant key internally developed computer systems. The plans encompass all operating properties as well as Frontier’s corporate headquarters. Implementation began in 1996, and the company says a majority of its internally developed IT systems are now compliant.
Assessment and remediation are expected to be substantially completed by the middle of this year, leaving the remainder of 1999 for system testing, carrier-interoperability testing and resolution of any remaining issues. The plans call for new software and hardware, as well as modification of existing software.
The company has spent $7.2 million so far to solve Y2K issues, and expects to spend an additional $4.8 million.

Gannett Co. Inc.
Total estimated cost: less than $25 million

The first three phases of inventory, assessment and detailed analysis of Gannett’s Y2K plan are completed. The company’s efforts are focused on implementation and remediation, expected to be essentially complete by the end of the first quarter of 1999. Audit and contingency planning efforts also are expected to be complete in the first quarter and refined through 2000.
Much of the hardware and software used at Gannett’s 125 business units is standardized and centrally supported. For these systems, Y2K issues are being addressed by a centrally managed Information Technology Group. Other Y2K issues are being addressed by local personnel at the individual business units, with guidance from headquarters staff or consulting specialists.
Gannett’s local subsidiary is Gannett Rochester Newspapers, which publishes the Democrat and Chronicle.
The company’s business systems (i.e., marketing, sales support, customer billing and accounts receivable, accounting, accounts payable and payroll) at the majority of its local operating properties and at its headquarters are already Y2K-compliant. By the end of 1998, more than 85 percent of these business applications were expected to be Y2K-compliant.
By the end of 1998, more than 80 percent of the company’s newspaper publishing systems also were to be Y2K-compliant. All but one of the remainder will complete installation of publishing systems in the first half of 1999. Facility/administrative systems for the newspaper group were expected to be Y2K-compliant by the end of 1998, with a few exceptions.
Gannett’s efforts to address potential Y2K problems began within its central IT group in 1995 and were broadened to include all departments/operations in 1997. The costs for Y2K compliance are expected to total less than $25 million.

Genesee Corp.
Total estimated cost: $1.7 million

Genesee formed a senior management task force to address its Y2K compliance issues. The project is on schedule.
The task force identified critical and non-critical information and other technology systems at its Genesee Brewing Co. subsidiary and is currently identifying systems in its foods division, as well as its equipment-leasing and real estate investment businesses.
In November, Genesee implemented a major hardware and software upgrade to bring its manufacturing, information and financial consolidation software into Y2K compliance. The new system has been tested, and the company is programming to resolve minor issues relating to the new system. It is expected to complete the work during the third quarter of fiscal 1999 (the company’s fiscal year ends May 2).
The task force is identifying critical third-party relationships and is developing a program to assess the Y2K readiness of vendors, customers and third parties. It targets completion of the identification process and communication program by the end of the fiscal third quarter.
The cost to achieve Y2K readiness for the internal information and other technology systems is estimated at $1.7 million, with $1.3 million spent to date. Contingency plans to address worst-case scenarios will be in place by the end of the first quarter of fiscal 2000.

Gleason Corp.
Total estimated cost: $900,000

Gleason is remediating and testing its major business information systems believed to be non-compliant. Other major equipment and systems have been evaluated, and those identified as non-compliant are being upgraded, modified or replaced. Plans call for all critical systems and equipment to be compliant by June 30.
Gleason also is contacting its significant suppliers and other third parties. The company has evaluated the products it has sold and is currently selling to determine if any potential Y2K issues exist. The company believes, based on its own testing and/or information received from its suppliers, that all current products are compliant and that products formerly sold are either compliant or can be made compliant at a minimal cost.
The company estimates the cost of its Y2K program at $900,000.

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The cost of moving forward
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Graham Corp.
Total estimated cost: $85,000

Graham established a program to assess the impact of Y2K on the software and hardware utilized in its internal operations. The cost to address Y2K issues has been estimated at $85,000.
This program includes the following phases: identifying affected software, hardware, and manufacturing and telecommunication equipment, and assessing the impact of the Y2K issue; hardware and software remediation; testing and surveying the Y2K readiness of customers and suppliers; and developing a contingency plan.
Modification and testing of hardware and software have been completed. Manufacturing hardware and software and telecommunications hardware are currently Y2K-compliant. Remediation of telecommunications software is expected to be complete by March 31.
Graham is surveying customers and suppliers regarding their readiness for the Year 2000 and anticipates completing that effort by March 31.

Home Properties of New York Inc.
Total estimated cost: $675,000

Home Properties began addressing Y2K issues in September 1997. It divided its review into two segments: business-critical and mission-critical systems. Business-critical systems are those affecting the financial and operational infrastructure of the company. Mission-critical systems are those affecting the safety of or the delivery of electricity and natural gas to the company’s residents, commercial tenants and employees.
The company will survey all mission-critical service providers in March and develop contingency plans–possibly in coordination with industry organizations to minimize the likelihood of disrupting the lives of its residents, commercial tenants and employees.
Home Properties uses PCs exclusively. Its review and modification of corporate office systems toward Y2K compliance is 85 percent complete. Outstanding projects include: upgrading the voice-mail system, upgrading work-stations and installing Y2K-compliant modules of property management and accounting software. The software vendor has advised the company that the property-management and payroll software is compliant; the accounts payable and general-ledger software were expected to be compliant by Dec. 31, 1998.
The company’s review and modification of regional office systems is 35 percent complete, and its review and modification of community-based systems is 20 percent complete. Home Properties has a full-time employee dedicated to upgrading regional offices and community-based systems. The company anticipates testing its regional office systems for compliance by April, and its community-based systems in June. Last month, the company began surveying critical suppliers to determine their Y2K readiness.
The total cost of the Y2K activities is estimated at $675,000.

IEC Electronics Corp.
Total estimated cost: $500,000

The company expects all “business-critical” systems to be Y2K-compliant by June.
“Important” systems also will be tested and upgraded with the expectation that, where necessary, they will be Y2K-compliant no later than Sept. 30. Other systems classified as “not important,” since they do not use the date function, will be tested and upgraded as needed.
The main or central operating system is already compliant, with the exception of one sub-system. IEC is working with suppliers to obtain upgrades and/or enhancements for other systems. Comprehensive testing of nearly all critical systems was performed in November, at the company’s shut-down Alabama facility, in a simulated Y2K environment. Only minor issues were found. They have been corrected and retested successfully.
IEC will develop contingency plans, which it expects to have completed during 1999. Total Y2K costs are estimated at $500,000.

Monro Muffler Brake Inc.
(company did not disclose cost)

All IT systems the company considers critical have been evaluated for Y2K problems. Management says these systems will have been diagnosed, modified, tested and deployed by Sept. 1.
The company’s non-IT systems include machinery and equipment in its buildings such as elevators, telephone equipment, HVAC, security and alarm systems, copiers, fax machines and computerized alignment equipment.
The company is reviewing these systems for Y2K compliance with third-party providers, and expects full compliance by Sept. 1.

PSC Inc.
Total estimated cost: $500,000
PSC has a three-phase plan to address its Y2K issues. The company expects to complete the identification stage by early 1999.
The assessment phase includes the evaluation of the software and hardware identified for Y2K compliance, the determination of the remediation method and resources required, and the development of an implementation plan.
The implementation phase includes testing some modifications/upgrades in a Y2K-simulated environment and vendor interface testing. PSC has begun implementation, domestically and internationally, and expects this phase to be completed by September.
PSC officials expect its systems will be Y2K-compliant on time. Several significant operating systems are already compliant. Internationally, the company is installing new computer systems developed in the United States that are Y2K-compliant. The company expects its contingency plans to be completed by June.

Paychex Inc.
Total estimated cost: $5 million

Paychex expected to have the majority of internal mission-critical systems Y2K-compliant by the end of 1998, with a few remaining internal systems compliant by the end of this quarter.
All commercial third-party service providers are being queried regarding their Y2K-compliance plans, and the company is working with all government agency partners to determine their compliance plans. It has begun making Y2K changes based on those mandates.
The company plans to spend 1999 responding to mandates dictated by third parties, such as government agencies, hardware and software vendors, financial institutions or utility companies.
Paychex expects minimal business disruption will occur as a result of Y2K issues for systems that the company directly controls. It anticipates spending some $5 million on the project, with roughly 65 percent spent through Nov. 30.

Performance Technologies Inc.
Total estimated cost: $150,000

PTI has created a corporatewide Y2K project team. The company’s efforts involve three areas: information technology, such as software and hardware; non-IT systems or embedded technology; and readiness of key third parties.
PTI almost has completed phase one of its readiness plan, consisting of evaluating its systems and equipment.
Phase two began in the fourth quarter of 1998 and will continue through the first half of 1999. It consists of testing IT system and non-IT system components whose Y2K status cannot be determined by research alone. The third phase, planned during the third quarter of 1999, will consist of upgrading or replacing system components required for Y2K readiness.
Phase four, planned for the fourth quarter of 1999, involves developing contingency plans for temporary operation should unexpected difficulties occur.
The vast majority of the company’s products are not date-sensitive. The company has assembled a listing of information for customers regarding Y2K compliance. It expects its contingency plan to be completed by the second half of 1999.

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