The Relentless Marketer

The Y2K Problem: The biggest scam of the century?

FORTUNE SMALL BUSINESS, December 1999

By Bill Robinson

I got an agitated call from my mother a few months back. "Do you know about this Y2K thing?" she started.

"Yes, I do, Mom," I began. She cut right in: "I just saw a man interviewed on television and I'm afraid that the United States will be under martial law."

"But, Mom, you don't have to worry about martial..."

She wasn't in a listening mood. "Not only will I not get my Social Security check, but the electric company will cut off the power, the water company won't deliver water, there will be no food in the grocery stores, people will be rioting in the streets, the economy of the entire United States will crumble, and that's when martial law will come in."

I was speechless. "Well, it seems as if you are pretty certain about what's going to happen," I said. "At least it's not a mystery."

Now I'm not naìve enough to think the U.S. will totally avoid Y2K-related computer problems. It's a given that there are going to be some glitches. But the worries that have gripped many Americans are the product of classic, fear-based marketing by consulting firms and other companies that stood to gain millions by hyping the "Y2K problem." The Gartner Group, a computer consultancy based in Stamford, Conn., recently estimated that Y2K fixes will cost more than $300 billion worldwide. Other experts predict Y2K spending of $600 billion or more.

The irony of the situation is that some of main architects of the Y2K panic are now downplaying their earlier, Chicken Little predictions. Edward Yardeni, chief economist for Deutsche Bank Securities, who once predicted a long global recession caused by Y2K snafus, recently estimated that there is now a 45% chance, down from his earlier estimate of 70%, according to the Los Angeles Times. And Peter de Jager, a computer consultant in Canada who first sounded the Y2K alarm in 1993, said recently on his Website that most companies have tackled the Y2K problem successfully.

I wish more people had listened to Leon A. Kappelman, Ph. D., who is co-chair of the Society for Information Management Y2K Working Group. "The problem was real," he says. "There were real defects in technology. But, there are also a lot of scams involved. It will take months to play out." It's just those kind of scams which I believe have resulted in the de facto theft of billions from government, academia, and businesses. Many entrepreneurs now have to swallow costs that will make a serious dent in their annual profits -- and may not have been necessary. The only ones likely to fare well are those who opted for the "do it yourself" approach and took steps to protect their systems on their own.

What will all of the Y2K companies, consultants, authors, and experts do after the Millennium Bug is decloaked and crushed? Find other lines of work I suppose.