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SMEs most vulnerable to a meltdown

On the banking front--by far the most aggressive sector in tackling the Y2K problem--the 35-member Association of Banks Malaysia has reported that as of March this year, 100 percent of its members have completed the testing stage, while 80 percent are in the final implementation stage of their various Y2K strategies. The standard process for Y2K compliance is assessment, remedy, testing and implementation.

Customers have also been assured that hard copies of bank statements will be prepared as backup, in the unlikely scenario that their deposits go missing.

According to the president of the Federation of Malaysian Manufacturers, Paul Low, some CEOs, especially those in manufacturing companies, are not taking the potential dangers of the Millenium Bug seriously enough.

Also, response to a RM20 million fund set up by the government through the Small and Medium Industry Development Corporation (Smidec) last November has been tepid. As of May this year, only 19 applications for assistance had been received.

This is worrisome considering that Smidec has, to date, identified over 1,000 small and medium enterprises (SMEs) with critical Y2K issues, including 500 "which are extremely critical".

Given the current situation, Smidec has abandoned its "wait and see" stance, opting instead for a more proactive approach. "Instead of waiting for the SMEs to submit their applications, we will send letters to the SMEs to undertake the consultancy measures," said Zaky Moh, Smidec's IT manager.

International Trade and Industry Minister Rafidah Aziz was quoted as saying: "We do not want any businesses to go haywire as a lot of resources will be wasted if SMEs do not get the proper systems in place."

While Smidec attempts to strong-arm its companies, the fate of the SME-sector compliance is still in the hands of the individual firms which may or may not cave in to external insistence.

"You might consider the small and medium-scale industries in Malaysia vulnerable," said Lisa K. Westerback, director for Office of Information Planning and Review, U.S. Department of Commerce, at a recent FMM seminar held in Malaysia.

Westerback stated that Malaysia, based on a survey by research consultant GartnerGroup, is in the 50 percent category of countries in the world that are likely to experience at least one Y2K failure.

"The cost of recovery from a single failure can range from US$20,000 to US$3.5 million, and organizations need to take action now to ensure that they can sustain such a failure should it happen," she added.

Also, she encouraged local companies to state their Y2K readiness to suppliers with whom they exchange data and vice versa, in order to ensure that all parties will be able to deal with potential problems.

John Koskinen, an adviser to U.S. President Bill Clinton, speaking at a recent Asia Pacific Economic Conference Y2K Symposium, suggested that member countries--of which Malaysia is one--would do well to draw up national and cross-border contingency plans in key services, as well as emergency response mechanisms.

Y2K experts and solutions providers, however, say it is already too late for some organizations to begin the remedial process to address their millennium problems.

This is further complicated by the fact that many companies still rate their immediate financial well being over any potential disruption by the date rollover.

They point out that despite the fact there is enough awareness of the Y2K problem, the prevailing economic conditions and, in some cases, pure apathy would continue to prevent them from tackling the issue head-on. In fact, some are still believed to be holding out for the "silver bullet" that can be downloadable from the Net.

As the experts rightly point out, and as the clock ticks away to December 31, 1999, awaiting that mythical solution may lead ultimately to a system shutdown.


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