Date code fix bollixes predictions on federal IT budgets, analysts say

The cost of fixing date code is still a wild card when predicting federal spending on
information technology, an industry analyst said.

“It’s obvious the government estimate is below the actual cost to fix this
problem,” said Michael D. Groneck, an analyst with Input Inc., a Vienna, Va.,
research company. The Social Security Administration, for example, started fixing its
systems in the late 1980s and still isn’t finished with date code remediation, he
said. Agencies that are just starting to take the problem seriously are in for a shock, he

“We don’t know the impact Y2K will have on what the government plans to
do,” he said at Input’s annual conference held in Falls Church, Va., last month.
“The government has vastly underestimated costs.”

Input is sticking by its May 1997 estimate that government year 2000 work will cost at
least $8.1 billion, much higher than Office of Management and Budget’s most recent
estimate of $5 billion. The original OMB estimate was just over $2 billion, said Groneck,
director of Input’s electronic government program.

The year 2000 problem also limits spending and resources, but is a mixed blessing for
agencies, Groneck said. Although faulty date code is wreaking havoc on budgets and
programs, it lets agencies shake off aging legacy systems and redesign business practices,
he said.

The government’s IT budget continues to show moderate growth, Input officials
said. Spending from 1998 to 2003 will increase by 4.1 percent from $31.8 billion to $39

“There’s a lot of money out there,” Groneck said. Over the next five
years, the government will spend $150 billion in contracted IT spending, he said. “I
don’t know any other area in the world that is going to do that” kind of
business, he said.

Budget pressures have subsided, but the push for agencies to restructure and downsize
continues, Groneck said. And agency managers see IT as a powerful tool in reducing
government, he said.

Agencies are also increasingly looking at enterprisewide answers, so broader
applications are grabbing the attention of IT managers, he said.

Many agencies are also moving toward distributed systems, he said.


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