THURSDAY MARCH 19, 1998 THE ] O U RNAL QF COMME R ^_E OPINION Millennium bomb warning !'»V ERICM ALMaSY " Tht Year 2000 doomsayers 'had already sung their opening 'Idiije as the first significant nega- ; tiye impact of the coming milten- I'nium imploded :' The "bomb' was a quS«t one; :3n announcement by Geiman 'software giant SAP that while coipoiate proCK and revenue in- oeased a whopping 63% in 1997, the company expects its growth to slow abrupt tius year. ' Itae message behind the nmn- beis: A substantial part of SAP's total demand — and tremendous giqwdi — has come from organi¬ zations that wm scrapping their creaky "legacy" systems tMt vidJl. no longer loiow aft^r 19dd whether '00" means the year 1900 or 2000. SAP's {Kobtem: Ssxt there is no longer enoti^ time to implemem lei^acement systems b^re Dec. 31, 1999, this sourtt of buyers is disappearing, For any manager who $till thinlcs SAP is a stufcy substance that leab &om tzees, this news may nat $eein so dire. However, 00x09 know Sap, headquartered in WaDdoit Germany, as one of die most infiuendal information tedmology companies in the 'woiid -^ not to mention a Snn whose stxxk has enjoyed one ei the highest rates of leuim gjtobal- ly over the past Sve years. When SAP sneezes, the IT indu^ heads fiw the emeigeacy mom for a dieebfi. How can one company's de- pendencx cm, or vubietabiJiiy to, the so-caBed miOennium bomb be so ccHiiplete? The an$wer is diat SAP is part of a, mud> great¬ er whole. SAP st^>plie9 EntMpnse Resource Plaflning (or ERp) soft¬ ware that permits companies to manage their data inputs and outputs across many ftmctions and amund die wodd. Data entered as a customer ord^, for eiample, flows effi- cientiy ihmu^ financial, manu- iacturiog distribution and cus¬ tomer service systems. SAP shares tliJs niche vnih numemus other high-ilying software provid¬ ers, rwtably Grade, PeopleSoft, aiKl Baan, aJOi of which wiD be similaiiy affected by the inevita¬ ble slovwlown in Year 2000 or¬ ders. More imponant, the collective growth of d*ese applications over the past several years has been fueling even greater volume for computer hardware vendors, in¬ cluding IBM and Hewlett-Psckarc . and systems integrators sudti as EDS and Andersen Consulting. Some major accounting firms have reported recenfly dm up to 40% of their consuh&ig business is linked to Sntetpiise Resource PUnning softvrare hutallatiDn. In]pl«nentation of SAP aoA i^ rest (^ tta£ Enterprise Resomci! clan is currently the bigjgest sin¬ gle market for compute servers, database software applications and systems consulting assign¬ ments. As a result dedaring ^- toiy, or at least putdng an ^ to die business associated with Year 2000 issues, puts billions of dol¬ lars of IT expenditures at ask. The c&ncussuM Jhm £frtr fre-blast could be sign^aat. The Year 2000 downttrm in software and assodaAed U sales was predictable. In die near temi, the rr needs assodaied with European cuneney consoli¬ dation wiQ replace some of die business. E^pemsfon of Enterprise Resource Planning systems to smaller con^janies fiom larger businesses wii! also generate sig¬ nificant vohime. Nevertheless, the first millennia um bomb has landed, and it has nottiing to do wifli air trafSc coatmllers' consoles suddenly go¬ ing blank as At new century dawns over Kennedy Airport The concussion bom this pm-blast could be significant We don't have to wait for Jan. I, 2000, to understand that Year 2000 issues are going to 48ect all managers ~ and aS oiganiza- tkms — in surprising and some¬ times unforeseen ways. Eriib Almas]/ li a Towma-btoal via president of a numaggmem ecmuitir^ , firm. 3"d 81708gve SIS innSNOO ±0W y30b3H WOad WdAS = 5 866l-90-S
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THURSDAY MARCH 19, 1998 THE ] O U RNAL QF COMME R ^_E
OPINION
Millennium
bomb warning!'»V ERICM ALMaSY" Tht Year 2000 doomsayers'had already sung their opening'Idiije as the first significant nega-; tiye impact of the coming milten-I'nium imploded:' The "bomb' was a quS«t one;:3n announcement by Geiman'software giant SAP that whilecoipoiate proCK and revenue in-oeased a whopping 63% in 1997,the company expects its growthto slow abrupt tius year.' Itae message behind the nmn-beis: A substantial part of SAP'stotal demand — and tremendousgiqwdi — has come from organi¬zations that wm scrapping theircreaky "legacy" systems tMt vidJl.no longer loiow aft^r 19ddwhether '00" means the year1900 or 2000. SAP's {Kobtem:Ssxt there is no longer enoti^time to implemem lei^acementsystems b^re Dec. 31, 1999, thissourtt of buyers is disappearing,
For any manager who $tillthinlcs SAP is a stufcy substancethat leab &om tzees, this newsmay nat $eein so dire. However,00x09 know Sap, headquarteredin WaDdoit Germany, as one ofdie most infiuendal informationtedmology companies in the'woiid -^ not to mention a Snnwhose stxxk has enjoyed one eithe highest rates of leuim gjtobal-ly over the past Sve years. WhenSAP sneezes, the IT indu^heads fiw the emeigeacy momfor a dieebfi.
How can one company's de-pendencx cm, or vubietabiJiiy to,the so-caBed miOennium bombbe so ccHiiplete? The an$wer isdiat SAP is part of a, mud> great¬er whole. SAP st^>plie9 EntMpnseResource Plaflning (or ERp) soft¬ware that permits companies tomanage their data inputs andoutputs across many ftmctionsand amund die wodd.
Data entered as a customerord^, for eiample, flows effi-cientiy ihmu^ financial, manu-iacturiog distribution and cus¬tomer service systems. SAPshares tliJs niche vnih numemusother high-ilying software provid¬ers, rwtably Grade, PeopleSoft,aiKl Baan, aJOi of which wiD besimilaiiy affected by the inevita¬
ble slovwlown in Year 2000 or¬ders.
More imponant, the collectivegrowth of d*ese applications overthe past several years has beenfueling even greater volume forcomputer hardware vendors, in¬cluding IBM and Hewlett-Psckarc. and systems integrators sudti asEDS and Andersen Consulting.
Some major accounting firmshave reported recenfly dm up to40% of their consuh&ig businessis linked to Sntetpiise ResourcePUnning softvrare hutallatiDn.In]pl«nentation of SAP aoA i^rest (^ tta£ Enterprise Resomci!clan is currently the bigjgest sin¬gle market for compute servers,database software applicationsand systems consulting assign¬ments. As a result dedaring ^-toiy, or at least putdng an ^ todie business associated with Year2000 issues, puts billions of dol¬lars of IT expenditures at ask.
The c&ncussuM Jhm £frtrfre-blast could be sign^aat.
The Year 2000 downttrm insoftware and assodaAed U saleswas predictable. In die neartemi, the rr needs assodaiedwith European cuneney consoli¬dation wiQ replace some of diebusiness. E^pemsfon of EnterpriseResource Planning systems tosmaller con^janies fiom largerbusinesses wii! also generate sig¬nificant vohime.
Nevertheless, the first millenniaum bomb has landed, and it hasnottiing to do wifli air trafSccoatmllers' consoles suddenly go¬ing blank as At new centurydawns over Kennedy Airport Theconcussion bom this pm-blastcould be significant
We don't have to wait for Jan.I, 2000, to understand that Year2000 issues are going to 48ect allmanagers ~ and aS oiganiza-tkms — in surprising and some¬times unforeseen ways.
Eriib Almas]/ li a Towma-btoal viapresident of a numaggmem ecmuitir^ ,firm.
3"d 81708gve SIS innSNOO ±0W y30b3H WOad WdAS = 5 866l-90-S
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