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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.
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