Management is to blame for failing to keep the bugs at bay

It is the dinner party bore’s gift horse: if the computer industry is so full of brilliant people, why did no one foresee the millennium bug? And for the computer-illiterate, for all those who prefer to be bookish rather than online and for those who can’t afford, or be bothered, to boot up the Internet and global digital superhighways, the imminent collapse of the world’s computer systems comes as great news.

A different question is whether they should be quite so smug about it. For one thing, while it may be enjoyable to see the smile wiped off the faces of some of the multi-millionaire anoraks whose pronouncements these past two decades have been totally incomprehensible, it will be less enjoyable to see bil-lions wiped off our savings and investments as banks and finance houses struggle to cope with electronic brains that suddenly think they are Edwardian.

Luddites in cyberspace had better get used to the idea that we have got it coming to all of us, it’s not just the computer nerds on the receiving end. By extension, the argument that we’re all in this together answers the question as to how the situation was allowed to come about. No one can take responsibility for human technological progress – it just happens. It follows that the computer industry adopted a Micawberesque attitude to the millennium timebomb: something will turn up.

But if complacency is misguided in those who are antipathetic to the computer industries and misdirected at the computer industries themselves, then it is a downright abrogation of management responsibility when it is found in multinational companies that rely on such technology for their very operation and, therefore, for their delivery of earnings to their shareholders.

I note that there are posters and press ads originating from government quango Action 2000 imploring British industry to get its act together. But, if a report out at the start of this week is anything to go by, this sort of apocalyptic warning may have as much effect on industry as early government Aids advertising had on sexual behaviour.

According to research from Company Reporting, only 25 per cent of UK companies recorded anything about tackling the millennium timebomb in their annual reports over the past year. And even those that did appeared over-optimistic about their ability to cope with the prospect of meltdown.

The survey shows that of those that did disclose millennium bomb preparation information over the past year, only about a half divulged the total cost and just one-third gave information of these costs in their accounts. It is my experience that what is missing from management accounts is invariably missing from management.

Disclosure varies from the exceptional (SmithKline Beecham) to the more usually vague, and estimates of cost differ wildly – electronics group Bowthorpe and building materials concern Hepworth believe the financial exposure to be insignificant, while BP and SB say they are to spend 60.6m and 100m respectively.

Different strokes for different keyboards, I guess, and I concede that an SB is likely to be spending vastly more than a Hepworth.

Another way of looking at it would be as a measurement of human-resource commitment. Reuters estimates it will deploy more than a millennium in person-years and United Utilities says it will have 200 people work- ing full-time at the peak of its millennium bug programme.

Many companies are focused narrowly on their own efforts, and evade analysis of the threat from third parties. Only about one-third of those studied had contingency planning for third-party risk and, according to Company Reporting, “Many give the impression the complete success of their millennium programme is a foregone conclusion”. Cited as examples are Tate & Lyle, Glaxo Wellcome, Eurotherm and Amec. The goodies, in terms of contingencies for unforeseen circumstances, are SB again and Northern Ireland electricity supplier Viridian.

This makes sorry reading. And I don’t think there’s anything by way of cheer that can be added. In fact, quite the reverse. There is now almost universal anticipation of an economic recession for the new millennium – a Chartered Institute of Marketing survey this week records the lowest level of confidence among marketing managers for four years – so companies will be facing computer chaos at about the time that they can least afford extra investment to address it.

I am not alone in being a Jeremiah, so what is to be done, even at this late stage? My view is that British management is generally appalling at planning for crises that it hasn’t faced before. This is one of those crises. It falls to foreign, or at least multinational, managements to address the issue properly. Managers also need to be at the cutting edge of the vanguard industry, in this case the telecoms sector, as it is dependent on, and a major contributor to, the development of the computer industries.

Is it too much to expect, in a week when BT struck a 6bn joint venture with AT&T and Cable & Wireless Communications won the management contract for the UK subsidiary of America Online, the world’s largest Internet service provider, that the telecoms combines will step forward and defuse the millennium bomb? I hope not.

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