Late last year, rumblings arose over the costs associated with the near-
universal mobilization of Y2K efforts. Amid increasingly confident predictions about a
successful date change, the ballooning estimates of the final bill began to cast
shadows over IT departments.

Could a less drastic approach have saved some of the billions spent on readiness?
Did alarmists, or possibly profiteers, drive the expense of Y2K preparedness to ruinous
levels?

In hindsight, the answers are not necessarily clear. Although some IT shops point
to valuable lessons learned and procedures adopted post-Y2K, and industry boosters of
various stripes describe benefits for future projects, others sum up much of the effort
as overkill.

There's no firm figure for the total spending on Y2K readiness, but IT outlays
related to the exercise have been estimated at well into the hundreds of billions of
dollars worldwide. IDC's 1999 tally for IT spending was $122 billion in the United
States, and $282 billion worldwide, with further spending of $13 billion nationally and
$38 billion worldwide expected this year.

Largely because the reporting and accounting of Y2K remediation costs vary so
widely, estimates of Y2K spending have bounced between extremes, from 5 percent to 30
percent of the average IT budget.

Government and industry officials vigorously defended the spending levels and the
scope of the readiness measures after the relatively placid date change. But driving
much of the cost debate is the question of whether or not the Y2K measures yielded any
lasting benefits for IT operations.

Getting a grip on the enterprise

Apart from basically agreeing that the measures helped stave off disaster, or
weather a tempest in a teapot, observers have conflicting opinions on the collateral
benefits issue.

"It's best to look at where organizations are in terms of their understanding of IT
processes and understanding of their systems inventory," says Kazim Isfahani, an
analyst at Giga Information Group, a market research company in Cambridge, Mass.

Among the IT functions that stood to benefit from the endeavor, asset management
ranks high, Isfahani says. Also, many companies put in place quality assurance teams
and came away from the preparations with application test beds, he adds.

"That can be invaluable," Isfahani says. "Going forward, they have to try to apply
metrics to new e-commerce-type projects. That can lead to a decline in test times and
bug detection, and a shortened time to market. Since development is increasingly
happening in Web time, [IT teams] automatically have some efficiencies in developing
for the Web, if they added a

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