The top 40 companies in Chicago spent nearly $2 billion to beat the Y2K computer bug.
For that much money, they could have bought the 41st largest company in Chicago.
Chicago-area hospitals spent more than $50 million on Y2K, enough to purchase a new MRI machine for every hospital in the region.
The Illinois State Toll Highway Authority had to collect some 36 million tolls to cover the $14.5 million it cost for additional or accelerated projects to become Year 2000 compliant.
With the $6.5 million that the Illinois Department of Children and Family Services spent on Y2K, the agency could have added 186 caseworkers for a year to its army of 3,000.
If the millennium bug has been squashed, it’s only because it got flattened under a pile of money.
Spending for Y2K has been moving through the economy like a mouse through a snake, though it has been hard to tell if the bulge is feeding the thing or just weighing it down with fat.
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Some economists say Y2K has lifted the economy by being a full-employment program for high-tech workers and leaving the country more technically advanced than ever. To them, it was money well spent.
But others say it has usurped funds that otherwise might have gone toward hiring more workers, improving corporate bottom lines, treating sick patients or helping abused children. Moreover, they note, all that money was spent in the name of essentially maintaining the status quo.
Had all that Y2K money been allocated elsewhere, it probably could have cured cancer and heart disease, in the view of Lou Marcoccio, research director for the GartnerGroup consulting firm, considered among the lead analysts of Y2K.
“I’m talking resolve cancer totally, resolve heart disease totally,” Marcoccio said. “We could have easily done that as opposed to spend money on something that unfortunately we were forced to spend money on.”
But the problem was real, and so is the deadline.
It originated from a time decades ago when computer memory was enormously expensive. A two-digit date field took less memory than a four-digit one, allowing computers to perform other data functions more efficiently. When the date change even occurred to those code writers, most believed the early computers would be replaced by the time the year 2000 rolled around.
Across the board, from government to business, the computer mechanics now are assuring the world that they have fixed the problems and New Year’s Eve will be a party rather than a disaster.
The final Y2K bill can’t truly be reckoned until next year, after it’s known how much mayhem was uncorked on New Year’s Eve. Virtually every company that filed Y2K disclosure forms with the federal Securities and Exchange Commission acknowledges in tortured legalese that there is a potential for expensive judgments and settlements to lawsuits if there are problems.
If things do go smoothly, it will have cost about $100 billion nationally, or about $365 per American, according to the U.S. Department of Commerce.
The good news, if there is any, is that earlier federal estimates had said it would be twice that– $200 billion for the country, or $730 per American. So in a sense, the Y2K fix feels like a bargain.
“What the economy gets for that is what I expect to be a very uneventful date change, but also a whole new stock of incredibly efficient capital, a one-generation improvement in the capital stock of computers,” said Brian Wesbury, chief economist with Griffin, Kubik, Stephens & Thomson Inc., a Chicago investment bank. “I think in the end this is going to prove to be a big boon to the economy.”
American businesses are brimming with new equipment, in other words, and government agencies are humming with more efficient computer systems.
“Even without Y2K, we were sorely in need of new computers,” said Scott Burnham, a spokesman for the Cook County clerk, which spent $319,000 on Y2K fixes. “The computers that were replaced were probably state of the art 100 years ago.”
The Village of Gurnee spent $250,000 on Y2K, including buying a new backup generator for the fueling station that serves snow plows, fire engines and other emergency equipment. Officials believe they’re not only ready for the onset of 2000 but also for any blizzard or emergency for years beyond that.
Some government agencies have seized upon Y2K as an opportunity to upgrade computer systems a few years earlier than planned. Long accustomed to getting their requests for updated technology shoved to the back of the budget burner, Y2K rocketed Information Technology projects to the top of priority lists.
The Illinois State Toll Highway Authority spent $12 million replacing its non-compliant mainframe computer system a few years earlier than it would have, according to executive director Tom Cuculich. “It was an antiquated system, and we would’ve done it soon,” he said.
In the Chicago-area’s business world, Motorola Inc.’s $230 million in spending for Y2K stands among the heftiest corporate outlays.
“None of this money has gone down the drain, because it’s gotten us ready and it’s gotten our customers ready for the new millennium,” said Scott Wyman, spokesman for Motorola.
The University of Chicago Hospitals spent $7 million, including $4 million on a patient registration and accounting system. “It was 15 years old and we needed to replace it anyway,” said a spokesman.
Preparing for the prospect of chaos amid champagne corks also has served to “dramatically jump-start electronic business” by years, Marcoccio said. “Many companies, when they’ve had to replace systems, they’ve replaced them with e-business solutions,” he said.
But not everyone is trumpeting the unintended benefits of Y2K.
“In some cases we got some new features and things, but generally speaking, we got compliance,” said Donna Lenczycki, management information systems director for DuPage County, which spent $2.4 million.
Much of Y2K spending went toward upgrading and replacing software, hardware and embedded chips that contained 2-digit date fields, in addition to the costs for personnel such as analysts, technicians and consultants. The process drained resources from state agencies such as DCFS, officials said.
Because the equivalent of 56 full-time employees have been working to fix the problem on DCFS’ 45 computer systems, almost every other data or programming request made in 1999 had to be denied, creating an overwhelming backlog, according to DCFS chief of staff Carolyn Cochran Kopel.
In some cases, the moratorium may even have affected the agency’s defense in court cases. “If we were being sued and wanted to prove we weren’t doing something that we’re accused of, or to show that we were, we were unable to get that data,” Kopel said.
Hospitals, too, watched cash bleed to Y2K. An American Hospital Association survey found that $8.2 billion was spent to overcome Y2K problems in medical centers across the country. On average, a hospital spent almost 7 percent of its 1999 budget just to fix Y2K problems, the survey found.
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“When you spend $8.2 billion, you take $8.2 billion away from patient care,” said Fred Brown, chairman of the association. “But you want to be ready Jan. 1.”
Kane County Sheriff’s Commander Dave Barrows said the $1.3 million spent on replacing and upgrading equipment in his agency came directly out of the county’s building fund.
“Obviously, anything in government is borrowing from Peter to pay Paul,” Barrows said. “If money is spent on this equipment, it’s not available for something else. The circuit clerk’s office and the recorder’s office are in need of replacement. And we need a new jail.
“Certainly, not having the money might have slowed down the initial steps on those buildings.”
Much spending on the millennium bug helped the technology sector, according to Marcoccio, but most agree that even $100 billion probably had only a small effect on the overall economy in the United States, which is measured in the trillions.
And computer-related sectors of the economy will see a sudden, though perhaps only short-lived, downturn in sales, according to Susan Hering, chief economist for Chicago-based Carr Futures.
In its most recent earnings report, IBM Corp. already has reported a slowdown because Y2K-related sales in servers, services and operating systems software are drying up.
“We do have an $8 trillion economy, but $100 billion is $100 billion,” Hering said. “This is a risk for the economy in the sense that the stock market boom is built on unlimited upside prospects for computer and technology stocks. Any signs that there are bi-directional risks for the high-tech sector could give the stock market an unpleasant wakeup call.”