The Year 2000 Problem: Ethical Implications

نویسندگان

  • Leon A. Kappelman
  • James J. Cappel
چکیده

As the end of 1990s draws ever closer, organizations are “making the dash to the year 2000 finish line.” Unfortunately, this is no small task. Moreover, the year 2000 concerns of many organizations will not end on January 1, 2000. Systems failures will inevitably occur, and experts predict that the year 2000 (Y2K) problem will lead to numerous lawsuits costing enterprises vast sums of money. With the rise of litigation, it is likely that ethical questions will also be raised about organizations’ handling of their year 2000 problems. Among the relevant ethical issues that will be considered is did system developers and their organizations have an ethical obligation to address the year 2000 problem? This question is of great importance whether the developers work for in-house information systems (IS) departments or for software and hardware vendor organizations. This paper takes a detailed look at this issue. This paper also focuses special attention on a typology of factors, derived from models of ethical decision making, that have served to inhibit or facilitate organizational responses to the year 2000 problem. The goal of this analysis is to recognize and remove the obstacles that remain to an effective Y2K response, so that organizations can not only become year-2000-ready, but also become better prepared to ethically, technically, and effectively manage their information assets. In so doing, organizations will be pursuing the prudent, ethical course of action that minimizes their legal exposure, and protects the long-term interests of their stakeholders. Information Systems Frontiers, Vol. 1, No. 2, 1999 Focused Issue: Managing Year 2000 Risks Guest Editors: Mark Blaskovich & Prabhudev Konana Copyright: Kluwer academic publishers Introduction The quotation above aptly describes many ethical decision making situations. Ethical problems tend to be “thorny,” requiring, among other things, balancing the interests of various affected parties and considering one’s duties and obligations. There are often no easy answers. In the case of the year 2000 problem, however, just the opposite of President Johnson’s remark appears to be true. While many information systems (IS) professionals recognize that addressing the year 2000 problem (Y2K) is in the best interests of their organizations, and they want to do the right thing, many organizations have failed to take adequate action to ensure that their systems will be year-2000-ready. In effect, they are placing themselves in jeopardy. Thus, the underlying ethical quandary with the Y2K issue seems not so much a matter of knowing what is right, but doing what is right. Many year-2000-related lawsuits are predicted if systems failures occur and various parties are harmed. Harm to third parties or not, there is still the issue of the recovery of Y2K repair costs. In the wake of such mishaps, lawyers, investigative reporters, shareholders, and others will raise some glaring questions such as: “Why did this happen?” “Could it have been prevented?” “Who is responsible?” The key question for organizations is how can they best utilize their resources in the short time that remains to reduce their risks of year-2000-related damages? “Doing what’s right isn’t the problem. It’s knowing what is right.” President Lyndon Baines Johnson (Source: Boone, 1992) Information Systems Frontiers, Vol. 1, No. 2, 1999 Focused Issue: Managing Year 2000 Risks Guest Editors: Mark Blaskovich & Prabhudev Konana Copyright: Kluwer academic publishers This paper explores the ethical dimensions of the year 2000 problem. The ethical responsibilities of IS professionals and top management to act on the year 2000 problem are highlighted based upon their professional obligations. In addition, various dynamic forces are examined that have served to inhibit or facilitate an effective year 2000 response. First, however, it is important to address the potential harm that may arise from the year 2000 problem and the legal issues surrounding it. Potential Consequences of the Year 2000 Problem The scope and magnitude of the year 2000 problem is truly striking. While the Y2K problem is commonly perceived as only affecting older, mainframe systems, its effects extend much farther than this. The year 2000 problem potentially affects packaged software, operating systems, customized applications, and embedded systems in buildings and equipment, including elevators, bank vaults, security systems, heating controls, navigational systems, medical devices, telephone systems, and many other systems. Any computer system that makes use of dates is potentially at risk, and the age of the system is of little relevance. The Society of Information Management (SIM) Year 2000 Working Group estimates that organizations worldwide will spend between $409 and $615 billion on year 2000 conversion (Kappelman et al. 1998). In terms of individual organizations, Chase Manhattan Corp. will reportedly spend $250 million on its year 2000 conversion efforts, American Airlines, $100 million, the Internal Revenue Service, $1 billion, and GTE, $150 million (Bergen 1997). The SIM study also found that organizations on average were expected to spend about 38% of their annual Information Systems Frontiers, Vol. 1, No. 2, 1999 Focused Issue: Managing Year 2000 Risks Guest Editors: Mark Blaskovich & Prabhudev Konana Copyright: Kluwer academic publishers information systems operating budgets in 1997 on the year 2000 problem (Kappelman et al. 1998). The year 2000 problem is also expected to have negative impacts on the economy. Unlike some systems development projects that may improve efficiency or lead to competitive advantage, addressing the Y2K problem is largely a systems maintenance expense that a company must bear just to stay in business. A Standard and Poor's DSI study commissioned by Business Week projected that the year 2000 problem will lead to lower economic growth, lower productivity, and higher inflation. This study estimated that the economic growth rate of the United States will be 0.3 percent lower in 1999 and 0.5 percent lower in 2000 and early 2001 due to organizations diverting resources to fix the year 2000 problem (Mandel 1998). Furthermore, these conclusions only considered the remediation costs and not any possible supply chain or cascading “ripple effects.” The lack of a timely response to the year 2000 problem can result in systems errors that lead to significant financial losses. For example, invoices may be miscalculated and customers misbilled, production systems could be shut down, good inventory could be discarded, and many other problems. Some experts have even predicted that errors in mission-critical systems could be so severe that they could lead to business failures (de Jager 1996). Beyond an organization itself, systems that are not year-2000-ready could harm a company’s trading partners. Since many enterprises today are linked through extended supply chains with their vendors, suppliers, customers, and other parties, non-year-2000-ready systems could corrupt Information Systems Frontiers, Vol. 1, No. 2, 1999 Focused Issue: Managing Year 2000 Risks Guest Editors: Mark Blaskovich & Prabhudev Konana Copyright: Kluwer academic publishers the systems of other organizations with which a company exchanges data. This may result in various problems such as improper billings, the unavailability of parts and supplies, and stalled production. According to Joe Bione of the Deloitte Consulting Group, “Supply-chain interaction is critical to the success of Y2K as exemplified last year in the General Motors strike. We observed where one facility could literally shut down the world’s largest corporation... There is very little room for error or even a brief disruption” (Melymuka 1998b, p. 60). Most importantly, the year 2000 issue raises a threat to public safety, since computer programs that utilize dates also control nuclear power plants, water and sewer plants, chemical factories, petroleum pipelines, and weapon systems (Scheier et al. 1996/1997). For these systems, potential year 2000 impacts include injuries, the loss of human life, or environmental damage. For example, when Phillips Petroleum ran year 2000 simulation tests on an oil and gas platform in the North Sea in Fall 1997, they found that an essential system for detecting harmful gases such as hydrogen sulfide failed (Mandel 1998). Finally, the effects of the Y2K problem resulting from government, public utilities, telephone, and public transportation systems could be significant. For example, the Department of Health and Human Services has received low grades from a U.S. Congressional Committee that issues quarterly ratings on agencies’ Y2K readiness. This raises concerns that Medicare, Medicaid, and welfare payments that are delivered by this agency through the states could be delayed (Lester 1998; Neumann 1998). Meanwhile, some state governments are also behind on their Y2K efforts. An analyst at the GIGA Information Group estimates that states, on average, have completed remediation work on only about half of their mission-critical systems (Caldwell 1998). The Information Systems Frontiers, Vol. 1, No. 2, 1999 Focused Issue: Managing Year 2000 Risks Guest Editors: Mark Blaskovich & Prabhudev Konana Copyright: Kluwer academic publishers Department of Transportation is also among the agencies receiving unfavorable ratings by Congress for its Y2K readiness, and some have predicted that there could be failures for aviation and U.S. railroads (Neumann 1998). If these failures materialize, they could obviously be disruptive to travelers or the flow of goods. Representative Steve Horn, whose Congressional Committee issues the quarterly report cards on federal agencies, says, “What worries us most is the power grid... A power blackout (in some areas) is entirely possible” (Zuckerman 1998/1999a, p. 1A). Legal Considerations Since the year 2000 problem poses significant risks to organizations and their constituents, it is not hard to imagine numerous lawsuits arising from the year 2000 problem. In fact, they have already begun. A number of class-action lawsuits that seek damages have been filed against software vendors such as Software Business Technologies, Symantec, Medical Manager Corp., and Intuit, alleging that these vendors required customers to purchase Y2K-compliant software upgrades of certain products instead of providing these “repairs” for free like other vendors (Mukherjee 1997; Reuters News Wire 1998). As part of the settlement of several class-action lawsuits against it, Medical Manager Corp. agreed to provide a free patch to make certain versions of its medical management software year-2000-ready (“Year 2000 Litigation” 1998). The cases against Intuit were also dismissed when the software maker agreed to provide free upgrades for its non-year-2000-ready versions 5 and 6 of Quicken (“Year 2000 Litigation” 1998). In another case that gained media attention, Produce Palace, a Michigan grocery store, sued its cash register vendors because the systems they sold did not accept credit cards expiring in the Information Systems Frontiers, Vol. 1, No. 2, 1999 Focused Issue: Managing Year 2000 Risks Guest Editors: Mark Blaskovich & Prabhudev Konana Copyright: Kluwer academic publishers year 2000 (Hamilton and Springen 1998). As a result, Produce Palace allegedly experienced more than 100 system crashes that led to lost business and customer goodwill (Century Date Program News 1997). This suit was later settled out of court for $250,000 (“Market Rids Itself of Bad Y2K Goods,” 1998). In another intriguing case, Andersen Consulting made a “pre-emptive move” by suing a Massachusetts company in a dispute involving work that Andersen performed on a system. The company, J. Baker, Inc. demanded that Andersen upgrade the system at no cost because it was not year-200-ready. Andersen seeks a declarative judgment that it fulfilled its contractual obligation and is not responsible for upgrading the system at no additional cost to the customer. This case is still pending (“Year 2000 Litigation” 1998). Lou Marcoccio, who monitors legal developments for the Gartner Group, reports that he already knows of about two hundred year 2000 disputes that have been settled out of court, many of which involved the payment of between $1 million and $10 million (Chandrasekaran 1998). It is striking to note that the legal costs of the year 2000 problem are estimated to exceed the costs of fixing the problem itself. GIGA International, a large consulting firm, projects that year-2000related litigation worldwide could top $1 trillion (Ditchburn 1997). Besides software vendors, many other parties are potentially at risk. Consultants could be held liable if they fail to fix systems adequately. In fact, according to a Wall Street Journal article, the consulting arms of some Big 5 public accounting firms have not taken on new year 2000 conversion work due to concerns over potential legal liability (MacDonald 1998). Organizations Information Systems Frontiers, Vol. 1, No. 2, 1999 Focused Issue: Managing Year 2000 Risks Guest Editors: Mark Blaskovich & Prabhudev Konana Copyright: Kluwer academic publishers could face product liability lawsuits for year-2000-related systems failures, or corporate directors and officers could be liable to shareholders if they do not fix year 2000-related-problems or fail to disclose them properly (Scheier 1996). For example, shareholders of a company might sue directors if year-2000-related losses lead to falling stock prices. Since companies can negatively impact others in their supply chain, a firm could also sue its suppliers if their Y2K-related problems cause delivery disruptions in parts that halt production. Finally, it is predicted that companies who have to pay year 2000 damages will also file cases against their insurance companies to try to get reimbursed for some damages that they are forced to pay out (Chandrasekaran 1998). Ethical Duties of IS Professionals and Top Management As noted above, failures associated with the year 2000 problem can result in serious harm. Yet, many of these failures are preventable if an organization takes timely, prudent action. A key concern is who in organizations is responsible for taking this action? A careful analysis of this issue, based on ethical theory and relevant professional codes of ethics, suggests that both information systems professionals and top management, whether they work for IS vendor or customer enterprises, have an obligation to act on the year 2000 problem.

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عنوان ژورنال:
  • Information Systems Frontiers

دوره 1  شماره 

صفحات  -

تاریخ انتشار 1999