AT midnight on 31st December, 1999, as people around the world are ringing in the new millennium, information technology experts and senior business managers with responsibility for their organisations' computer systems will be huddled around their computer screens, anxiously waiting to see how their computers handle the critical time movement from 23.59 hours on 31/12/1999 to 00.01 hours on 1/1/2000.

Their jobs may depend on it.

What are the problems facing computers with the move into the year 2000? What action is being taken outside Ireland to deal with it and what steps should organisations be taking at this stage and what are the practical and legal implications? The message for any company acquiring a new computer system or software is to insist on an unqualified, unlimited, express contract warranty that the system is year 2000 compliant.

. The problem Most computer systems utilise two digit data fields to recognise dates. For example, 1st April, 1997 is typically recognised as 01/04/97. Two digit data fields, however, when we get to, say, 1st January, 2000, will typically annotate the date as 01/01/00. Some computers will recognise the final two digits as representing the year 1900, instead of the year 2000, which will produce unintelligible output and calculations. Some systems may fail completely to recognise 01/01/00 as a date at all.

The invalidation of systems calculations, and the failure of program logic, will not only undermine totally the reliability of output, but could, in certain circumstances, even cause the computer system to crash. This could result in serious disruption to businesses.

Not only could it prejudice internal operations (inability to produce invoices, credit notes and other management information data etc), but it could also put the company in a very difficult position with customers who are affected by the inability of the system to cope with the transition.

The problem may be compounded for organisations which have "open systems". These systems enable organisations to use different types of software and to connect diverse systems. Failure to plan for Year 2000 could prevent data from being properly transferred from one system to another.

. Growing international awareness The problem of the "millennium time bomb" is receiving attention globally. In Ireland no formal initiative has been launched to date. In Britain, the Ministry for Science and Technology has already established "Task Force 2000" to raise awareness of the problems and to recommend what should be done now. The British government has estimated that the cost of ensuring year 2000 compliance will be in the region of £5 billion sterling. In the US it has been estimated that for US "Fortune 50" organisations the costs of adjusting existing systems will be approximately 35-40 cents per lined of code. This amounts to $50 million (£33.7 million) to $100 million per company.

. Suggested action New Systems: Any contract for the acquisition of new computer systems or software should include an unqualified, unlimited, express warranty that the computer system or software is year 2000 compliant. The ability to process year 2000, and subsequent year dates, should be included in any acceptance testing. It is imperative to identify all operational and computer procedures where date information is required and processed.

Existing Systems: Conduct an audit of existing software applications to establish the full extent of potential problems.

- Decide on the rectification policy. Can new logic be formulated so that the system can recognise "00" date fields as referring to the 21st century or is there a requirement to rewrite all dates in four digit format? - Ascertain whether the software. was developed in house or supplied by third parties.

Do you own or have access to the source code? Clients should obtain a copy of the source code, or have other adequate arrangements which guarantee access to the source code.

. The practical and legal ramifications Liability: If non Year 2000 compliant software was provided by a third party software house or vendor do you have a remedy? This will depend on a combination of factors: - the terms of express warranties (if any) and whether other warranties implied by statute or otherwise were excluded - most software vendors exclude the implication of warranties and limit express warranties to a minimum; - the duration of the warranty period - most software warranties are given only for a 90 day period whereafter the user must rely on the maintenance and support agreement; - the financial limitations that are applied to any warranty claim - most contracts limit the total amount that can be recovered on any warranty claim and specifically exclude certain categories of loss such as indirect and consequential loss.

. Are there any contractual limitations to taking remedial - action? If you do not own your software, for example if it is licensed from a third party, you will need to examine closely the terms under which software has been licensed and the extent to which you may make changes to the software. For instance, some software licences prohibit the making of any alterations or modifications to the software without the consent of the licensor. Other software licences expressly provide that modifications or alterations may only be made by the licensor.

. Are you covered under existing maintenance and support arrangements? Existing maintenance and support contracts should be examined to see whether provision is made for rendering software year 2000 compliant. This may appear as a feature in the support provisions of the contract (already included in the annual maintenance fee) or as something which is chargeable as an extra.

. Third party claims If your computer systems have problems processing year 2000 data then this could ultimately result in claims being made by customers or other organisations which are affected by the inability of your systems to cope with the transition to 2000 and beyond.

. Mergers, acquisitions and takeovers Any planned mergers, acquisitions or take overs of another company should include a comprehensive due diligence analysis of the target company's compliance with year, 2000.