DATE: Monday, November 10, 1997             TAG: 9711080290

SECTION: BUSINESS                PAGE: D1   EDITION: FINAL 

SOURCE: BY LIZ SZABO, STAFF WRITER 

DATELINE: CHESAPEAKE                        LENGTH:   86 lines

CORPORATE GIANTS FEARFUL OF COMPUTER MISHAPSTHE COST IN READYING FOR THE YEAR 2000 COULD BE TOO MUCH FOR SMALL COMPANIES.

It's only 1997, but some companies already are running into the notorious Year 2000 Problem.

An insurance claims clearing house recently rejected the medical claim of a woman born in 1898. The insurance company's computer - whose internal clock reads only the last two digits of a year - misinterpreted the woman's birthdate as 1998.

If she hasn't been born yet, we're not paying for her doctor's visit, the clearing house decided.

So Brenda Lyle, co-owner of Advanced Medical Services Inc., resubmitted her 99-year-old client's application on an old-fashioned, hand-written application. It was approved.

So far, such computer glitches - like the client's longevity - have been rare. But Lyle knows her client's problem was just a preview of the $600 billion electronic nightmare looming at the turn of the century.

For corporate giants, preparing for the Year 2000 is a titanic task. Prudential Insurance Co. of America estimates it will spend $150 million to rewrite 125 million lines of computer code, converting two-digit dates to four digits that can handle the changeover to a new century. American Airlines will spend $100 million to hire 500 people to reprogram its systems.

For small businesses with only a handful of employees, the Year 2000 is not just daunting. It's enough to put a small company out of business, said attorney Andrea Webb Phelps. That's why she organized a seminar Thursday at the Holiday Inn in Greenbrier

for small entrepreneurs called ``Year 2000: Prepare Now or Pay Later - Legal, Accounting and Technical Issues for the New Millennium.''

The computer glitch stems from the way programmers have abbreviated dates for decades, said Kathy Gard, president of Gard Technical Solutions Inc., who spoke at the seminar. Operating systems have been designed to record dates as just two digits. It saves time. It's simple. The only problem arises when the century changes.

``Folks never assumed the software they wrote would be around by the year 2000,'' Gard said.

Businesses need to begin solving the year 2000 problem now, said Sharon K. Nickle, an accountant with Bresenoff & Associates.

``It's an enormous amount of work, but it has to be done,'' Nickle said. ``It's especially hard for small businesses, who don't have a lot of resources.'' Waiting will only make things worse, Nickle said.

Computer programmers with the skills - and the patience - to wade through long strings of data are being snapped up by savvy companies, Nickle said. Businesses that hesitate may have to scramble to find available computer engineers. Or pay much more money to get them.

Lucky businesses with talented programmers on the payroll should do everything in their power to keep them, said attorney Andrea Webb Phelps, who organized the seminar.

``Now is the time to review your compensation packages,'' Phelps said. ``You want to make sure that the programmers who begin your year 2000 compliance solutions are there to see it through.''

In contracts with computer programmers, businesses should specify that all new coding belongs to the company.

``You don't want the programmer to claim they own the work, and that they'll license it to you for a fee,'' Phelps said. ``You could be paying royalty fees forever.''

Companies should test their spreadsheets for possible glitches - but only after creating and testing a backup system, Gard said.

Tackling the technology is only part of the problem, however. Phelps said there are also a seemingly endless number of legal complications:

Businesses whose computers crash in 2000 may be unable to fill their customers' orders or meet their legal contracts, she said. And even the best prepared companies can suffer if suppliers, distributers and other business partners fall through.

Boards of directors could be sued by angry stockholders or investors for failing to prevent a millennial meltdown. With so much publicity about the problem, a company may not be able to claim that it did not have time to prepare.

Banks could call in loans issued to a business that did not disclose its vulnerability to the year 2000 problem, Phelps said. ILLUSTRATION: Color photo by Richard Dunston/The Virginian-Pilot

Sharon K. Nickle, CPA, CFP principal at Bresenoff & Associates P.C.

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Preparing for the 2000

For complete copy, see microfilm KEYWORDS: YEAR 2000

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