Us Company Plans Unit To Defuse Millennium Bomb

To provide solutions for the dreaded year 2000 bug that is expected to hit computers across the world, the $-13 billion US-based Phoenix Home Life Mutual Insurance Company (PHL) is setting up a software export unit in Bangalore.

This unit will focus on software development exclusively for this problem.

The new company called Command International Software (CIS) is a 51:49 joint venture between Command Systems, another America-based information technology company, and PHL Software Services Pvt Ltd.

The latter is a 100 per cent subsidiary of Phoenix Home Life Mutual Insurance.

The two companies will jointly invest around Rs 23 crore in CIS over the next two years.

 

The century date problem is an extremely sensitive matter with serious financial and legal implications for the financial industry, Satish Bangalore, CEO of CIS, told Business Standard. PHL itself faces the date problem for which CIS is developing a solution.

This is expected to be worth nearly $10 million in revenues for CIS. There are many others.

The year 2000 problemmore commonly referred to as the millennium bombis one that will affect businesses across the world, especially those with applications running on mainframe computers.

This problem has arisen because when the applications were written, in the seventies and eighties, computer disk storage space was very expensive.

And so applications were written to make optimum use of disk space. One way was to use just two digits to represent the year in dates. So 1996 is represented as 96 only.

In the year 2000, however, this will mean a major disaster as that year is represented by 00.

This would make computers go crazy trying to figure out things. For insurance and banking companies, this is an especially frightening prospect.

Take for example the interest that has to be paid to a customer between the years 1995 and 2000.

The computer would calculate this as either a negative number of years (it subtracts 95 from 00, according to the two digit date); or the computer may decide to pay interest for 95 years, deciding to read 00 as 1900 and subtracting it from 1995.

The millennium bomb, according to analysts, is expected to cost businesses across the world nearly $600 billion.

And with 2000 barely three years away, the demand for software expertise that can solve the problem has become acute.

For India, according to Nasscom, this will be worth $5 to 6 billion in software exports over the next few years.

Command Information Systems expects to be part of this. Information technology companies in India, including Wipro and HCL-James Martin, are already re-writing code for companies in the US and Europe.

Each line of code that has to be re-written can cost a company between $1 to $4.

By 1999, this cost would be between $10 to $15 per line.

We have a five-step procedure to solve the problem, says Satish Bangalore.

These are: diagnosing the problem (which takes up about 10 per cent of the budget and time), segmenting it according to importance, then devising a logical sequence of rules to change the programme, and finally rewriting the code.

The last part takes up about 30 per cent to 50 per cent of the cost depending on the complexity of the code. Command Information Systems, which operates from a software technology parks (STP), with satellite links to its clients abroad, already has five of the largest US insurance and mutual fund companies as clients.

Among them are New York Life, the fourth largest insurance company in the United States, Liberty Mutual, United Healthcare and Boston Mutual.

Command International aims to achieve revenues of approximately $6 million every year starting this year.