All NACDA Members
The Implications of Y2K on College Athletics
(Tuesday, June 15, 8:30 - 9:15 a.m.)
Diane Gray has been with the Coca-Cola Company for the past 12 years. Among her responsibilities are to provide communication structure and strategy to the Coca-Cola 2000 team to manage the supplier program. This includes site visits and the process and guidelines for global development and to provide guidance to the company's headquartered corporate functions to identify progress, assess risk and provide recommendation for any identified major concerns. Diane also provided planning strategies and tools and assisted with the development of plans for emergency response teams.
Additionally, Diane has served as the company senior education program manager and manager of financial affairs for the Coca-Cola Foundation. She has worked with many colleges and universities developing programs on scholarships to help young people continue their education. In her latter role, Diane redesigned the company's computer mainframe and designed new computer programming for corporate contributions.
We are very fortunate to have Diane Gray with us today to talk about Y2K, how it affects all of us and, hopefully, what we can do to come out of this prepared. Please join me in giving a very warm NACDA welcome to Diane Gray.
(Video). No matter where you live, no matter what sport you play, no matter what team you play for, we all want to celebrate. Thank you, Jim, and good morning. I thought a little entertainment this morning might wake you up.
I'm pleased to be here today to talk about the year 2000 challenge. I'm not a computer tech and I don't believe there are any year 2000 experts, because we really don't know what's going to happen. I wanted to look at this challenge from a different perspective and that's why I joined the team.
Perhaps the local ATM won't work, but the tellers will be inside as they always have been. What about the small bakery down the street that can't get their delivery of flour? He telephoned his order in three days ago, but the medium-size delivery business couldn't process his order.
What I hope to do in the next few minutes is explain how the Coca-Cola Company is addressing this challenge. I hope that you will take away some of this information about this issue, perhaps join the year 2000 team or, at a minimum, I challenge you to ask a lot of questions. I do and I will throughout this briefing this morning.
First, many of you understand what the millennium bug is all about. Some of you think it doesn't apply to you at all. It does and I'll explain. Please bear with me during this explanation. Once upon a time, when computers first came into existence, around the 1960s, these very ingenious computer programmers decided to save some space by storing the year as only two digits thereby eliminating the first two digits which were one and nine. As the story goes, many programmers thought their programs would not be around for a long period of time or that they would be replaced by new technology. What's happening right now is that those computers and programmers are still around.
What does the two-digit date storage mean when the world moves from 1999 to 2000? Let's imagine that the old programs are a meatball. I like Italian food. That's why I use that analogy. You have all of these programs in a meatball. The programmer leaves and that's fine. The company then hires a new programmer to enhance the programs, making them more powerful. What does he do? He doesn't necessarily have to fix the meatball, so what does he do? He adds a layer of spaghetti. Now, 25 years later, all of this new technology, all of this new programming, with smarter people making our lives faster and this plate of spaghetti has grown. Now, comes all of the discussion about the year 2000. How will this core or this meatball get fixed? How will it understand the difference between 1999 and 2000? Now, we have two problems because everything is stored in this meatball as a two-digit date. Somebody has to get through all of this spaghetti to get to the meatball to fix it. That's what's taking a long time.
We don't want the computers to stop. What may be worse is that it miscalculates information. I, for one, don't like miscalculated paychecks. I don't expect anybody here does. What about your football staff? What if they get messed up? This country is very interdependent, very linked in all of our computers, things we forget about in everyday life. The challenge is to fix these two-digit dates. Is the program real?
Presidential Commission on the Year 2000 and Compliance is explained in its web site. I'm going to read this as a quote. "The year 2000 could disrupt many aspects of our society around the world, across the nation and in your office. Y2K ignores lines on maps. It has no respect for size. Without remedial action, small businesses, major corporations and governments at all levels are equally at risk. To call the technology, the Y2K, a technology issue ignores the capacity for disruption. It is, in fact, a communications problem, a health care problem, a utilities problem, a logistics problem, a national and international problem and a government problem."
There are a variety of opinions. One is no big deal. May 1997, in Business Week, Senator Bob Bennett, Republican representative out of Utah who has served as the Chair of the Senate's Special Committee on the Year 2000 technology problem, remarked, "that while Americans could experience some inconvenience as a result of the year 2000 problem, the United States is not going to find the kind of collapse that was being predicted a year ago." He has spent a lot of time bringing in organizations and industries to deal with the problem.
In 1999, there are many good stories about the achievements of the year 2000 teams across the country and the world, while there are many stories about the continued concerns. Part of the concern is that there is not enough time to finish if you're just getting started. There are limited resources in both people and money. In many countries, they are dealing with financial disasters, crisis and other natural disasters that put Y2K as a distant threat. That's later on, that's coming in five and one-half months. I'll deal with it when it gets here.
Media stories about Ireland, Japan, Brazil, Germany, Russia and even the Dutch Y2K programs are easy to find. Plus, we have an increasing amount of conflicting media stories. In Washington, D.C., March 31, "The U.S. telecommunications systems are unlikely to suffer major outages due to the year 2000 computer problems." This is what a Federal regulator said. However, in a June 3 article in Business World, the quote said, "In April 1999, the State of Readiness Report from the Presidential Commission in the Year 2000 Compliance indicated that in terms of overall Y2K project progress that the finance industry was far ahead, but the telecommunications was at 66 percent. You can draw your own conclusions.
Another conflicting report talked about the Gardner Group, which has done a lot of study for the year 2000. There were 14 countries within the danger zone, including the Philippines. The Philippines shot back and said that if this international survey is to be believed, the Philippines is at the tail end among those countries despite the fact that they had received a high Y2K awareness from the World Bank. Who's right?
So, how have we at the Coca-Cola Company been addressing this challenge? We started in 1995, which seems like ages ago. Our programmers recognized that this was a risk to the business. This is a business issue. This is not just a computer problem. The business scope as you see on the screen is varied. What's the impact to the risk of the business? That's what you should be asking yourself today. What's the risk to me? What am I dependent on that uses computers, even if I don't? My guess would be many things. I had a gentleman call me last year and ask me to please stop sending surveys to him. He didn't use a computer and I needed to get his name off the list. I sent 6,000 surveys, all with my name on it, they tended to call me. I asked him what he does for us. He said, I do this. I told him that was an important ingredient for Coca-Cola. He said, "Yes, it is." I asked him how it works. Do you process it? He said he did and that he had a plant. I told him that if he had a plant, there is a thing called an imbedded chip. It's a microcomputer that runs your plant equipment. There was dead silence. He said, "You know, I'm glad we had this talk. I better go talk to my engineers."
I did that in more than 130 visits face-to-face on behalf of Coca-Cola. I talked to people about the potential risks they have for their business and their business can effect us. As you can see on the screen, our system begins at the raw material stage and goes all the way through the collection of revenue.
How about yours? Have you done this flow chart for yourselves? I may be wrong, but I would think that statistics are pretty important in your world. They are probably stored in a computer somewhere. How about the January 1 bowl games? Who's going to play is important, but what about getting there on planes, buses? What about the airport? Will the airport baggage get you the equipment you need? Will it run smoothly? From what I know about football, you can't play without equipment. Will you stay at a hotel? How about the stadium? I can imagine most of these are run by computer or microchips. So, the year 2000 could affect you in some way. Our value chain is extremely important. Remember, we're talking about a company's ability to continue to do business as usual. If there is a disruption anywhere along this cycle, there's a risk to our business.
The Coca-Cola Team 2000 was created in 1997 to enhance the work that was started by the programs. You have to remember it started with this meatball. It started with a core, a main frame and people have evolved from what happens in the mainframe of the program to the hardware, the embedded chips and facilities on plant floors and on to business continuity.
But, what's our goal? Our goal is to minimize to the extent possible. Minimize because we can't say we can fix everything and nothing is going to happen. We're going to minimize to the extent possible the business impact. How? This is the phase of the year 2000 program. It may not be of interest to you, but as I have gone to our suppliers, I asked the same questions. I want to know that they have an in-depth program just as we do.
They need to make sure they had an inventory of every computer, every program and every machine in every facility around the world. We did it. It was a daunting task, but we did it. Assessment is the process to review all of what you've gathered and determine what is next.
In the planning phase in computer terms, the only things I didn't understand was to replace something, repair something, figure those out, upgrade something or sunset something. We learned that when you sunset a program and take it off your mainframe or platform, this frees up disc space for other programs you need. This housekeeping of old systems has been considered the silver lining in many of the year 2000 programs. You have implementation. What is implementation? It's about actually doing the work. You need to be doing it and testing the work. Testing is considered vital.
I often ask people about recontamination prevention and they ask me what I'm talking about. We want to make sure that the $130 million we spent on fixing the programs doesn't go capoot because somebody put something on there that shouldn't be there. May 1 of this year, the Coca-Cola Company instituted a freeze to protect our environment. There will be no new production. If you want to fix something, it's fixed very tightly and very tightly controlled.
We also have four separate programs going on within our year 2000 program. Applications have to be looked at. The software that runs normally in our architecture plus all of the specialized programs have to be looked at. We have special programs for marketing and for legal and many people are working on that. Systems components have to do with hardware, but it also has to do with your telephone systems, checking your routers in your hubs. I know those words aren't familiar to you, but if you ask those questions, somebody on the year 2000 team would know whether they've checked them or not.
Then you have the embedded systems. Embedded systems are the microchips and, believe me, they are everywhere. Some of you probably have them in your watches. Everything had to be checked.
Finally, our third parties, which include our suppliers, vendors, customers and government agencies. As you can see from the iceberg, most of it is under water. This is the same type of scenario people around the world have experienced with embedded chips. Many of them are hidden. They can't get there.
In regard to facilities, elevators, UPS systems, heating and cooling systems, I've got to tell you a story. We have a $70 million state-of-the-art building, one of many. We decided we wanted to test the heating and air-conditioning system. Last year, they decided they would roll it over. They brought a team of Coca-Cola people and a team from the vendor. They set the clock to December 31, 11:57 p.m. Within five minutes, as the clocked ticked down, that building was totally unsecured. We had no locks, no electricity, everything unlocked, no heating and air and no telephone system. It took us five and one-half hours with a team of experts that knew that place inside and out because one programmer put it all on one computer in the back room and he doesn't work for us anymore. This is what people are experiencing. This is why testing is critical.
Legal issues are something we all love. I always say I have four lawyers sitting on my shoulder. We have a general counsel, a litigator, FCC attorney and a business attorney that asks a lot of questions. We ask a lot of questions because we do have to report to the FCC. Any public entity in the United States has to report their year 2000. It's all out there. You can find it.
I was sitting with a Fortune 500 CEO during a visit a year ago and he was about to merge. We were talking about his year 2000 program and I asked him about their year 2000 program. He said, "What do you mean?" I asked him if they checked it out. You could be buying a liability versus an asset. He whispered something to his vice president and I never saw that vice president again the rest of that day. I'm sure they were checking out what the status was of that particular merger. We are going to protect our trade secrets and our confidential information. That's something that many are worried about when their computers have been revamped by many people over the course of their year 2000 work.
We had to develop communication strategy. Why? We're the Coca-Cola Company. We knew we would have questions. We had to develop something for our employees. We had to tell our employees what they could and couldn't do, what they should and shouldn't say. If they had some conversations on the year 2000 beforehand, we needed to get in touch with those folks to determine what the status was of the information they gathered already.
We also needed to develop external. We have a great responsibility to our stockholders. We have a great responsibility to our customers and consumers. Of course, we do get a lot of inquiries from the media. We also looked at our consumer base. What are the potential issues of restaurants? Automated ordering systems, time clocks, cooking equipment, cash registers all had to be looked at. When was the last time you got change manually? Telecommunications, of course, is critical to all of us. Menu boards are important. What about retail signs? If you can't read it. When was the last time you saw a stamped price on anything? We are very automated in today's society. Their inventory systems are automated. What about credit cards? That's become a big issue. I don't carry cash. I carry credit cards. Automatic doors. I just told you that our doors unlocked. There are many automatic doors that fail safe closed. We found that issue in our plant in Honolulu three months ago.
What do we need to do with our customers? Customers are critical so we made sure we identified all of them. Then, we needed to look at their readiness. Are they ready for the year 2000? Even if they're ready, do they have a plan to continue business as usual?
Now, one of my other favorite subjects is suppliers, vendors and third parties. What kinds of suppliers? Look at your own world to determine what kind of suppliers you have. We have product suppliers, which are our raw materials for packaging and we have service providers. People like the utilities, advertising agencies, consultants. What about vendors? They are hardware suppliers. They supply your computers, your servers and they can supply your software. One of my favorites is, if you don't believe government agencies you do business with could affect your business if they fail, I ask you to think about that one more time. We can't ship back and forth. We can't ship around the world if Customs anywhere in any country that we would normally ship in or out of would shut down. The delay could stop and interfere with business.
What about the state level? Let me tell you, there's a lot of legislation going on. There are a lot of things being passed and there are lots of interfaces everyday. Many of you are state agencies, I would expect.
What about the local level? Many of these folks control your water systems, waste water systems. I don't know how many of you are in high rise buildings, but the only thing that will shut our building down is if we don't have water. Health regulations say it's mandatory that we shut down without water.
Traffic lights. We did a scenario testing all of our planning. It's 1:00 in the afternoon and we just lost power. They pulled the building back up, but it's for life safety. We had limited elevator access. The water will not pump into the toilets if you're on the 26th floor because that's not life safety. We moved everybody out because we thought it would take about four hours to get everything back up. If we actually lost electricity in the city of Atlanta, traffic would be terrible without traffic lights.
I've done a lot of visits face-to-face. We felt this was the way to gather the information and to have a true discussion about the year 2000. The business unit does the follow up. For every major supplier, we sent a survey. For general, we made sure we sent a survey to deal with an overall project.
So, what's continuity planning? Disaster recovering deals with your computer systems. Contingency planning is the next layer out and it deals with specific suppliers or an industry. Business continuity takes into effect all of this. Everything that I just led up to is what feeds into our business continuity. We're going to know who our suppliers are by division of the company around the world. That's been important to us.
On June 7, the Portland mayor said, "We're taking this very seriously. The purpose is not to raise a tremendous amount of concern, but to be prepared for an emergency. It doesn't mean it's going to happen." Planning is a key element. I understand this is a busy slide I'm going to show you, but I wanted to show you what Coca-Cola has gone through worldwide. We have had every division and every corporate function look at preparing for the year 2000. We've looked at critical systems, we've looked at how would we respond if there was a disruption, how would we then recover and restore our normal business operations. We've exercised and we will maintain this through the remainder of this year.
We will continue to update our plans and monitor them through the next few years. They are useful tools and will be able to stay on site in case a different kind of emergency comes up.
PCP can be simple. It can be a list of your critical functions. It can be task list to restore your systems, which systems first. Make a telephone tree. Who would I need to get in touch with if I had a problem and couldn't get to work? Review the supply chain. Who would I need to call if I had a problem? If one system goes down, whom do I call?
In a process to backup your files, you need to remember what is critical to you. If you're Rolodex is on the computer, my personal suggestion would be to make sure you have a back-up copy. The Coca-Cola Company is well positioned to avoid disruption in all of our facilities around the world because of this process.
Now that you've heard more about the year 2000 challenge, you may want to do some research on your own. I want to share with you some web sites that may be of importance to you. Presidential Counsel on the Year 2000 Conversion has a hot line, as well. The American Association of Retired Persons has a hot line. The American Red Cross has a lot of information for you. The FDIC has information since banking is important.
I would like to share one more story with you and this is the dilemma of the year 2000. This is not our country because our money is protected. Our money is looked at from a number of sources and the federal regulators have been very involved in our banking industry for the year 2000. In another country, we do business in three banks. One of the team members did three face-to-face visits. They came back and reported their findings. Two of those banks were no problem. They felt they were going to make it. The third bank wasn't going to make it. The Coca-Cola Company can take their money out of the bank. What do we do with the employees? What is our responsibility to the employees who do business with that bank with information that we know? I'll tell you that I don't know the answer and I don't want to know the answer. I gave that to the lawyers, but it's something to think about. Our chief is going to fly from Washington, D.C. to Seattle on an American Airlines flight over the rollover. The U.S. Department of Education should be checked out too. Social Security has been given an A forever. I tell them I know this, but Social Security does not write the checks, folks. The Treasury Department does. The Treasury Department has not been getting high marks. The World Bank has information about many countries around the world. The State Department is already starting to issue information about the year 2000 travel.
This is one time when we can't change the target. Managers can't say they need another month to fix it. It isn't going to happen. Time is not our friend in this challenge. Today, the year 2000 is only 200 days away. That's only 143 business days. I've worked enough weekends already. This group represents the finest educational institutions in the U.S., Canada and Mexico. During my 20 years as senior manager of educational programs, I've had the privilege of visiting many of your campuses and many of your students. I admire your dedication to helping your students achieve on the field, as well as in the classroom. We would all like to celebrate our victories. On behalf of Coca-Cola, I have won and I salute your institutions. As a wife and mother of two teenagers, as a Coca-Cola employee and stockholder, as a Sunday school teacher and a community leader, I recognize the potential risks. Along with many others, we're working to fix this problem, because as a business community, we face the biggest challenge of all, the year 2000.
You must put on your thinking caps. How does this year 2000 impact what I do every day? Ask yourself how can I protect my information? What else do I need to think about protecting? I hope you join your institution's team or start a citizen's network. There's lots of information on the presidential web site or perhaps lead the charge at your own church. Remember today, based on the information that you've learned, I've made you an honorary member of the year 2000 challenge. I've thrown the ball, don't fumble it.
Diane, on behalf of NACDA, thank you very much for your update. I just hope those web sites will work in the year 2000. Thank you very much. You've been very enlightening and on behalf of NACDA, thank you for being here.
The next session will begin at 9:30 a.m. Division I meets in this room. Thank you.