IT'S known as the year 2000 problem. And if businesses aren't careful, their computers will turn a milestone into a millstone.
Despite the mammoth technological advances made since the turn of the century, it turns out that two tiny zeros can bedevil the smartest software.
An American bank had been selling a popular seven-year bond, for instance, when all of a sudden its computers started printing out checks worth millions of dollars, far more than the actual interest. The glitch: Its software couldn't make sense of accounts due in the year '00. The bank had to stop selling the bonds.
And in New York, a large newspaper had to stop selling 10-year subscriptions because its computers couldn't make heads or tails of a date field with '00.
Businesses are shy about admitting the year 2000 problem. But just about everyone has it: insurance companies, governments, even individuals. ''People just don't realize all the things that could go wrong,'' says Bill Goodwin of 2000AD Inc., a New York consulting firm dedicated to the problem.
No one knows for sure what exactly will happen when the clock reaches 12:00:01 a.m. on Jan. 1, 2000. But if businesses don't do something, analysts predict consumers will see all sorts of computer-generated gremlins. For example:
* You make a call that night at 12:02 a.m. to a part of the country that is still in 1999. Will the computer charge you for the five minutes you talked or subtract 1/1/00 from 12/31/99 and calculate a 99-year phone call?
* You make a claim in 1999 on an insurance policy that started in '98 and expires in '00. Depending on the computer's arithmetic, it may conclude you had a 98-year policy that expired in 1998, making the 1999 claim invalid.
* You were born in 1982 and are applying for a driver's license in the year 2000. Will the state government's computer determine you're 18 or 82?
''It just goes on and on,'' sighs Jay Holmes, assistant vice president for programming at USAA. The San Antonio, Texas, insurance and financial-services company has been working on the problem since the 1980s. But with 25 to 30 percent of its computer code containing date-sensitive instructions, the company still faces massive reprogramming. ''It's a very bad thing, because when you have to change a fourth of your entire inventory, you've got a problem.''
The conundrum affects more than 90 percent of Fortune 1000 companies, says David Reingold, vice president of Computer Horizons Corp., a Mountain Lakes, N.J., consulting firm. And with more than 1 trillion lines of computer code to analyze, the problem is huge.
The Gartner Group, a Stamford, Conn., consulting firm, estimates that fixing the problem could total $600 billion worldwide. The federal government of the United States alone will have to spend $25 billion to $30 billion to handle the problem, estimates Chuck Ross, mid-Atlantic regional director for Data Dimensions, another consulting firm focusing solely on the 2000 problem.
Even personal computers pose potential date hazards. Many older IBM-compatible machines will, on reaching Jan. 1, 2000, interpret it as Jan. 1, 1980. Analysts have found individual PC software reacts strangely when calculating the year 2000.
To test whether a problem exists with a particular PC, analysts suggest setting the machine to a few minutes before midnight on Dec. 31, 1999. Turn off the computer, then turn it back on. If the date reads other than the year 2000, the machine has a dating problem.
The problem stems from computer-programming practices of the 1960s and '70s. Back then, computer storage and memory were precious, so programmers did everything to minimize data. Instead of using a four-digit year field, for example, they relied on a two-digit field.
No one worried much about the problem at the time, says Carla Gude, a software director at IBM. ''Programmers didn't think their programs would be around in the year 2000.''
To everybody's surprise, companies still rely on these 20- and 30-year-old programs to transact vital business functions. So companies are having to go through a tedious process of identifying date fields, modifying them so they include a four-digit year, then testing the changes.
With more businesses grappling with year 2000 fallout, computer companies and consultants are offering automated scanning programs and other date-conversion tools.
These steps should make computer programs reliable again - at least until 9999, points out Mr. Holmes, when mankind will have to reprogram everything again for a five-digit year.