I'm hoping somebody can inform me the size of this DUKE's "Year 2000 Computer Software" (Y2K) problem. Have there been any statements or hearsay that put a dollar amount on it, or tell us the problem is less than a certain dollar amount?
This problem may be bigger than I had previously given it credit for. There was an article in the 4/9/98 Wall Street Journal (page B-8) which stated for Houston Industries, the cost will be perhaps $155 million. This includes $130 million to install software from SAP AG, this weird German system that seems to run your whole company. Another person told me the SAP cost for HOU is projected to be more like $300 million over several years.
Are these figures at all in line with what other utilities are seeing? Are other utilities using SAP software with success? All these $$$ figures are getting big enough to have me truly concerned as an investor.
Thank you for any information you can give me on the Y2K problem in utilities, or SAP in utilities.
Pacific Gas & Electric was one of the first U.S. companies to implement SAP's R/3 generation of software, in the early 90's (92-93?). They were also the first of a number of U.S. utility cos. to "take the SAP plunge" (SAP has marketed heavily to this vertical segment). Therefore, I don't see DUK's migration to it as a big risk, just a big investment.
The only risk I was referencing was a time factor. I've seen companies trying to solve Y2K by installing SAP that have had to fall back on contingency plans because they ran out of time (not utilities). Later post says DUKE is all done remediating problem. Good news for stockholders. Try reading TIME BOMB 2000. Food for thought. Claims heavy exposure for utility companies.
In my experience with Y2K remediation, some companies have tried to replace legacy systems with SAP and had very limited success. SAP is a bear to install and migrate to. If Duke is just starting this process they'd best have some najor contingency plans in place. Y2K is an absolute nightmare. It affects everything with a PLC in it. Even yor car, microwave, tv, vcr may stop running.
DUK has already addressed this problem and spent the necessary monies to correct it.I am not technically literate enough to discuss what they did,however in a discussion with their investment services division it was explained to me that the work was complete.Apparently the costs where very high because the gentleman with whom I spoke, cited this as the biggest reason for the dip in fourth quarter '97 earnings.It was critical to resolve this matter now because of their option of year round flat billing and the forward looking calculations required.