The media, government, and technology establishment are all sounding warning bells over the Year 2000 computer bug. Are small businesses getting the message? Or do they think Y2K is more hype than horror?

Results from an informal Business Week Frontier survey -- taken by 74 readers via fax and online -- show that small companies are being widely affected by the computer glitch and most are moving briskly to prevent any potential meltdowns. Just 26% of respondents said they were "unconcerned" about the Y2K problem, while 43% of respondents said they were "very concerned."

The survey, prompted by a story that appeared in the Oct. 12, 1998, edition of Enterprise, is hardly scientific. But it does provide a window into how deeply the concern over Y2K has penetrated small businesses. That concern is spurred, in part, by Y2K-compliance demands ricocheting up and down the supply chain. When asked about "compliance letters" -- queries from businesses to clients and suppliers to assess their Y2K preparations -- nearly two out of three respondents said they received such inquiries.

Only one-quarter of the respondents said their computer systems were free of Y2K bugs. Nearly one in two found Y2K problems in company PCs, and an additional 58% reported software snafus.

What are the companies taking our survey doing to fix potential glitches? Forty percent said they hadn't taken any action yet. Forty-three percent said they had repaired PCs, while 63% said they had altered both off-the-shelf and customized software. (Totals may not add up to 100% because readers could select more than one answer.)

Although skeptics suggest that the Y2K phenomenon is being hyped to drive the technology-repair business, companies responding to our survey suggest the modifications have come relatively cheap. Of those currently fixing their systems, 22% reported spending less than $1,000. Ten percent invested less than $5,000 and 38% spent more than $5,000. The modifications have not dragged on, either: No one reported taking over six months to make the fixes. More than 50% of the respondents completed the process in less than 12 weeks.

The survey sheds no light on how many small companies have begun looking for Y2K problems, because the only readers likely to respond to our questions were those who are already confronting the issue. But for the sake of perspective, Gartner Group, a leading technology consulting company, told a congressional hearing in early October that only 5% of small companies have fixed their Y2K problems. It also predicted that more than half of all small companies will experience some form of serious system failure, compared with less than 20% of large companies.

By Dennis Berman in New York
dennis_berman@businesweek.com


Table: Y2K: Hype or Horror? Readers' Answers to Our Y2K Poll
To: TECHNOLOGY