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Year 2000 Problem – Israel (9/1999)

A New VIVID Agenda

Since the beginning of 1999 we have continuously analyzed, amongst other research projects, surveys and analysis, the issue of the Y2K problem. We feel that there is a need for a completely NEW AGENDA now, facing the year 2000, not as an alternative theme for research, but as a completely new way of looking into our world. It seems that nothing could serve better to symbolize such need for change in thinking than the Y2K problem itself. Certainly, the Y2K problem is a symbol for 20th century thinking, improvising a shortsighted solution for a trivial problem, without foreseeing future implications. There is a need for new thinking. All of us are now facing new opportunities. We therefore suggest that the issue of Y2K problem be replaced with the issue of Y2K opportunity. Year 2000 allows us to start with a blank sheet of paper. We already know that the value of analysis of past events in the business world is becoming less and less relevant, considering the rapid pace of changes. So let’s turn the page and start creating from blank. This is our opportunity not to merely live events as they come, but to plan what we would like to have in our future: Which kind of business are we trying to build? What type of culture would we like to have in our organization? What trends are we attempting to lead? Our new agenda is building our future, inventing it by asking ourselves what is really desirable. Welcome to the Y2K opportunity!

Y2K Bug Gauge at 6.6, a continuous rise since October 1999.

Y2K graphVIVID Management Systems was selected to provide the data and analysis for the “Y2K Bug Gauge”, in collaboration with Achla, Israel’s leading portal. The gauge, measuring the public’s position towards the Y2K problem, fluctuates according to results derived from telephone and online surveys conducted following events related to the Y2K problem. The Gauge ranges from 0 to 10, when zero stands for being completely indifferent and 10 – for being extremely worried (“on the verge of a nervous breakdown”).

The present position of the Y2K Bug Gauge is 6.6.

This is a rise of 1.3 points from 5.3 as at 01-OCT-1999, following a continuous drop form the highest peak ever of 7.1 reached on 01-AUG-1999.

Recent events significantly contributing to the rise in the Y2K Bug Gauge:

A report of the State Comptroller revealed many flaws in the steps taken by the public and governmental sectors towards year 2000 compliancy. Most of the offices and organizations announced that they are to complete all modifications until the end of 1999, but then, they would not have sufficient time for adequate testing and re-examination. The report also criticizes the Israel Electric Corporation for commencing too late in their preparations towards year 2000 compliancy. Also Bezeq telecommunication Corporation commenced too late, according to the report. Cost of the project to the telephone company amounted to US$ 64 million, but until November 1998 the plan for mapping the telephone exchanges, in order to examine potential faults, had not been formulated. In March 1999, the telephone company informed the State Comptroller that it estimates that its emergency procedures would be ready until the end of the year. The findings of the report are indeed very alarming, and are reflected in a steep ascent in our Y2K Bug Gauge. However, this was somewhat restrained in the light of the results of a telephone survey we conducted amongst managers. According to the results of our survey: although being very alarmed by the findings of the comptroller’s report, the public still has confidence. This is much due to the high ratings Israel received for its compliancy by international examiners.



The Y2K problem is referred to also as the “Y2K Bug” or the “Millennium Bug”. Although bugs are a matter of personal taste, usage of the term “Millennium” here is somewhat misleading, since the second millennium is to end on December 31st, 2000 and not on December 31st, 1999. Just a thought…


The “Y2K Bug” is a threat to all computer programs, even those in the most simple and trivial applications. For decades, the year was represented by two digits: 1980 is “80”, 1999 is “99” and 2000 is…

And there lies the problem: for years, “99” was the code in computer systems for “error” and “00” may not only produce negative results in calculations, but may also be completely unknown to the computer system or may be interpreted as “infinity”.

We had already experienced many difficulties accessing certain Internet servers during the first days of 1999. After checking with the home server and the destination server, the conclusion was that the somewhere along the route, one of the servers caused a problem and prevented us from accessing the destination. A simple run of the program “tracert www.DESTINATION-NAME.com” revealed that communication got stuck at around the 15th connection. This indicates how grave the problem is since we depend on external service providers. Not only our home server and destination server need to be Y2K compliant, but all 15 or more servers in between. This certainly minimizes the feasibility of overall compliancy.

The Good News: In a survey conducted by the Gartner Group, covering 15,000 corporations in 87 countries, Israel was rated amongst the top 25%.

The Even Better News: World bank analysts announced on 22.06.1999, in the Second International Y2K Convention held in the United Nations center in New York, that Israel is amongst the 11 most Y2K ready countries. The other 10 countries (in random order) are: Britain, The U.S.A., Canada, Australia, Belgium, Holland, Switzerland, Sweden, Ireland and Denmark. World countries were divided according to the probability of faults into 4 groups: the highest, that includes Israel, with a probability of 15%, and the 3 other groups with a probability of Y2K related faults of 30%, 50% and 66%, respectively.

A Personal Testimony

On 28.06.1999 between the hours 10:00-15:00, the Municipality of Tel Aviv conducted a test for the compliancy of its water supply systems with Y2K. Since there was still water in our taps on the evening of 28.06.1999, chances are that we could take a shower on 01.01.2000 (errr…its going to be winter that time in the northern part of the globe. Will there be hot water?..).

Survey Ordered by the Prime Minister’s Office

Reportedly (“Ha’aretz”, 11.05.1999), a survey conducted by the Government Information Bureau at the request of the Prime Minister’s office produced the following results:

51% of the population are familiar with the term year 2000 bug. 49% are not.

43.5% stated a date at which they believe the bug will make its effect, of which 16.5% sated 01.01.2000.

33.5% stated fields in which they believe the bug will make its effect: computers and databases – 13.5%, banks – 11%, aviation – 4.5%, electricity – 4.5%, all fields – 4.5%.

Domestic equipment that will be affected by the bug: computers – 15%, television – 3%, telephone – 3%, video – 2%, general electrical appliances – 2%.

27% of the population said that they are interested to receive information on the Year 2000 bug, 22% do not.

57% were interested to receive information on dates at which the bug may make its effect, 65% on domestic appliances that may get hit, 54.4% on steps taken by the government and public institutions. 71% are interested to receive information on what they should do with regard to public services, such as hospitals, flights and banks.

53% of the population are interested in opening an emergency information line. Only 22% were still interested if the service would not be for free.

No Business Restrictions

The Restrictive Trade Practices Controller announced in March 1999 that a complete exemption is granted to cooperation between companies engaged in providing solutions to the Y2K problem. The exemption applies also to normally competing companies as long as information shared does not harm free competition.

Deduction of Y2K Related Expenses

On 15.06.1999, Deputy Income Tax Commissioner, Mr. Gerry Agron, announced that direct expenses made towards Y2K compliancy are to be tax deductible. These would not include upgrading software that is not purely Y2K related. In this case expenses will be only partly deductible.

A Breakthrough?

Reportedly (Ma’ariv, 11.02.1999), Yissum research development Co. of the Jerusalem University, a subsidiary of the Hebrew University, Jerusalem, filed an application for a Y2K related patent in the USA. The new invention offers a different approach of bypassing the Y2K problem, without introducing too many changes to existing software and databases. Thus, cost are to be much reduced, from US$ 500,000 to less then US$ 50,000 in a relatively large system. The new technology is being presented to IBM, Microsoft and Compaq and other leading companies.

Israel Government

Already back on July 7th, 1996, the government of Israel decided that the Y2K problem should be addressed. But, only in January 1998 a Y2K sub-committee, headed by MK (Member of Knesset, Israel Parliament) Prof. Alex Lubotzky, commenced functioning. The overall impression is that the problem had not been addresses adequately and seriously enough until December 1998. However, In a television interview given on January 9th, 1999 by Deputy Minister Michael Eitan, he stated that the Emergency Economy Unit is to operate during the transition from 1999 to 2000. The Emergency Economy Unit is normally to operate in cases of a military offensive actions against Israel or in other critical emergency events. This demonstrates that the government does consider the Y2K problem as a potentially acute one.

Ministry of Health

In February 1998, M.L.L. software & Computers Industries Ltd. Completed a Y2K compliancy project for the budgetary accounting system in 28 government hospitals.

Ministry of Defence

Reportedly (July 1998), all civilian systems are to be compliant by the end of 1998.

Israel Defence Forces (I.D.F.)

Reportedly (Ma’ariv, 28.01.1999), Brigadier Nissim Alfia, head of the IDF computing division, said that that all Y2K compliancy actions were taken and examinations of all systems were completed. Some systems, in particular medical equipment, were replaced with new ones.

Following a test conducted in late march 1999, Brigadier Nissim Alfia announced that “more than 90% of the computer systems in the IDF are Y2K ready”. No system has collapses and the few problems that occurred were fixed simultaneously.

Ministry of Finance

The project commenced in September 1996. The Y2K budget in 1997 amounted to US$ 400,000 and 170 months of labor, in 1998 the budget amounted to US$ 230,000 and 104 months of labor.

Ministry of Industry & Trade

Reportedly (March 1999), SCH Software Conversion House, of the Formula group, is conducting the Y2K project of the Investments Center, jointly with the IT division of Inbal Insurance Company, a government controlled company. Cost of the project is estimated at US$ 100,000.

Ministry of Labor & Welfare

Reportedly (May 1998), Binsoft of the Kardan Group is to conduct the project for the National Insurance Institute. The institute is to conduct two major tests in March and August, 1999.

Ministry of Transport

Reportedly (February 1998), S.P.L. WorldGroup Israel won a tender for the vehicles and drivers Licensing office. The project was reported as completed in August 1998.

Ministry of Infrastructure

S.C.H. Software Conversion House of the Formula group is to conduct the project for Israel Lands Authority.

Ministry of Tourism

Tourism in year 2000 is certainly facing a double challenge. According to the “Israel 2000 Administration” the forecast is of 4 million pilgrims arriving to Israel during the years 1999-2001.

The Knesset (Israel Parliament)

Effective July 1998, Tescom Software Systems Testing commenced analyzing the computer systems as the first stage of the Y2K project.

The Postal Authority

The IT department commenced the project that will include a nationwide network of 250 branches and 250 agencies. Expenditure in 1998 in the Y2K project amounted to US$ 1.4 million.

Israel Electric Corporation

Reportedly (May 1998) the project is to be conducted by Formula Software Services and Tadiran Information Systems using tools of Crystal Systems Solutions of the Formula Group. The Project is to amount to US$ 9 million.

Reportedly (January 1999), a strategic stock of 1.9 million tons of coal is to be accumulated in the power stations towards the transition to year 2000, enough for 2.5 months of electricity production.

Reportedly (Mid March 1999), Tesnet Software Examining and Mercury Interactive completed the Y2K testing project.

Bezeq Telecommunication Corporation

According to an agreement of April 1997 the project is to be conducted by Formula Software Servicesand Tadiran Information Systems.

Reportedly (May 1998) Kontahal was chosen to analyze the switching and control systems.

The Airports Authority

Tadiran Information Systems and Liraz Systems are conducting the project, amounting to US$ 6 million. Reportedly (early March 1999), The Ben Gurion international airport was rated by IATA with those of the highest readiness to the Y2K problem.

403 computerized systems are in use by the Israel Airport Authority, and they were divided into 4 categories, according to declining priority: Damages to operations and services to passengers (160 systems), damages in current operations (44 systems), business related damages (49 systems) and damage to the flow of information to executives (150 systems). The two top priority issues were communication, including communication with airplanes, and radar, including connection to the Israel Defence Army (IDF).

A seminar on aviation related Y2K issues was held at the Radison Moriah Plaza Hotel in Tel Aviv in March 1999. Participants included representatives from Egypt, Jordan, the Palestinian Authority, Cyprus, the FAA of the U.S.A. and IATA.

Mr. Shaul Yahalom, the current Minister of Transport, announced that there is nothing to fear from flying on 01.01.2000, and that he is going to fly himself on that day. Mr. Yahalom reversed from this brave announcement, when he noticed that the first day of year 2000 falls on Saturday, and therefore as a religious Jew observing the Sabbath, he cannot use transportation on that day.

Reportedly (“Ha’aretz”, 13.04.1999), Only 10% of the 60 destinations to which there are regular flights from the Ben Gurion international airport, are Y2K ready.

Reportedly (“Ha’aretz”, 16.06.1999), effective 15.06.1999 the Airport Authority commenced preparing to a possibility of being forced to operate manually. A comprehensive drill was conducted at the Ben Gurion airport. It is to enter into a special mode a few hours before midnight in December 31st, that will continue for 72 hours after. Then it will gradually return to routine operation. El Al Israel Airlines Ltd. Following a request by El Al, Israel national airline company, “Boeing” forwarded a document that confirms that its systems are Y2K compliant. In March 1999 El Al conducted a test that included a simulation of collapse of computer systems and manual instruction using procedure books.

In March 1999, Tesnet Software Examining conducted a Y2K project for Maman Cargo Terminals & Handling Ltd. at the Ben Gurion international airport, Lod.

Mekorot Water Company

The project commenced in 1996 and was reported as completed in July 1998. A general testing of the systems is scheduled to April 1999.

Magen David Adom in Israel

In July 1998, YAANA Systems Ltd. was chosen to conduct the project for The Blood Bank.

Tel Aviv Stock Exchange

Tel Aviv Stock Exchange will be the first stock exchange in the world to operate in 2000. This is since January the 1st falls on Saturday, and Sunday is a working day in Israel, whilst other stock exchanges would return to work only the day after.

A test, conducted in January 1999 by the stock exchange, analyzed also the communication with relevant banking systems. The test included running of data on systems parallel to the real ones, during ten days. It produced no faults.

Auditors’ reports

The Israel Auditors Association announced in December 1998 that corporations are not permitted to state in their reports that the have solved, fully or in part, the Y2K problem. According to the announcement, in line with the announcement of the international association, it is impossible to reach full compliancy. Auditors are to examine the financial implications of the steps taken by the corporation, and their reflection in the reports. Similar instructions were given by Miri Katz, chairwoman of the Securities Authority, and Dr. Itzhak Tal, the Banks Commissioner (see “Banks” section).

Small-Medium Businesses

IBM Israel announced (Mid January 1999) that it is offering small to medium businesses its support service for Y2K compliancy. The service, for Microsoft, IBM and Novell networks, is charged at US$ 24 per station.


Reportedly (Ha’aretz) Dr. Yuval Karniel (attorney), speaking at the Israel Management Center seminar held in February 1999 on the Y2K related legal implications, suggested that a law is to be legislated. The new law, similarly to the suggestion of Senator John McCain of the USA, will exempt, those that have taken adequate steps towards Y2K compliancy, from legal liabilities.

Insurance against Y2K damages

In January 1999, Ayalon Insurance Company announced its insurance policy. The policy, offered only to those who have taken compliancy steps, covers loss and damages to software or database. The premium is 1.5% of the insured sum, which is limited at a maximum of US$ 500,000. Subsequently, the insurance company ceased offering this policy and presently no local insurance company offers coverage against risks related to the Y2K problem.


In mid February 1999, the Banks Commissioner, Dr. Itzhak Tal, instructed the banks to consider the Y2K problem in any credit decision regarding customers with high-risk compatibility. The banks are also required to submit quarterly reports on Y2K related credit risks.

Reportedly (“Ha’aretz”, 29.04.1999), the Banks Commissioner, Dr. Itzhak Tal, instructed all banks to close from 31.12.1999 until 02.01.2000. These days will not be considered as business days for banking transactions. This instruction was issued in order to enable the banks to better deal with the Y2K problem.

Bank Hapoalim Ltd.
The Y2K project of Israel’s largest bank amounted to US$ 17.5 million, of which US$ 9.25 million in software, equipment and external experts.

Bank Leumi LeIsrael Ltd.
According to an agreement of August 1997, Forsoft is to conduct the Y2K software project.

In April 1998 Sapience Israel converted the Human Resources system to be Y2K compliant.

The second largest bank in Israel made the largest investment (including projects conducted in overseas subsidiaries): US$ 52.5 million.

United Mizrachi Bank Ltd.
The project, conducted by Crystal systems solutions of the Formula Group, amounts to US$ 7.75 million.

Israel Discount Bank Ltd.
Reportedly (February 1998), Malam Systems is to conduct the project, amounting to US$ 13.5 million.

First International Bank of Israel Ltd.
Investment in the Y2K project is to amount to US$ 7.25 million.

Tefahot Israel Mortgage Bank Ltd.
Forsoft won the tender in September 1997.

Maritime Bank of Israel Ltd.
The bank announced in its financial statements that as part of its preparation to the possibility of an emergency situation or collapse of computer systems for a number of days due to the Y2K problem, it is preparing a manual registration of its large borrowers.

Visa Alpha Cerdit Card Company
Reportedly (“Ma’ariv”, 15.06.1999), Visa International twice fined Visa Alpha, a local licensee, for non-readiness in its actions for Y2K compliancy. It was first fined US$ 40,000 in early April 1999, and in early June was fined again in the same amount.

This report was later denied in a letter sent by Mr, James Hobes, Year 2000 project manager of Visa International, London, UK.


Hadassah Medical Center, Jerusalem
According to an agreement of June 1998, Tadiran Information Systems is to complete the project in first quarter 1999. Two of the systems are to be converted by SCH Software Conversion House, of the Formula group.

Sheba Medical Center, Tel Hashomer, Ramat Gan
Reportedly (June 1998), Computer Associates and Information Analysis are to conduct the project.

Elscint Ltd.
Reportedly (mid February 1999), Malam Systems is to provide all computer related services to Elscint Ltd. including the Y2K related problems, as complete outsourcing. Elscint Ltd. supplies medical imaging equipment. Some of its divisions, including CT and MRI, were purchased in late 1998 by Picker, UK and General Electric Medical, USA.


Reportedly (early March, 1999) Rad guard of the Rad-Bynet group, adapted all its Firewall and VPN security products to be Y2K compliant.

Other Leading Corporations

Israel Chemicals Ltd.
Reportedly (“Globes”, 26.03.1999), a total budget of US$ 6,200,000 was approved by the board of directors towards the Y2K project, of which US$ 4,150,000 are to be invested during 1999. Each member of the group is to conduct an independent project: Dead Sea Works Ltd. have already changed most of its information systems into a new integrative system, Rotem Apfert Negev Ltd. decided also to implement the system chosen by Dead Sea Works Ltd. All other members of the group, including Dead Sea Bromine Co. Ltd. and Dead Sea Periclase Ltd. are to complete the project according to the timetable during 1999. It is further reported that some of the companies in the Israel Chemicals group still do not have a systems failure plan and that there was no analysis has been conducted as yet of the compliancy with external systems.

Dor Energy Ltd.
Reportedly (“Ha’aretz”, 06.04.1999), Dor Energy Ltd., operators of a nationwide network of 50 public petrol stations, announced that it has a two months delay in its schedule for the Y2K project and its management is contemplating engaging with another external company in order to have it completed. Investments in the project amount to US$ 170,000.

Note: The overview is based on public announcements and publications.. It is a service to the public with no commercial intentions.