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Y2K contingency planning:Outsourcing takes center stageThe show must go on for small- and mid-sized companies that don't have the IT infrastructure or financial resources to tackle the Year 2000 problem on top of existing responsibilities.
By Karen D. Schwartz
Jay Topper is a big believer in the adage "The show must go on." His company, Production Resource Group of New Windsor, N.Y., provides scenery for concerts, plays, and major stadium events to the tune of $150 million in revenue. Although the glamour of show business may seem decidedly low-tech, in reality, the business of providing lighting and scenery to many diverse locales requires the same number and type of intricate computer systems that other companies employ to perform their day-to-day tasks. Complicating the situation is the company's explosive growth. Production Resource Group, which currently has about 1,200 employees, has been on a buying spree of late, snapping up 10 small- to mid-sized companies ($10 million to $50 million) in the lighting, audio, or scenery business over the past two years. As director of information systems and strategy, Topper must find a way to ensure that his company's systems--as well as the systems of all of the companies Production Resource Group buys in the coming 18 months--are Year 2000 compliant. That's a virtually impossible task, Topper says, and a major reason why he decided to outsource the one task he knew he couldn't fix in time. He turned to Automatic Data Processing (ADP) of Roseland, N.J., for payroll processing. "We have so many disparate companies and systems that we can't possibly be completely Year 2000 compliant. The only way to handle it is to take the offensive," Topper says. Topper's decision to outsource a critical company function puts him in good company. Small- and mid-sized companies across the country increasingly are turning to service bureaus in diverse areas such as payroll, enterprise resource planning (ERP), and electronic commerce to take over internal processes that are not Y2K compliant. Gary Rainsberger, president of D.A. Rainsberger Co., a Lansing, Mich., accounting and financial services firm, decided to outsource several of his company's functions. He notes that the coming of the new millennium, along with a decision to focus on core competencies, was enough to convince him to outsource company invoicing and billing to Great Plains Dynamics, a partnership of IBM Global Services and Great Plains Software. "We are in a situation where both our software and hardware are not Year 2000 compliant and if we had to update both, we would incur a substantial financial outlay," Rainsberger says. "We could have chosen to buy the software and run it ourselves, but this way [outsourcing] proved more cost effective."
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