Dr. Marguerite Raaen Issues Research on the Risks that the New Daylight Savings Time Change Creates for Businesses and Government Institutions

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With such monumental global changes in the structure of time, significant risks lie ahead for companies of all sizes and in every industry. In new research, Dr. Marguerite Raaen, founder of Raaen Consulting, discusses the risks created by the change in Daylight Savings Time and the changes that companies can take to mitigate their exposure.

Dr. Marguerite Raaen, founder of Raaen Consulting, has issued new research about the risks from the change in Daylight Savings Time and the changes companies can make to mitigate their exposure. An excerpt from the report, which is posted on Dr. Raaen's website (http://www.margueriteraaen.com), is presented below.

The Daylight Savings Time (DST) dates were recently modified with the passage of the Energy Policy Act of 2005. Starting in March 2007, DST in the United States will begin on the second Sunday in March and end on the first Sunday in November. Europe, Mexico and the Caribbean Islands will maintain DST on March 25, 2007, and end on October 27, 2007; Australia will roll back an hour a week after the U.S. moves its clocks forward on March 25; parts of Arizona, Hawaii, Puerto Rico, the U.S. Virgin Islands and American Samoa do not participate in DST. Canada and Bermuda will follow the new U.S. DST changes. With this level of complexity, changes in U.S. DST can have distributed effects across the globe. With Canada following the U.S. and Mexico not, not even North America will be the same time, let alone the rest of the world.

With such monumental global changes in the structure of time, significant risks lie ahead for companies of all sizes and in every industry. Some of the most vulnerable types of IT activities include: time-based tariff applications; financial calculations such as interest or trades based on time; calendar applications; ATMs; landing times for planes in foreign countries; badge-in systems with set times to let employees into buildings; and the list goes on and on. While many companies have formed a Global DST Command center to watch the affects of the DST change on March 11, 2007 the overwhelming majority have not.

Global Impact

The U.S. DST change will impact computers around the world. Today many companies have data centers in India, Latin America, Canada and the Caribbean. Many of those locations will not follow the U.S. DST changes for their own country but will have to make corrective changes for their customers who are based in the U.S. This could impact not only large multinational organizations, but also international banks, airlines, security agencies, transportation companies and government regulators. For example, many hedge funds are headquartered in the Caribbean, which will not follow the U.S. DST changes.

The industries most impacted by the DST change will likely be the financial and banking sectors. The problems will be two fold: 1) operating systems that are not upgraded across the entire enterprise, which generally include different types of servers and operating system environments; 2) applications that keep their own "time." If only a few million of these of these transactions do not go thru in an industry gated by the hour to pay interest or to sell a stock, bond etc - millions of dollars could be at risk. The "Big 6" U.S. airlines are estimated to lose as much as $74 million in revenues per year due to lost connections and/or uncompetitive schedules (http://www.airlines.org). Ultimately, these costs will be passed along to the US citizens.

"Penny Wise and Pound foolish"

As IT budgets have been cut year after year and many operations and servers have been outsourced overseas, many duplicate environments that were once used to reduce risk have been reduced, or cut entirely. Additionally, after Y2K, many businesses and governmental institutions cut back on IT budgets and eliminated separate environments for the four key parts of the IT cycle: 1) production, 2) testing, 3) development, and 4) disaster recovery. CIOs bring their budgets to have robust environments created and sustained but quite often CEOs / CFOs feel the institution can assume the risk and delete these testing and redundant environments.

There are both robust and minimalist organizations when it comes to managing their IT operations: e-Trade, for example, maintains a complete testing, development, deployment and redundant production environment with a separate and equal disaster recovery environment. If it's been programmed by a programmer - it can be tested. On the other hand, the U.S. Department of Education, the 3rd largest lender in the U.S. at $100 billion a year, does not have all of these separate and complete application and data representations in all four environments for all of their financial applications. Securities Industries Financial Markets Association (SIFMA) has declined the request to test exchanges/ vendors on the weekend of March 11.

Judgment Day

With the Federal government making changes to DST and not providing the commercial industry with enough time to implement them, it is doubtful that every trading platform, ATM and banking application, along with respective operating system will be "patched" in time.

Diebold, for example, has stated that they will probably not be able to get to all ATM's in the U.S. compliant with the upcoming changes in DST Additionally, Diebold's server-based products - Postilion, Imageway (Alogent), Campaign Office, Journal Office, iqESD, iqCRM, and EmS - will all be effected and need to be patched. All of their ATMs with Microsoft or OS2 (IBM) based operating systems will need to be patched and that work is not covered in Diebold's service contracts. (Diebold Document). Fujitsu and NCR ATMs are also at risk and will probably need to be upgraded as well.

It is important to remember that everything consumers do on eBay, online checking accounts, bill payment accounts, with hedge funds, or with e-Trade, Schwab or any other online trading venues, goes through based on a commit in a database. A database will reject a transaction if the date and time is not in synch between the sending and receiving computers. IT research firm Gartner recently reported that they expect the DST bug could lead to incorrect arrival and departure times in the travel industry and result in errors in bank transactions, causing late payments. How much will be lost in failed transactions? If only a few million transactions do not go through, tens or even hundreds of millions of dollars could be at risk.

DST is not the same as Y2K, but businesses had several years to find all of the time stamps in custom applications and fix them for Y2K. With the change in DST, the government has given those same businesses 4 months to modify all of the old and new applications and operating systems time stamps and get all end users and server applications patched.

Note to Editors:

About Raaen Consulting: Raaen Consulting was founded by Dr. Marguerite Raaen to help companies navigate the increasing complex global IT landscape. She provides clients with an impressive executive career record of breakthrough results at Fortune 100 firms, startups and now the Federal Government. Most recently, she was the Chief Technology Officer and Principal Deputy CIO for U.S. Department of Education and a scientific appointee at NCI. Dr. Raaen held positions as e-COO of Cable & Wireless; Internet Technology Executive at IBM, reporting directly to the President and General Manager of ibm.com, a 10,000 person sales, service and technology acquisitions division at IBM; and Senior Vice President of Technology Alliances and Business Development at Chase Manhattan Bank /Intelisys Electronic Commerce in New York City.

Dr. Raaen has been recognized throughout her career with awards and commendations. While at IBM, she was awarded the IBM Distinguished Accomplishment Award (1999); she was granted a U.S. Patent 6,424,997 B1 for artificial intelligence technology (1999); named the IBM Software Executive of the Year (1993); presented with the IBM Corporate Strategy Award (1992) and accorded the Chairman's Eagle Award for the "Top Sales Employee of the Year" in 1990. Her dedication and accomplishment were similarly confirmed while she was at Cable and Wireless, PLC, where she was elected Chairwoman of the Global IT Steering Committee to restructure CW sales to launch their new Internet sales channel in 14 countries. She received U.S. Congressional recognition as one of top five U.S. Executives for "Best Practices for Corporate Employee Programs and IT Development Processes" (2002).

Dr. Raaen is also a scientific advisor to Catalyst Advisors (http://www.catalystadvisors.com) in California, where she contributes as an advisor to technology start up companies, and is on the board of directors of HireNetworks (http://www.hirenetworks.com), a U.S.-based outsourcing company located in Raleigh, North Carolina. She is a director on the board of Junior Engineering Technical Society in Alexandria, Virginia. She recently contributed a chapter to a soon-to-be-published book about the benefits of outsourcing technology development back to U.S. firms versus offshore.

For more information, please visit Marguerite Raaen.


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Damon Leavell