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Time Is Money

Springing forward three weeks early may mean falling behind at the same time.

The business world is bracing for technological glitches and worldwide scheduling headaches with the new U.S. Daylight Saving Time (DST) on the horizon.

Americans must set their clocks one hour ahead on March 11, the second Sunday in March as opposed to the first Sunday in April. The period also lasts one week longer, ending on the first Sunday in November, instead of the last Sunday in October. This year, clocks “fall back” an hour on Nov. 4.

The change may be little more than a nuisance for consumers, who will have to manually update their computers, BlackBerrys and other gadgets if the devices are programmed to automatically adjust for the old DST, or run the risk of being an hour behind for three weeks. But it’s proving to be a bigger pain for companies and their workers, which if not addressed, could mean anything from incorrect time stamps on financial transactions to missed meetings to lost business, in the worst cases.

Industry observers and analysts stopped short of calling it another Y2K, but expect disruptions to be inconvenient, with exact costs to businesses hard to quantify.

“This will not mean the world will grind to a halt because meetings are off by an hour,” said Dave Thewlis, executive director of CalConnect, a consortium that promotes the interoperability of calendar and scheduling software. “But this may have the biggest impact0 on small to medium size businesses that haven’t had the resources to assess their systems, don’t have large scale IT staff that can handle it, or don’t think they are time sensitive.”

And these IT headaches can quickly turn into strained business-to-business and business-to-customer relationships, says Rodney Nelsestuen, a senior analyst in the Financial Services Strategies & IT Investments practice of TowerGroup, a research and consultancy firm for the financial services industry

“Customer inconvenience, whether you’re a bank, insurance company or broker, is a very serious issue,” Nelsestuen said, pointing to the possibility of losing potential business.

Nelsestuen also warned of the potential loss from fraud during the transition period. He advises companies to monitor operations closely, especially at their call centers.

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While IT staffs scramble to prepare their systems and companies like Microsoft and Apple issue patches for their software, the costs of “saving daylight” are adding up in other sectors as well.

The biggest economic impact will be on international commerce, such as air, train and truck transport, where business depends on synchronizing schedules, which are coordinated far in advance, says Michael Downing, a professor at Tufts University and author of “Spring Forward: The Annual Madness of Daylight Saving Time.”

“Clock time is only useful for two reasons: predictability and synchronization. Otherwise it’s a pointless invention,” he explained. “These petty annoyances can add up to hundreds of million of dollars in rescheduling. And that burden falls to the companies in America who have to absorb the costs.”

This affects companies like FedEx and UPS and the airline companies. The Air Transport Association, which represents major U.S. airlines, said carriers have had to absorb additional administrative costs to get their flight schedules in sync with Europe. The airlines had lobbied against the DST extension in Congress, saying it would cost the industry at least $75 million in potential lost revenue.

But some questioned the significance of that impact.

“A snowstorm has a bigger impact on rescheduling than this,” said Ray Neidl, an airline analyst for Calyon Securities. “This may create a few challenging problems for schedulers, but as far as being a problem for the industry, in a list of one to five, this is number eight.”

While DST is expected to cause some headaches, most welcome the concept of more “usable” daylight. Passed by Congress in 2005 in an effort to curb energy use, the extended DST shifts an hour of daylight from the morning to the evening for four more weeks each year. Congress hopes this will encourage consumers to use less electricity and reap estimated savings of 100,000 barrels of oil a day in March and April.

“This is a major lifestyle effect and most people like it,” said David Prerau, author of “Seize the Daylight: The Curious and Contentious Story of Daylight Saving Time.” “The positives outweigh the negatives and if it brings along some small energy savings, then it’s even better.”

Researchers also point out that brighter evenings mean lower crime rates, fewer traffic accidents, increased recreation and more consumer spending. That’s good news for companies related to outdoor activities, such as sporting goods retailers, the barbecue industry and theme parks.

“Retailers love daylight saving time because people do tend to go out and participate in sports and go shopping,” Downing said.

The last time DST was extended for a month in 1986, the barbecue industry estimated it could make an additional $150 million. The golf industry figures it could get a boost of at least $200 million this time around.

But it’s not quite a hole-in-one.

“You can change the clock, but you can’t change the temperature,” says Casey Alexander, a tournament golfer and Gilford Securities special situations analyst, who says resort destinations and golf courses in the southern states are the only ones likely to benefit from the extended DST. “Chances are the north will still have snow til the first week of April.”

“It may mean a pick up on the margin level, but it’s not going to give the industry the 5% to 10% boost that would make a difference,” added Alexander, who has a buy rating on Callaway Golf.

Whether the new DST means more tee times for golfers or more headaches for IT staff, Prerau says it could be much worse.

“One state of Australia voted to do daylight saving time and they had two weeks notice. Israel changed its daylight saving time every year until 2005 and only had a few months to prepare,” he said. “This problem is not unprecedented. We’ll get through this.”

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