If businesses did not have enough to contend with - fortifying their information technology (IT) systems against the millennium bug - the euro has also been eating into IT budgets.
Between the official introduction of the euro on January 1st, 1999 and the eventual withdrawal of member currencies three years later, the entire process will dramatically affect accounting and reporting methods. All fields used to store monetary data in business applications will need to be changed, and upgraded to handle both the local currency and the euro during the transition period. Recently, the Gartner Group estimated the cost to business of adapting global IT systems to handle dual currencies will run into billions.
However, according to Ms Liz Ann Doyle, euro project manager with Cap Gemini, the total cost could be much higher, perhaps even exceeding the cost of tackling the year 2000 problem, which has been estimated in some quarters to cost hundreds of billions.
The changeover process also takes time, and Forfas has estimated that conversion for a medium-sized company with a single site will take between nine and 12 months. A multi-site large company is estimated to take between 18 and 24 months.
The process is time consuming, because the euro's introduction imposes a series of legally required rounding rules, data conversions, decimal data requirements and thresholds on financial calculations. All systems referencing currency fields will need to be converted. It is now widely accepted that larger businesses will generally have their systems ready for the euro changeover by January. However, the case is not as clear cut for the smaller players.
"The emerging problem for smaller businesses is when to change over during the transition period. Because demand for euro reporting will be customer or supplier driven, what has to be done and when it has to be done by is unclear for businesses," says Ms Doyle.
Every business needs to identify the potential impact of the euro on its IT systems - hardware and software - and adapt accordingly. All financial and accounting systems, including order processing and invoicing, payments, costing and payroll, will be affected by the euro changeover. A complete audit needs to be taken of all these systems and a course of action identified.
For instance, in some cases the best option might be to replace all system software to incorporate euro features and multi-currency accounting, instead of trying to upgrade an outdated system. There is also the option for larger companies of outsourcing its IT activities, and turning the problem over to someone else.
Those companies planning to tackle the euro head on need to appoint a dedicated team to assess the implications. They should then conduct software and hardware reviews. The main hardware systems likely to be affected include cash registers and vending machines.
Software and hardware suppliers need to be contacted to establish whether they have a euro upgrade. Companies using tailor-made systems must identify the changes required for each part of their business.
In some cases, particularly for smaller businesses, it might be possible to incorporate euro compliancy into the year 2000 project, but according to Ms Doyle, this is more the exception than the rule.
"It is physically not possible to have Y2K and euro changes implemented at the same time. Because of the amount of work involved the deadlines are very different. However, IT managers buying off the shelf software should ensure it is both Y2K compliant and euro capable," says Ms Doyle.
A word of warning for companies relying on a blanket euro test procedure issued by a software house. Spreadsheets, which are an integral part of every business, are widely used to integrate the information flow between differing systems. It will be necessary to make appropriate changes to formulas and historical data to ensure they are individually modified to cope with the euro.
Other issues include price rounding, where specific legal rules will have to be adhered to following the conversion process. New application systems will have to incorporate rounding rules and follow defined formulas.
Forfas also recommends creating a back-up of all information as a contingency against any changeover disasters.
From January 1st, 1999, the euro will only be available for non-cash transactions. The euro notes and coins will not be introduced for another three years, following a six-month period where both local currency and euros are in circulation.
The timing of when companies need to take action is very much at their own discretion, but all it takes is one large supplier or customer with the muscle to dictate your euro timetable. While there is no legal obligation for businesses to display both euro and Irish pound values to customers, some may wish to do so from early on as a service to customers. Larger companies and financial institutions are notifying all their business partners of their euro plans, with the assumption that smaller players will follow suit.
According to Ms Yvonne Cullen, project manager with the Forfas EMU Business Awareness Campaign: "The main message we are trying to convey is the importance of discussing the euro with key business partners and suppliers. Many companies feel they can wait until closer to the notes and coins transition, but they are unaware that key customers or suppliers will dictate the pace of change."
Another major concern for business will be managing and planning the rounding differences that arise following conversions to the euro from national currencies. Where a product was previously sold at a psychologically attractive price of £2.99, it will now cost approximately #3.72. This is proving a major problem for vendors who offer multi-pack deals - four cokes for £1. Now they have to rethink their pricing and packaging systems.
"Companies should plan now for the price at which they will pitch their products after the switch to the euro. Remember you can't have a price point in euros and pounds at the same time," says Ms Doyle.
With the euro, comes the new currency symbol - #. The symbol and a corresponding keyboard icon must be added to existing operating systems. None of the fonts included with Microsoft Windows 3.x/95/NT carry the symbol. While there are upgrades available for Windows 95 and NT 4.0, Windows 98 and NT 5.0 still do not bear the symbol. UNIX and mainframe systems also have the same problem. IBM has released PC-DOS2000, an updated version of PC-DOS which handles Y2K problems and contains the euro currency symbol. Most of the Macintosh compatible systems from 1997 onward include the euro symbol fonts.
All businesses should at this stage have conducted an analysis of their systems and have an implementation strategy in place. It may not be too late for smaller businesses, but it is important to remember, finding the necessary expertise may prove a problem if everyone defers their implementation strategy.
On the bright side it is also worth mentioning that the euro changeover should not be viewed solely as an IT headache. Small and medium-sized enterprises should recognise there are huge opportunities unfolding in the euro marketplace. They can target bigger markets, or source products at a cheaper rate. But one of the first lessons of the new order will demonstrate how preparation and planning lend themselves to competitive advantage.
More detailed information on the IT issues for business is outlined in "EMU: The Issues for IT" which has been prepared by the EMU Business Awareness Campaign. Alternatively visit the Forfas website at www.emuaware.forfas.ie
