BM - Here it is!
April 21, 1998
By BRUNO GIUSSANI
Euro Changeover Makes Year 2000 Bug Look Easy
Companies and organizations around the world are spending dozens of billions of dollars to cope with the Year 2000 problem, the reprogramming of millions of aging computer systems so that their two-digit internal clocks will recognize the 21st century and not go back to 1900.
But European corporations are facing another problem that is even more complex and costly to fix - and which is passing almost unnoticed in the United States: the introduction of a new single continental currency named the "euro," which will be phased in next January and will completely replace the established national currencies of many European countries by 2002 (see box).
Revamping computer systems and re-engineering work procedures to make them euro-compliant may cost companies doing business in Europe up to $175 billion, according to IBM Corp. (The Gartner Group estimates that figure at $150 to $400 billion.)
And a recent survey conducted by consulting firm KPMG found that few companies across Europe have grasped the real extent of the impact the European monetary union (EMU) will have both on their organizations and their markets.
"Large banks and insurance companies started acting two years ago and are among the leading converters to the euro," says Eric Coursin, a director of strategy with the Sema Group in Paris.
Industrial and service corporations and smaller companies on the other hand "are often reducing the euro question to a software upgrade, which it definitely isn't," Coursin added in an interview last week.
Firms such as Germany's SAP and Holland's Baan are scoring spectacular growth by offering euro-compatible software packages, yet "well beyond software the introduction of the euro will have a formidable impact on the way companies operate," Coursin said.
Whole systems managing payrolls, inventories, orders and invoices will have to be rewritten, receipts and financial statements remodeled, foreign exchange and tax software modified and enormous amounts of historical data converted.
In addition, automated teller machines' programs and interfaces will need to be revamped, cash registers reprogrammed, employees trained and export and import practices reorganized. Even the currency recognition systems, such as those used in vending machines, will need to be replaced.
"It's a huge challenge," commented Nick Jones, a research director with the Gartner Group Europe in London. The cost for a big organization could be in the hundreds of millions. For instance, the euro bill for Paribas, one of the largest French banks, will add up to nearly $85 million.
What makes the euro more difficult to integrate into a company's operations and computing systems than, say, the Italian lira or the Spanish peseta can be summed up in two words: transition and triangulation.
To let people get accustomed to the new currency, the European Commission (which is the executive body of the European Union) has stipulated that there will be a three-year transition period from 1999 to mid-2002.
During that time, virtually every company and organization will have to deal with two different currencies. While transacting in euro on the market, for example, they will have to be able to pay taxes in the local money.
Converting money however will not be like selling lire to buy pesetas. The EMU's legal framework states that during the transition period people will have to conduct every operation in the form of a "triangulation." In plain English: convert first lire into euros, round the result to the nearest cent, then convert this amount of euros into pesetas.
Rounding, of course, will unavoidably cause inaccuracies. "The effects of these rounding differences vary from being merely a nuisance to bringing information processing to a halt," the European Commission recognizes in "Preparing Financial Information Systems for the Euro," a set of practical guidelines it published last December
to help companies and organizations establish changeover plans.
"Changing I.T. [information technology] systems to the euro is difficult in itself but managing that in an economy with many differing systems is even harder," said Charles Pownall, the producer of EmuNet, an independent British Web site dealing with the EMU.
In an interview, Nick Jones said that European corporations' readiness to adapt to the euro "is quite bad." An unpublished survey by the Gartner Group reveals that "even those that have plans are having difficulties implementing them," he said.
"Smaller companies' awareness is very low," Jones added.
To educate the public about the single currency and to help managers and organizations cope with the changeover, governments from Finland and Ireland to Spain have designed expensive advertising campaigns
that include a massive presence on the Web.
In Italy, which is one of the more euro-friendly countries, a rough electronic referendum was held last February when citizens could call a public television station to vote for the symbols that the euro coins will bear - Dante, the poet, won. For Italians, several currency converters are already available online, along with euro games, databases of frequently asked questions, and sites aimed at schools, such as Eurolandia.
The European Union and professional organizations like the Irish Computer Society and the European Federation of Accountants have put up Web sites and resource pages offering everything from technical
tutorials and legal guidelines to checklists and the latest news. Both anti-euro and pro-euro lobbies such as the Critical European Group or the Association for the Monetary Union are also using the Web to voice their opinions and disseminate practical tips.
The fact that the switch to the euro is overlapping with the year 2000 question "will cause some significant additional stress to the industry," said Jones. A shortage of available skilled people is already being felt.
The KPMG survey has found that only 11 per cent of the companies have a specific budget for the euro changeover, while most of the others will have to dig into the current I.T. budgets.
"The combined costs of the euro and the year 2000 [problem] may limit Europe's ability over the next years to invest in other projects" such as electronic commerce, Jones said.
"There is of course a nice side of the story," said Eric Coursin. "Several companies are taking advantage of the situation by conducting - often for the first time - in-depth audits and explorations of their computer systems, re-engineering and modernizing them."
The changeover to the euro does not only affect European corporations, of course, but also those doing business with them. "In order to reduce its foreign exchange risks, British Steel is encouraging suppliers in other parts of the world to accept payments in euros," said Jones.
There is a more mundane I.T. problem related to the new currency: almost nobody can type the euro character on his computer today. Keyboards have no provision for this sign, which is unknown to font sets, software applications, printer drivers, cash registers and ATMs.
Some shareware fonts do exist which support the euro symbol, but they don't solve the problem. On its Web site, Microsoft has posted instructions concerning support for the euro character in its most recent Office software suites.
The euro equivalent to the "$" and "œ" signs looks like an e with two horizontal bars through it. It may take a long while before most computers come with a specific euro key.
Among the temporary alternatives suggested: the use of three uppercase letters, as in "EUR10," or of the lowercase letter e, as in "e10."
EUROBYTES is published weekly, on Tuesdays. Click here for a list of links to other columns in the series.
Related Sites
Following are links to the external Web sites mentioned in this article. These sites are not part of The New York Times on the
Web, and The Times has no control over their content or availability. When you have finished visiting any of these sites, you will be able to return to this page by clicking on your Web browser's "Back" button or icon until this page reappears.
The Year 2000 Information Center
The Official Euro Page, by the European Union (multilingual)
The Other Side of the Coin, a briefing on the European single currency directed to British voters
IBM's euro page
The Gartner Group
KPMG's survey on the impact of the euro on information technology
A-to-Z, a glossary of the European monetary union
The Sema Group
The European Union
"Preparing Financial Information Systems for the Euro," practical guidelines by the European Commission (December 1997)
EmuNet, an independent British Web site
Euro, by the Finnish government (in Finnish)
Euro, by the Irish government (in English)
Euro, by the Spanish government (in Spanish)
Euro, by the French government (in French)
Euro, by the Dutch government (in Dutch)
Euro, by the Belgian government (multilingual)
Euro, by the Italian government (in Italian)
The draft design for the euro banknotes
Italian lira-euro currency converter
Il gioco dell'Europa, a euro game by the Italian Treasury Ministry
Quest, a multilingual database of frequently asked questions about the euro and the European monetary union
Eurolandia, an initiative aimed at schools, by the Italian Treasury Ministry and Telecom Italia
Euro special interest group of the Irish Computer Society
Euro information service of the European Federation of Accountants
Critical European Group
Association for the Monetary Union of Europe
Year 2000 and the euro: I.T. challenges of the century, a resources page by the European Union
Microsoft's euro page
The missing euro key
Bruno Giussani at giussani@nytimes.com welcomes your comments and suggestions.
Copyright 1998 The New York Times Company
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