Managing the Euro in Information Systems: Strategies for Successful Changeover [Anglais] [Broché]

The changeover to the euro, Europe's new unified currency, necessitates fundamental modifications of information systems worldwide. Managing the Euro in Information Systems is a roadmap for implementing the many changes required for this transition. This book covers the mechanics of conversion calculations, but also examines the scope of such an enormous project, the many different business functions involved in the conversion, and the options and strategies that should be employed to insure a smooth changeover.

This book provides in-depth information about the complex conversions that will be incorporated into information systems, including coverage of the key topics triangulation, avoiding rounding errors, the effect on price points, and converting historical data.

Moving beyond the math, this book helps you gain a perspective on the euro's overall impact on your organization and how information systems must respond. Patrick O'Beirne explains the euro's effect on business activities such as sales and marketing, procurement, supply-chain coordination, and human resources. The author also examines how the euro will affect business accounting, providing detailed coverage of profit margins, pricing, invoicing, taxes, and other topics.

Finally, Managing the Euro in Information Systems presents strategies for successful implementation. It will guide your efforts to assess your organization's situation, to determine which systems will be affected, to devise appropriate strategies for the changeover, and to plan the specific steps and timing of the changeover process.

Patrick R. O'Beirne B.Sc. M.A. FICS, Managing Director of Systems Modelling Limited since 1981. His current
projects are consulting and auditing I.T. projects for information system
conversion to the euro, the single European currency. He is a Fellow of the
Irish Computer Society, a member of the Institute of Business Analysts and
Consultants, an Expert Advisor to the European Commission, and contributes
to the national Euro Business Awareness Campaign of Ireland. A certified
TickIT ISO9000 auditor, he promotes software development process
improvement using the Personal Software Process. He is a frequent speaker
at international conferences on practical I.T. approaches to the Euro
single currency changeover. His book "Managing the Euro in Information
Systems; Strategies for Successful Changeover" was published by Addison
Wesley in August 1999, ISBN 0-201-60482-5.

From 1997 to 1999 his focus was writing articles, speaking
internationally, consulting, and auditing Year 2000(Y2K) projects. He
contributes to I.T. training courses in the Irish Management Institute,
lectured in computer applications at the Management Science School of the
Department of Statistics in Trinity College Dublin, and is involved in the
TRINET project to provide remote regions with access to the world-wide
Internet via low-earth-orbiting satellites. His background is in industrial quality control and operations research applications.

Contact details: see homepage: http://www.sysmod.com

The introduction of the euro has been described by many commentators as an historic event. An event not only of great economic significance but also one of great political significance. The economic advantages most often cited are the increased price transparency, the reduction of costs of cross-border trade and the elimination of exchange risks.

In this way the euro will contribute to an environment that supports a balanced and sustainable growth of the economy. While most of the early debate about the euro concentrated on the economic and political advantages of the single currency, many of the more practical aspects received little attention. This began changing slowly in 1997 when several large European companies announced that they would changeover to the euro early. Where it was thought at first that the euro would make life easier for all, especially for international business, it was quickly recognized that the changeover to the euro would not happen by itself. In the IT world the euro2002 mailing list became one of the first public forums exclusively dedicated to discussions about the effect of the euro on information systems, and where discussions initially focussed on the euro symbol and how it could be implemented in existing computer systems. Quickly, however, attention shifted towards other aspects of the euro introduction such as the conversion algorithm (commonly know as triangulation) and the dual display of amounts. All of a sudden people realized that the euro could have a significant influence on information systems and the changeover did not seem so straight-forward anymore.

How can something like the introduction of a new currency have a significant effect on information systems? For years information systems have been capable of dealing with foreign currencies, why should there be any problem when an additional currency is introduced? The euro is not a new foreign currency. Instead, for the participating countries, the euro is the new national currency. It is equivalent to the national currency and replaces the national currency unit.

Equivalence was achieved when the European Council adopted the conversion and rounding rules and the fixed conversion rates between the participating national currencies and the euro. The conversion and rounding rules prescribe the exact method that must be followed when converting amounts between participating national currency units and the euro. Unfortunately, many information systems use conversion and rounding algorithms that are different from the prescribed rules and are frequently less accurate. This is one of the most visible problems in relation to the changeover of information systems.

Replacing one national currency with another is something that has never occurred before. Therefore, it is not surprising that information systems lack the functionality that would allow for such a change. Whole categories of functionality may be missing in existing systems, such as the ability to accept input in different currencies or to produce output in different currencies, let alone the ability to convert existing data from the national currency unit to the euro. Accepting that additional functionality is often required in order to deal with the euro, the question then becomes: What functionality is needed to be euro compliant?

Whether or not a universal definition of euro compliance exists was at the center of debate for a while. Currently most would accept that information systems cannot be seen in isolation, and that euro compliance may mean different things to different companies. However, it would be wrong to conclude that businesses are out on their own when preparing for the changeover. Many businesses share common features, and best practices identified by one company might usefully be applied by another. It is in this context that this book is most useful. The book does not claim to provide a silver bullet against euro changeover problems. Instead it offers an excellent overview of issues that need to be addressed when preparing for the changeover to the euro, illustrated with helpful examples, checklists and quotations. In addition, this book conveniently brings together valuable references to many sources of information.

Patrick O'Beirne was one of the first to realize that the introduction of the euro could have a significant effect on information systems. In this book, his latest contribution to the discussion about the effect of the euro on information systems, he draws from his expertise to provide one of the most comprehensive publications on the subject yet. For the many businesses that still have to prepare for the euro, the guidance offered in this book will help them to make the euro a success.

Pieter Dekker Amsterdam, April 1999

From the Introduction:

Since January 1, 1999, the euro has been a reality. It has replaced the national currencies of eleven member states of the European Union and is a crucial factor in the world economy, in international financial markets, in the denomination of trade and as a medium of exchange.

The historic process of creating the euro and replacing national currencies has been long in preparation. Because of its enormous implications for national governments, businesses and consumers, the process by which the euro has been introduced is a two stage one. The notes and coins, through which consumers will recognise the reality of the currency, are not being introduced until January 1, 2002. In the three year period until then, the euro can be used for cash-less transactions. Even more importantly, for businesses, the use of the euro within the EMU area is not compulsory during this period. This transition period was introduced to allow time for businesses to adapt their systems, including their accounts, prices, and transactions with customers and suppliers. Accordingly, the use of the euro until the introduction of notes and coins is subject to the general principle of 'no compulsion, no restriction'. This means that businesses are not restricted from using the euro but cannot be compelled to do so. Some companies are adopting a 'wait and see' approach. While the transition period is clearly necessary, it means that the use of the euro in business transactions is spreading at different rates among companies of different sizes, in different sectors, and in different countries.

However, this task of preparation cannot indefinitely be postponed. By January 1, 2002 , all businesses must have their preparations complete. This is the single most important message to convey to businesses about EMU. For those that have not yet begun this task, the time for action is now. And, for companies outside Europe, that nevertheless do business with European companies, it is equally important to adapt their systems and their business practices appropriately, in order to ensure that the business can continue in the future.

Ireland is one of the countries that has joined EMU from its inception. On January 1, 1999, the Irish pound as a separate entity ceased to exist. In preparation for EMU, the Government of Ireland took the initiative in December 1996 to start an information campaign for businesses in order to provide companies with the facts on EMU so that they might begin their preparation in a timely way. Since then, the EMU Business Awareness Campaign managed by Forfs (the Industrial, Policy and Advisory Board for Ireland) has been distributing information through information packs, booklets, leaflets, a web site, speaking at conferences and exhibitions, answering enquiries, and advertising, distributing materials through various media, including newspapers, magazines and trade and professional journals.

Our basic concern in the Campaign has always been to ensure that the right information is available. Business decisions are the responsibility of businesses themselves. Companies have to formulate their own strategies and implementation plans and carry them out to meet their own needs as they perceive them. But, equally, businesses, especially smaller businesses, do not always have the time to inform themselves fully on the implications of major changes such as EMU. The day to day pressures of the market, and the ever increasing pace of technological change mean that businesses are focussed on these issues and can feel that an 'exogenous' factor such as EMU is one that can be treated separately.

Nothing could be further from the truth. EMU thinking has to be part of company strategy formulation, both for businesses within EMU and those outside. Firstly, EMU means a change in the economic environment. The virtues of a single currency, independently managed, will yield economic benefits in terms of continuous low inflation, low interest rates and an enhanced climate of business confidence. The introduction of the euro represents the completion of the European single market, with the only real remaining barriers within Europe being language and cultural barriers. Goods and services can flow freely across national boundaries, and business will be denominated in a single currency, the euro. Exchange rate uncertainty is eliminated.

This means both more competition within the European market and more opportunity for firms dealing within that market. The competition will be enhanced or intensified by what is called 'transparency of prices'. The goods on offer from a Finish firm can be compared with the offers from a Portuguese firm instantaneously. This is likely to lead to increased cross border trading within EMU, both for consumers and for businesses buying goods and services that they need for their own production. This trend will be further accelerated by the spread of E-commerce and the Internet.

Price transparency applies not just to goods and services: it applies to capital assets also. Increased merger and acquisition activity is also foreseen because of the possibilities to compare prices of companies across Europe, and also the wish to achieve economies of scale to exploit the advantages of the new European market. Companies outside Europe, especially in the United States, will also find new opportunities for investment in Europe.

Thus, it can be seen that the introduction of the euro is not only a question of modifying the internal systems of a company. It is a pressing reason to re-evaluate company strategies as a whole. In fact, in preparing for EMU we have, in the EMU Business Awareness Campaign, always emphasised that companies should first look at the strategic implications of EMU for the future of a business, before examining in detail the changes required at the functional level, in accounting and finance, in marketing sales and distribution, in production and product development, together with the information systems, human resources, and legal aspects of the changeover.

It is one of the great virtues of Patrick O'Beirne's book that, before going into commendable and exhaustive detail on how to change computer systems to prepare for EMU, that he sets the context so well in strategic terms. Companies must recognise that the new currency is not being introduced just to make life difficult for their internal operations, although certainly these require close examination and all the necessary changes to be specified and implemented. The purpose is to ensure that a potential market of three hundred and fifty million people can function as effectively as possible and that all the economies of scale and of scope that such a market can deliver can be realized.

The present book is a technical one, in that it gives full consideration to many aspects of IT systems planning, outlining the issues to be considered and detailing the steps to be taken in drawing up a plan for conversion and implementation of new, euro - compliant systems. There is a comprehensive analysis of the steps involved as well as a rich assortment of links to relevant web sites.

This book therefore, is valuable both on account of its broad coverage of the issues as well as of the detail in to which it goes in a wide range of technical areas. It could be profitably read both by information systems specialists as well as by those in general management, particularly on the strategic side. For the computer expert, it defines the tasks clearly. For the management specialist, it outlines the economic significance of EMU and the requirements of business strategy. The great virtue of the book, however, is that it does this in a highly readable way, allowing the two sides of business to understand one another and to recognise the importance of both parts of the work. The computer specialist has to understand the context in which the euro conversion work is required so that it can best meet the future objectives of the firm. Equally, the general manager has to understand the full dimensions of the systems work required in an enterprise, in order to make the resources available and to ensure that the work is completed on time.

Eoin Gahan Senior Economist Forfs