The fact that Britain is not one of the 11 European Union countries in the so-called "euro-zone" is no protection from the euro's impact. Any company unable to handle the new currency is likely to damage relationships and lose business. Even firms with no trading relationships outside the UK could find that British suppliers or clients have adopted the euro and expect them to follow suit. Among construction firms, the ripple effect of the new currency probably travelled from the boardroom to the information technology department in the second half of last year. It would not have taken IT managers long to realise that euro-compliance was not simply a matter of adding a new currency to a multicurrency accounting package. All contract and invoicing systems will be affected, and new software upgrades – many of which are just becoming available – are needed for calculations and rounding.
Single currency, multiple problems
John Perkins, membership director of the National Computing Centre, says that adapting accounting, automatic invoicing, databases and electronic data interchange systems to deal with euros is "no trivial problem. There have even been forecasts that, overall, it will cost more than the year 2000 problem." The expense and effort of modifying systems could fall on the industry unevenly, as smaller contractors and materials producers are less likely to have free upgrade contracts with software suppliers. And assuming Britain does eventually join the single European currency, there are forecasts of yet more IT problems in store – problems the software industry itself is struggling to solve.
The key issue for dealing with the first phase of euro readiness is "triangulation" – the euro calculation process laid down in Article 235 of the Maastricht treaty. This stipulates that conversion from, say, French francs to German marks must be calculated using their euro equivalent. Also, all calculations must be to six decimal places, a level of accuracy far beyond that of most current systems. Many construction companies are taking a "wait and see" approach that chimes with advice from the Treasury. The government web site (www.euro.gov.uk) stresses the need for preplanning and a whole-company approach, and provides a series of checklists.
At H&R Johnson Tiles, part of the Norcros group, accounting, sales and ordering systems have been bought from US supplier Coda. But staff will be relying on pen, paper and calculators to triangulate their first euro transactions, as the firm is in no rush to upgrade before all the issues are understood.
Ken Packwood, the firm's management information systems executive, explains: "Because the UK is not in the euro, we have tended to concentrate on the year 2000 and to get by with the minimum on the euro. We'll do most of the work before Britain joins." Packwood also expects headaches with the euro symbol itself. Although Microsoft has provided the relevant software upgrade and new printers will be able to cope, he anticipates difficulties in persuading older inkjet machines to render the symbol.
"On invoices, it's not a problem as we use three-letter abbreviations, but on letters we use the symbols. Something as simple as that could be very time-consuming," he predicts.
Updating bespoke systems
Costain, another Coda customer, is confident that its accounting system will be up to speed. However, deputy IT director Peter Ludlow is concerned about other bespoke systems, dealing with issues such as subcontractor payments and plant hire, which are normally written in-house. "If a subcontractor wants to be paid in euros, we'll just have to do it outside the system," he admits. "But I don't think it's going to be a big issue for us – at least, not immediately." Costain has enjoyed a free Coda upgrade, but Packwood still fears that software vendors may try to exploit the situation. "If they make a new maintenance release euro-ready, it's probably not chargeable. But they will try to roll it into a chargeable new version and make you upgrade when they want you to."
Not surprisingly, the trade association for software suppliers – the Business and Accounting Software Developers Association – defends itself against this charge. Communications director Wendy Haylock says that "no one is making vast sums of money out of this", and argues that triangulation is a technically difficult issue that suppliers took "a couple of years" to solve.
She adds that it could take suppliers some years to solve the IT issues associated with UK entry to the single currency and the loss of national currencies.
The experience of Mentor Systems seems to bear out BASDA's points. Production manager Bryan Wiggans says: "No charges will be levied for new releases – it's all in the contract." On the other hand, the fact that Mentor plans a phased introduction of euro releases for its accounting and contract costing systems suggests that technical hurdles have been considerable. Single currency triangulation will be available in spring, the ability to convert historic data into euros in early summer, and triangulation for multiple currencies in autumn.
For industry managers shouldering year 2000 problem responsibility, it must be reassuring to see software suppliers sharing the headaches of euro compliance. KPMG partner Nigel Wood, an expert in euro-related issues, points out that the euro-clouds hovering over construction's IT departments may have one silver lining. If your software is not as euro-enabled as your supplier led you to believe, you could have a legitimate claim against them.
All systems go for the euroHow can you ensure your information technology systems are euro-ready? The British Computer Society, the National Computing Centre and Building’s IT doctor Ian Hamilton of the Construction Industry Computing Association offer their advice.
- Once new systems are installed, test them exhaustively, simulating the data loads they will have to cope with
- The first time euro transactions are attempted, check the sums manually to ensure the software has produced the right answers
- Once you have upgraded to euro software, archive the old sterling-only system so that you can return to it if problems arise
- At the same time, archive the operating system used before the upgrade. If you have an emergency in four years’ time, the old software will be no use if it doesn’t run on your brand new Windows NT v.20
- Modified systems may increase the processing load on your computers and accelerate the need for more powerful machines
- Fraud and simple human error in euro calculations could become costly. Ensure your system incorporates spot checks
- Don’t forget to provide training for staff using the new systems
- On-line advice is available from the Federation of Small Businesses (www.fsb.co.uk); software supplier Sage (www.sage.com); and the British Bankers Association (www.bba.org), a good source of links and information