EMU IT Working Group Forum Forbairt, Dublin 20 Nov 1997 The meeting was introduced by John Travers, the CEO of Forfas, as a discussion forum. The first session was chaired by Jennifer Condon of the National Software Directorate. The first presentation was on the regulatory framework by Philip Hamell of the Euro Changeover Team of the Department of Finance. He introduced a scholastic note by likening the changeover to the euro to Aristotle's theory of "substance" and "accidents". On 1/1/1999, the pound in your pocket still has the accidents (look and feel) of a pound, but its substance (nature) is changed and is now really the euro. (This stimulated others to quips during the day that could best be appreciated by those educated by the Jesuits.) He described : The main treaty provisions - Articles 102a to 109m of the Maastricht treaty The timetable - The main shock here was the final decision on E-day. 1 Jan 2002 really will be the date for the introduction of notes and coins. This is when there is the highest level of cash in circulation and uncleared cheques in Ireland. This is a nightmare for the banks and the worst possible time for the retail trade. The legal framework - The Article 235 regulation No. 1103/97 on continuity of contracts and rules for conversion and rounding. - Article 109L4 regulation published officially on 2 August 1997, describes the timetable and the no compulsion/no prohibition rule. National preparations - Government groups, Forfas Business Awareness campaign. All attendees received a copy of the Forfas information pack plus a couple of Kg of other EU publications and speakers' notes. He concluded with a couple of reminders: - There is no law that you must use the euro glyph (symbol). - There is no law (yet) on dual retail pricing. - Only the Dutch supported the Irish desire to avoid 1/1/2002 as E-day, the rest of Europe saw no reason to change it. The second presentation was by Declan Costello of DG II. He outlined the expected scenario, that wholesale activity will move quickly to the euro, retail banks will supply services in accordance with demand, some companies may choose to use it, and citizens will continue with national currency until E-Day. Seven member states have already published national plans - B, I, IRL, L, NL, OS, SF. The challenges for companies were described under three headings - strategic, technical, and organisational. He emphasised the business opportunities and challenges of the single market, and the scale of changes in IT systems, accounting, and personnel training. He described the communications activities of the Commission, such as newsletters, Groupeuro (of conference speakers), a best practices web site (see below) and co-financing of communication campaigns. He summarised some legal and international monetary implications, and described EU workshops such as the meeting on 30 October with the SIX group of large accounting vendors. BASDA (Business and Accounting Software Developers Association) in the UK is examining a certification possibility. Web sites: http://europa.eu.int/euro/ EU web site http://amue.lf.net Association for the Monetary Union of Europe http://euro.fee.be Federation of European Accountants http://www.cordis.lu/esprit/src/y2keuro.htm Best Practices (DG III) http://www.irlgov.ie/finance/225e.htm National Changeover plan http://www.emuaware.forfas.ie Forfas Awareness Campaign http://www.revenue.ie/euro/docstart.htm Revenue Commissioners At least one of the transition problems was illustrated by one speaker's slides that had boxes where the euro symbol ought to have been. They were obviously prepared on a system with a font set including the euro symbol but displayed on a system without it. An attendee raised the issue of Year 2000 and euro coincidence but the topic was not pursued; the euro is going to happen, deal with it. Politicians are used to administrations saying that some measure cannot be implemented, but on being told "do it", somehow it happens through heroic effort. After coffee, the chair was taken by Eoin Gahan of the Business Awareness Campaign of Forfas. The third presenter was Brendan Lawlor of Price Waterhouse, who addressed the issue of "euro compliance" by quoting Humpty Dumpty's words from "Alice through the Looking Glass" by Lewis Carroll (1872) that "When I use a word, it means just what I choose it to mean." His packed slides described the technical basics of compliance: the conversion and rounding rules. Each attendee received a copy of Pieter Dekker's paper (available as wdiseuro.pdf from the CORDIS best practices site) which describes these in some detail. He pointed out that no current "multi-currency" packages met these criteria, as they were designed for the management of floating rates, not a six-digit fixed rate regime. He proposed some good practices such as : Identify the currency, use the euro symbol with caution, care with converting small unit prices. He showed how every business process is affected by the euro, and worked through the revenue cycle as an example of how new requirements might be generated for IT systems. This covered setting prices, order processing, delivering, invoicing, and payment systems, with the attendant problems in the transition period of when trading partners go through their own E-day. He also described the likely features of a euro migration suite that software vendors should provide. This is not, however, likely with spreadsheet applications. Most end-user applications will need painstaking checking to convert, and to avoid double conversion. The euro needs more than most multi-currency packages provide. Multi-base-currency packages have been proposed, and may suit some but one size does not fit all. He finished by emphasising the need for preparation, testing, and rehearsal. The fourth speaker was Paul Murphy of CMOD, the IT group in the Department of Finance. He contrasted the well-defined Y2K problem with the evolving euro requirements, and concluded that the best practice is to plan together, but deliver separately. The Y2K effort delivers a well-documented inventory to the euro project. Rather than a Big-Bang, their approach is that of several "major-booms". He covered the technical conversion issues and added some more web site references. Interestingly, he described a bottom-up approach that assessed the impact of money processing in data files, thence up to applications, then to the business processes depending on those applications. He also highlighted the vendor "complacency" rather than "compliance" when those who supplied multi-currency systems assumed that that was enough, and did not realise that their four decimal place conversion factors would not fit the six-digit factor required for the euro. He also highlighted the risk that new accounting software might require another O/S upgrade, right after the O/S has already been upgraded to handle Y2K. The fifth speaker was John Wright of Databank Systems, a POS vendor. He described the pervasive impact on retail systems - purchasing, price displays, labels, pack pricing, barcodes, sensitive price points, weighing scales, cash office management, and the unit pricing directive. Most simple cash registers come from Japan, and are programmed by EPROM. His "utopia" position is a Big Bang changeover to avoid many of the dual-currency problems that could result in a massive outflow from the Irish economy to pay for many changes which will only be used for a few months. In the discussion before lunch, questions were raised about the availability of a national euro calculator for shoppers, the desirability of a short changeover period, the idea of having a "bureau de change" at the entrance to a shop so internal transactions are only in euros. The problem was raised of dual pricing for the travel industry, who have to print brochures in May for holidays the following January. A distinction was drawn between outbound and inbound tourism as to when euro prices might be shown. The session after lunch was chaired by Tony O'Farrell, the ICS SIG representative on the EMU-IT working group. It covered case studies. Noel Garry of Irish Life Insurance described their euro project, and indicated that those in the Financial Services Centre viewed EMU as a competitive issue, but other members of the Insurance Federation viewed it as needing co-operation. He thought there was little chance of installing replacement packages by this stage, as there was not enough time to handle Y2K too. (Others argue the opposite). If the euro is your priority issue, you must change by 1/1/1999 for both Y2K and euro. Those companies who deal mainly with the public will wait until 1/1/2002. Banks will have to decide which of the 40 different kinds of accounts they might have should be offered in euros. IT resources are getting very tight and loyalty bonuses are becoming common. Dick Flynn of Castle Business Systems, a computer hardware and software vendor, spoke on the effect on SMEs. Whatever about their Y2K exposure, 100% of SMEs are affected by the euro. Sage Software are considering an accreditation scheme for Y2K consultants. Could there be a similar scheme for the euro? A typical SME has no IT staff, and accounting staff whose training, maybe 10 years ago, is insufficient for today's increasingly complex regulatory controls. They may have neither the will nor the confidence to learn new skills. This does not just apply to IT staff - he quoted the case of a company who sells animal feed in the summer, and coal in the winter. They may be obliged to employ a chemist to supervise their sales of animal feeds, which only applies to part of the year. Companies near the border with Northern Ireland will have to handle three currencies. If the accounts systems change, so will other support systems such as the weighbridge. Many Irish SMEs use accounting software from the UK - will they be ready? If not, this could be an opportunity for Irish software houses. In connection with Y2K, he commented that red tape is not the way to go, drawing up specific legal contracts for every sale, as each company's needs are different. Maurice Crowley of AIB spoke on Euro Banking Services. He compared the nine-month roll out of VISA with the few weeks they have for the euro. There are specific banking problems, such as the change from 365 day interest charging to 360 day, that requires scanning all code in countless programs that do interest calculations. They will try to move the market from paper to electronic transactions such as the Laser (debit) card and from vending machines to the e-purse. AIB have issued a "wake-up call" and are organising seminars for business. Their aim is "if you can do it in IEP, you will be able to do it in euro". They aim to convert all ATMs in four days; they must, they simply could not cope with the amount of branch traffic that would result if the ATMs were out of service. There are 20,000 POS terminals in the country to be converted. The 1/1/2000 E-day is a nightmare - the Army will have to be called in to help, and all paper transactions will have to be cleared out of the system before we can flip the switch of the banking system to euro. Paul Murphy returned to outline the plans of each government department for the changeover. The audience did not seem to appreciate the customer-oriented focus of the Revenue Commissioners in being prepared to accept payments in either euro or IEP from 1/1/1999. In the final discussion, it was mentioned that Paddy O'Boyle of the Institute of Chartered Accountants was working on plans to help smaller retail shops. Patrick O'Beirne echoed Brendan Lawlor's point about the need to adopt good spreadsheet practice now and identify all currency input points in spreadsheets, to facilitate conversion.