It strategy

It strategy

Just as the UK government and captains of industry are waking up to the scale of the Year 2000 software problem, an even greater menace to our IT systems is looming – the need to convert to handling the European currency. The scaremongering and general hype about this issue is just coming to the boil, even as various experts are pouring cold water on the Year 2000 panic. Both these problems are potentially good business for consultants, and even their largest clients are getting seriously worried about them.

Even if the UK stays out of the European Monetary Union, companies will still have to deal in Euros from 1 January 1999, which means massive changes to any systems with a financial content – many of them old mainframe applications with documentation long since lost.

Some multinational companies will insist from an early stage that their employees are paid in Euros and their trading partners deal in the new currency, even if the UK is still clinging to the pound once the period of coexistence with national currencies ends on 1 January 2002. So it is not just large banks and international traders, but any smaller companies that deal with them, that need to get prepared.

Consultancies have certainly jumped on the Year 2000 bandwagon. Most now have advisory units for counselling concerned board members, as well as more operational teams that actually come in to help rework code.

The Euro problem opens some of the same opportunities, but should not be dealt with as the same issue, say the experts. As with Year 2000, companies will be crying out for realistic overviews of the situation and for temporary teams with “legacy” software skills such as Cobol programming.

Both these can be supplied by consultancies, and will also be needed by companies adapting software to the Euro. But beyond that, they are very different projects and should be treated as such by the consultancies, if they are to provide a good service. Year 2000 recoding is a very mechanical task, time-consuming but not really complex. It is largely a resource problem for consultancies and their clients-advice on whether it will be cheaper and quicker to replace systems, rework old applications or, in the case of systems with little time-sensitive content, just hope for the best, is the key requirement.

With the Euro, although there is the same challenge of rewriting old and dusty mainframe programs, there are also far greater implications for the business as a whole. Dealing in a new currency, and probably dealing with certain partners and customers in one currency and others in another, changes many aspects of the financial function and the general underpinnings of business.

In this situation, it is important that companies understand the full implications of what they are doing, not just the software mechanisms.

There is widespread complacency about the Euro conversion, as there is about the Year 2000 problem, claim many consultancies. They say that IT chiefs are aware of the problems but are often daunted by the scale of the remedy required, or fear to be the bearers of bad news – while the board directors often completely underestimate the challenges. In the US, some states are passing laws to make directors responsible if customers suffer from failure to alter software for the Year 2000 and an MP has pushed for similar legislation here. But many of the companies vigorously addressing the issue believe good advice and sound, hype-free information are more influential over attitudes than regulations.

Confusion may be holding back decisive action, but so is hype. Some consultancies and vendors have taken the opportunity of the Year 2000 and Euro crises to scaremonger and so boost the market for their own services and products. Many software houses have suddenly repackaged their maintenance tools as Year 2000 conversion products, while consultancies with programming teams are charging hundreds a day for Cobol experts.

This has made many directors cynical and has also, in some cases, exaggerated the scale of the problem. We hear plenty of horror stories about aeroplanes falling out of the sky on 1 January 2000, but in fact, some experts estimate only a few per cent of the UK’s code base is critically affected by the date change. The rest can be left as it is, or updated in the company’s own time.

Market research firm IDC published a report recently claiming the Year 2000 saga has been built up by the IT industry into a “Chicken Licken says the sky is falling in” story. From a survey of US executives, it estimated that half would have their systems in order by 1998, 21 per cent next year and 15 per cent in 1999, with only 2 per cent failing completely and the rest making changes in 2000 without serious consequences.

The researchers admitted Europe is somewhat behind the US in adapting to the problem and has the added complication of the Euro conversion coming at the same time, but they believe directors are being relaxed because there is no real need not to be – not because they are sticking their heads in the sand.

As the deadlines for both software changes come closer, there is sure to be a rise in panic levels in large companies and a mass call to consultancies to give advice and services. This could be a great opportunity, as long as both problems are kept in perspective and customers are given realistic support, not a scare story.

– Caroline Gabriel is a group editor in VNU’s IT portfolio.

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