| Major issues need to be addressed before January 2000 write Stephen Gill and Jane Duncan |
I mportant as some of the main developments since the introduction of the euro have been...
l The introduction of the euro on currency markets
l Convergence and reduction of interest rates across the eurozone
l Fixing of exchange rates E1 = IEP 0.787564
l Ceding of national monetary policy to the European Central Bank
l A fall in the value of the euro against the US dollar of around 13 per cent
l Insignificant rate of take up by business and consumers. 0.5 per cent of consumers are using the euro across Europe.
l Dual display by retailers and banks
l Slow fall in prices of manufactured consumer goods (DKBR)
What we have seen so far however,is only the tip of the EMU iceberg:
How many businesses have given serious thought to the next series of events which will necessitate changes on a much larger scale with far reaching strategic as well as operational impacts?
The euro - what has yet to come?
From now until 2002 every organisation must prepare for and embrace one of the most significant business events that they will ever face. Economic, strategic and operational EMU issues need adequate preparation and planning to ensure that margins, market share and overall profitability are not undermined.
However, EMU must be kept in perspective. It is as much about deciding what you want to do as about deciding what you have to do. Each business must decide whether the business opportunities and threats posed by EMU are overshadowed by mere compliance with the regulations.
Major EMU issues that must be addressed by 1/1/2002 are lying dormant, waiting to be activated by customers or competitors.
What should businesses do now ?
Start with 2002 and work backwards. Look at deadlines that have been set by customers, industry codes of practice and the national changeover plan. Then identify the dates that are unknown such as rate of take up for trade within the industry, the date of withdrawal of Irish notes and coins. Use scenario analysis.
Work backwards from January 2002 - there are only 27 months left, an immovable deadline - the latest possible date for delivery of all operational euro projects.
Consider the scenario below from an IT perspective, then consider what lead times you need for product, proposition or pricing alteration.
Scenarios
Once 1 January 2000 has passed, there will be 12 months for those industries with agreed customer / supplier / the changeover dates (eg, grocery trade, and hardware) of 1/1/2001 to convert to the euro. That is 12 months to specify, design, develop, test and implement an IT system that has the potential to throw a businesses revenue cycle, profit and cash flow into disarray.
That means that the sales and marketing and business managers in those companies must be reviewing the business impact of the euro now so that IT staff can hit the ground running with a business specification in January 2000. There are only 3 months left until January 2000 for this business impact assessment to be completed.
Choosing the timing of a company’s
l-Day requires careful thought and planning to ensure that the strategy chosen will be practicable for all aspects of the company’s operations and reflect the needs of customers and at least meet or exceed competitor activity.
The key to successful Emu transition is early strategic and operational impact assessment, followed by an identification and prioritisation of issues. The objective should be to ensure that every opportunity is taken to translate the significant costs of conversion into long term competitive advantage and increased profitability and/or market share.
The transition period provides all business with the flexibility to shape their own EMU and euro destiny. The success or otherwise of EMU responses will be determined by adequate advance preparation which is currently within the control of each individual business.
Irish businesses must ‘Seize thÄ-Day’ before time runs out. |
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| Article appeared in the October 1999 issue.
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