InformationWeek

October 20, 1997

Companies Weigh Cost Of European Monetary Union

IBM expects greater impact on IT than with Y2K project

ecent studies highlight the IT costs of Europe's looming financial transition to a single currency. Though European Monetary Union will affect far fewer companies than the year 2000 date-field conversion problem will, the impact on those companies that are affected is likely to be considerable.

IBM estimates that the IT costs to European businesses could rise as high as $150 billion. IBM also says that its own internal IT costs to prepare for EMU and the Euro, the new pan-European currency, will exceed the cost of its year 2000 project, says Jo hn Downe, EMU director for IBM Europe. "Our own estimate of IBM Europe is that 80% of our systems are impacted," he notes.

However, financial-services firm Merrill Lynch, which is headquartered in New York but has extensive European operations, sees the problem as much less costly than year 2000 in terms of its impact on internal IT operations, though it's even more complex. While year 2000 projects require business understanding, support, and participation, EMU calls for high-level strategic business planning, Downe adds.

Downe also cites reports that European banks may have to spend about $12 billion to cope with the new currency, with about half of that figure going to IT projects; retailers could spend twice that much.

EMU is expected to occur over the course of three years, starting in 1999, though there's still some uncertainty about when, and even whether, it will happen. IBM research suggests that most European companies with 1,000 or fewer employees have not yet begun to address the iss ue.

Application vendors, though, may help companies move more quickly to accommodate the currency change, whenever it arrives. J.D. Edwards in Denver announced in June that it is developing a conversion tool and enhancements to its multicurrency software for delivery in mid- to late 1998, and will assist customers with the transition.

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