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Session No. AD248 The Euro is Here and it Means Business !. Michael G. McKenna Globalization Strategist Global Products Group Sybase, Inc. [email protected] One European Economy. ECU has already been around a while Economic potential comparable to U.S. New index currency, like U.S. Dollar

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session no ad248 the euro is here and it means business

Session No. AD248The Euro is Here and it Means Business!

Michael G. McKenna

Globalization Strategist

Global Products Group

Sybase, Inc.

[email protected]

one european economy
One European Economy
  • ECU has already been around a while
  • Economic potential comparable to U.S.
  • New index currency, like U.S. Dollar
  • Stability built in as part of Euro Member State Policy
  • One of the largest Government Bond Markets in the World
  • Expected increase in efficiency and GDP
    • Intra-European trade becomes “domestic” instead of “foreign”
euro time line
Before 1999 : ECU

3 Year Transition Period

Started January 1, 1999, 1 euro = 1 ECU

Conversion rates fixed

Multiple Currencies in Transition Period

National Currency Unit (NCU)

euro Currency Unit

Payments in either - no obligation

euro Time Line
euro time line 2
euro only in 2002

January 1, 2002 - euro Notes & Coins introduced

Local currency still legal

All payments must be in euros

July 1, 2002 - National Currencies withdrawn

A few of these will go away ....

Euro Time Line (2)
euro exchange rates
Euro Exchange Rates

1 EUR = 40.3399 BEF Belgian franc

= 1.95583 DEM German mark

= 166.386 ESP Spanish peseta

= 6.55957 FRF French franc

= .787564 IEP Irish punt

= 1936.27 ITL Italian lire

= 40.3399 LUF Luxembourg franc

= 2.20371 NLG Dutch guilder

= 13.7603 ATS Austrian schilling

= 200.482 PTE Portuguese escudos

= 5.94573 FIM Finnish mark

accounting systems
Preference for Invoicing in Home currency

National Currency

euro

Others?

Currency Conversion

Triangulation

Rounding Errors

Accounting Systems
legal and administration issues
Adherence to Time Line

Credit must be issued in euro if due after Jan. 1, 2002

Hedge Funds

Elimination of exchange rate risk between participating countries

Liability due to conversion errors

e.g., ItLira to/from euro to/from DEMDon’t’ forget to change currency denomination!

Legal and Administration Issues
euro currency display
How to display the euro?

Updated fonts

Unicode: U+20AC

ISO 8859-15: 0xA4

Adobe: new fonts

Windows CodePages: 0x80

1250: Eastern European1252: Western European1253: Greek1254: Turkish1257: Baltic1255: Hebrew1256: Arabic1258: Vietnamese 874: Thai

1251: Cyrillic (0x88)

GIF files (e.g., in HTML)

Text: International Currency Code: EUR

Euro Currency Display
system conversion
System Conversion
  • Big Bang Approach
    • Use existing system
    • Convert all data at once
  • Parallel Approach
    • Maintain data in NCU and euro
  • Phased Approach
    • Convert interfaces one at a time
  • New Systems Approach
    • Just start over!
demo big bang approach
Demo - Big Bang Approach
  • Change all currency to euro with Control Panel
  • Convert all data
  • Use system in euros
conversion strategies
Conversion Strategies

Assessment

Re-engineering

Testing

Changeover

assessment
Assessment
  • At the Enterprise Level:
    • Decide on the business strategy
    • Decide on the transitional strategy
    • Determine the impact on IT systems and decide on a timetable
  • At the IT Planning Level
    • Determine impact on IT systems.
    • Create change specifications for IT systems.
    • Plan the detailed assessment, re-engineering, testing and changeover strategy.
re engineering
Re-engineering
  • Identify where currency values are:
    • Screens
    • Databases
  • Business rule dependencies
  • Enhance and update applications:
    • Conversion and rounding routines
    • Screen interfaces
    • Database changes
    • New functions and interfaces
testing
Testing
  • New test data
  • Unit, regression and system tests
  • Current, historical and future data scenarios
  • Each scenario with a different mix of currencies
changeover
Changeover
  • Time for natural fiscal break:
    • End of fiscal year
    • Jan 1, 2000
    • June 30, 2001
  • Prepare clients with advance notice
  • Keep a backup!
dual currency displays
Why

Facilitate transition period

P.O.S. Terminals

Reduce confusion

Costs

Conversion of user displays

Products Labels

Reports

Dual Currency Displays
dual currency practicalities
Every item

Confusing display?

Too much data?

Use simple, elegant design

Bottom Line

Only show end-result in dual display

Cash register receipts

Invoices, etc.

Must show what currencies accepted for payment

Dual Currency Practicalities
demo dual currency
Product Order

Select National Currency

Display in euro and NCU

Invoice

Items listed in euros

Customer profile indicates NCU

Sub-totals in Dual Currency

Demo - Dual Currency
rounding errors
Example:

Don’t use inverse rate:

1,000,000 NLG = 1,000,000 ÷ 2.20371 EUR = 453,780.22 EURwith inverse rate:

1,000,000 NLG = 1,000,000 x 0.453780 EUR = 453,780.00 EUR

Conversion/reconversion problem

NCU è euro ; euro è NCU

99 PTE / 200.482 è 0.49380... EUR è 0.49 EUR

0.49 EUR * 200.482 è 98.23618 PTE è98 PTE

Problem grows with large lists

Rounding Errors
conversion best practices
Best to conduct all business in one currency

Display for information purposes only

Use Triangulation when converting currencies

Add “rounding” line item to match up sums

Conversions, if possible, should be left to the Banking Sector

Conversion Best Practices
triangulation
Triangulation

National currency to National currency

NCU1 to euro to NCU2

Use 6 significant figures for conversion rate

Intermediate euro with maximum decimals

Round up to nearest sub-unit of currency

SQL: http://www.sybase.com/products/global/euro

select @result = round((@amount/@rate1*@rate2), @round)

Triangulation
legacy data conversion
Convert all at once

Assess and convert

Convert “on-the-fly”

Use data triggers and convert only when accessed

Add conversion flag to show status

Don’t convert

Leave data as is

Convert at Application Interface

Legacy Data Conversion
multiple currencies
Multi-Currency Module (MCM)

Free download at:

http://www.sybase.com/products/global/euro

Live feed off internet

Tie USD, JPY, EUR, etc. Together

Demo: e-Commerce with live local currency conversion

Multiple Currencies
references
SEEC, Inc., “The Euro Problem: Analysis and Approach”, White Paper, http://www.seec.com/products/whitepaper-euro.html

Alejandro Moya, “IT Impact of the euro”, http://www.ispo.cec.be/y2keuro/euroit.htm

European Commission, “Welcome to the Euro”, http://europe.eu.int/euro/html/entry.html

European Commission, Directorate General II, “Euro Paper 22 : The Introduction of the euro and the Rounding of currency amounts”, 1998

ibid., “Euro paper 23 : Recommendations for the practical aspects of the introduction of the euro ”, 1998

ibid., “Euro Paper no.13 - Report of the expert working group on the technical and cost aspects of dual display”, 1997

ibid., “Euro Paper 3 - The impact of the Introduction of the euro on capital markets”, 1997

ibid., “Euro paper 1: External aspects of economic and monetary union”, 1997

Sybase, Inc., “Multi-Currency Module 1.0: Euro Converter”, http://www.sybase.com/products/global/euro

Microsoft, Inc., “Microsoft Euro Currency Resource Center”, http://www.microsoft.com/euro/

Oracle Corp., “Oracle’s Euro Solution”, http://www.oracle.com/html/euro.html

References
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