New partnership pools experience to tackle the problems of euro

Companies should consider working together to meet the deadline of next January for European Economic and Monetary Union (EMU). PA Consulting has devised a Euro Information Partnership which is enabling a number of the world's major multinationals to pool their euro expertise.

The partnership has two major benefits - to accelerate the changeover programme of participating companies, and to minimise the considerable cost of euro compliance to them.

Participants in this global initiative include the European consumer electronics giant Philips, leading Japanese electronic component manufacturer Alps, and US software developer Symantec.

Most companies fail to appreciate the level of potential margin erosion which the EU's single market is going to cause. For example, one German company faces a 45 per cent price reduction for its product in some European countries if it is going to operate uniform pricing within the euro zone.

This will become necessary because consumers will be able to directly compare the price for the same goods in different euro currency states, and businesses will find it very hard to justify significant price differentials for the same item.

To add to the woes of such businesses, the cost of changing over to the euro is proving to be very considerable, and costs will exceed Year 2000 compliance costs by up to 400 per cent. The partnership has also found that many organisations assume that the euro is an information technology problem only, and leave it to their information technology service providers to sort out. Nothing could be further from the truth, although information technology is, of course, a critical component of the changeover.

It is also fair to say that the poor timing of delivery could endanger many companies who are dependent upon fully compliant euro solutions from January next. Co-operation programmes such as the euro partnership initiative can help participating companies to pull together resources to address information technology and other issues, and companies already involved in the programme are very enthusiastic about its benefits.

For example, Philips Consumer Electronics, based in its Amsterdam headquarters, is treating the euro as a global project, and Mr John Shuttleworth, programme manager for the division, says that the benefit of the Euro Information Partnership is reduced changeover effort. He points out that there is much to do to meet even the minimum legal requirements of European Monetary Union, in addition to business systems and operational consequences. For Philips Consumer Electronics, the information partnership has allowed them to share a number of non-commercial aspects of the euro, including co-development of generic training, legal, treasury and IT solutions, with other companies facing similar needs.

Companies on the other side of the Atlantic are also showing an interest in the euro. For instance, the John Drew Company, which manages the Boston's World Trade Center and the International Trade Center in Washington DC, believes the euro partnership will benefit the US corporate sector in addressing euro issues. Pooling euro developments makes sense where there is no competitive issues at stake, and arrangements like the euro information partnership can significantly reduce the cost of changeover and it is a route which small and medium sized Irish companies could do well to consider.

Ray Nulty is Chief Executive of PA Consulting Ireland