Cashing in on the euro

On Jan. 1, 1999, 11 European nations will begin adopting the Euro as their common monetary system. Foreign exchange and money markets will switch over first, and in 2002, euro banknotes and coins will be issued to replace such national currencies as the deutsche mark, franc and lira.

The emergence of the euro will trigger a wave of IT activity, as affected companies scramble to update their business systems to deal with the new monetary unit. "They're the two biggest problems in the world," said Software Productivity Research Inc. chairman Capers Jones, referring to the Y2K and euro issues. Jones estimates that the Y2K bug affects 36 million applications, while the euro conversion affects 12 million apps. He adds, however, that in markets such as financial services, the euro is as big a problem as Y2K.

Obviously, much of the euro work will take place in the 11 affected countries: Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, Netherlands, Portugal and Spain. But their trading partners around the world will be drawn into the conversion, as well. Industry watchers say as much as a third of the euro conversion work will take place in the United States, with the global price tag estimated as high as $100bn (£62bn).

Those kinds of numbers have such industry heavyweights as Andersen Consulting, Cap Gemini, Electronic Data Systems Corp. and IBM trolling for business. The larger integrators tend to focus on getting customers' enterprise resource planning (ERP) systems into euro shape. The Baan Co. N.V., Oracle Corp. and SAP AG are among the ERP vendors providing Euro-compliant updates to their systems.

Room for little guys, but smaller resellers also have an opening, which many VARs may be overlooking. Financial-software vendors targeting midsize companies believe resellers can grab hold of the euro opportunity and are doing what they can to get them up to speed. But the key for VARs is to get into the market now, before the purchasing surge peaks and potential customers lock up deals with other providers.

"We want them to jump on this opportunity early, so they can be on the leading edge of this requirement," says Mike O'Brien, vice president of sales and marketing at Navision Software US Inc., the U.S. arm of a midrange accounting-systems vendor based in Denmark. Navision markets a multi-currency module that handles the euro. It hosted a 16-city seminar tour last summer to educate its resellers about the new currency.

One VAR that's taking on the euro is Business Management International Inc. (BMI), a Navision reseller in New York. "The whole multicurrency issue certainly is an important part of our business," says Larry Schiff, president of BMI.

The euro problem recently cracked a large software sale for BMI. A U.S.-based special-effects lighting company had a business unit in England affected by the euro conversion. But that was enough to trigger the sale and spark a company-wide installation of Navision software. "The deal happened not because 98 percent of the company needed to be euro-ready, but because one site did," Schiff says.

Resellers of Great Plains Inc.'s Dynamics accounting package also are scoring U.S. euro sales. Jeff Trosen, director of product requirements at Great Plains, says about a half dozen customers are scheduled to go live next month with the euro-compliant version of the company's software. All the sales were made through Great Plains' reseller network. Other VARs are not as clear on the opportunity. Trosen notes that some domestic resellers lack "a good understanding of how customers may be affected." The company, however, is working to educate its resellers. Great Plains presented its euro strategy to partners in September and plans to provide online training via the Great Plains University Web site, says Cara Myers, senior product requirements analyst at Great Plains.

Where To Find Business Financial-services companies are a major centre of euro activity, but industry executives consider companies in this market further along than other industries. They suggest other sectors, such as manufacturing, will emerge as a hot market for euro services.

"All industries are affected in one way or another," says Richard Seabrook, a consultant with Solomon Software (UK) Ltd. Seabrook says large manufacturers such as Siemens and BMW are expected to make a rapid switch to the euro. "My expectation is that the effect will ripple down the supply chain very rapidly, and that instead of a slow, gradual take-up, we will see a fairly dramatic switch for perhaps 50 percent of the business activity," Seabrook adds. He believes the best way for U.S. resellers to tap into the euro business is through U.S.-based multinationals.

Meanwhile, Navision's O'Brien says U.S. companies are more focused on Y2K than on the euro and thus are behind their European counterparts in awareness. But U.S. companies with global operations are becoming concerned, and O'Brien predicts that purchasing activity will pick up in the second quarter of 1999.

Even in Europe, the euro compliance rush hasn't been all that great to date, according to some observers. Cees Nieuwendijk, director of the euro program at Baan, says European companies are taking the euro transition seriously, but adds that the number of customers "really trying to prepare themselves so far is not that much." He expects companies to focus on euro migration over the next two years.

On the other side of the coin, it's still an open question whether the euro will rival Y2K for the attention--and investment--of domestic IT shops. Thus far, "Y2K has overshadowed the euro," notes Great Plains' Trosen.

But that could be good news for the savvy reseller looking for its next niche. While Y2K solution peddlers are a dime a dozen, not many resellers have taken on the euro. "We feel we have a competitive edge and something to hook onto," says BMI's Schiff about his company's euro business.

And with software vendors offering out-of-the-box euro compliance, the heavy lifting is already done. Resellers can focus on up-front consulting and implementation support. For some savvy resellers, the euro certainly could prove a change for the better.