There’s less than 30 months before the dawning of the new millennium and you’ve either done something about it or you haven’t. And we’re not talking here about booking a champagne table at the Ritz or a seat on Concorde as it hurtles through the firework-splattered time zones. No.
We are talking about the Year 2000 problem, that technological Armageddon when the absence of the first two digits in the date codes of most computers will result in unimaginable mayhem as lifts and traffic lights fail to function, pension and payroll schedules are thrown out of sequence, manufacturing processes go haywire and planes even fall out of the sky.
If a celebratory, new millennium trip on Concorde was on your mind, it might be no bad thing to give that one a miss. By now, many FDs will be shouting “hokum!” And they may well be right. Indeed, composure towards the problem is widespread among finance professionals, as a survey by Hyperion Software recently revealed. Some 650 FDs drawn from top European firms were interviewed and most were found to be remarkably cool about dealing with the matter – three quarters postulating how it was unlikely to have a major impact on the functioning of their accounting systems.
Whether it included the respondent who believed the Year 2000 issue had something to do with absorbing the Italian lira into the single currency is a moot point. But then the Hyperion study also found that most FDs are equally laid back about coping with European monetary union per se, with 61% reckoning it was unlikely to result in major changes to how they worked.
All of which suggests one of two things: either European FDs have such problems sussed, or they were not convinced there was a serious problem there in the first place. Whatever, those who made the wrong decision might be in for a vertiginous fall from grace in a couple of years’ time.
Fixing the Year 2000 problem, for example, is generally estimated to cost a dollar for every line of faulty code and, with millions of lines of code in your average legacy program, the bill for any sizeable company is likely to be astronomical. Side with the board faction that sanctions a costly IT overhaul, and then discover competitors are getting by quite nicely without resorting to the same colossal expense, and a sudden career change could be on the cards.
Conversely, help disuade the board that the Year 2000 issue is areal threat, and the lift shaft may look inviting if your mainframe decides to take a unilateral holiday. Similarly, gearing corporate computers to EMU could prove an immense cost.
If the Hyperion study is representative of thinking among FDs generally, less than half envisage it will involve parallel financial reporting.
It signifies the bulk either think the switch from local currency to the euro can be corporately instigated overnight, or they haven’t thought through plans for the dual currency regime that is likely to ensue. FDs might be relaxed today about how to deal with the Year 2000 problem and monetary union, but the worst is yet to come.
The cop-out argument for many finance chiefs, of course, is major decisions on whether to replace or renovate company computer systems should be technologically rooted, and the person best placed to make that choice is the IT director.
Finance directors might advise on where the cash could come from. But otherwise it is usually down to the board, primarily aided and abetted by the IT chief, to give the collective seal of approval. At least that used to be the excuse, but change is on the cards here too. As IT – particularly in the guise of PCs – becomes a commodity item like company cars – it is the financial director who is increasingly called upon to provide a rounded perspective, balancing capital equipment needs with budgetary perspicacity.
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As the Hyperion study reveals, almost all finance managers are nowadays involved in the process of reviewing and replacing IT systems, with 87% helping to assess requirements and 55% actively identifying the solution.
Only 6% have no involvement in the IT procurement process, indicative, in every sense, of a dying breed.
What the Hyperion survey doesn’t reveal, though, is how FDs and their IT counterparts are likely to be increasingly judged against each other by their boardroom peers. IT directors are already boning up on how the use of information technology affects the economic performance of a company, particularly in terms of productivity, giving rise to a whole new breed of hybrid managers drawn from a computer background. As IT grows as a major component cost of any corporate budget, so will the need for board-level people who can understand the issues from both a technological and economic viewpoint. For finance chiefs there is the opposite challenge of understanding the dark esoterics of computers. But according to Hyperion, FDs are, indeed, learning. In the previous 1996 survey only 67% were cognisant of the term client server, now 81% of FDs know roughly what it means.
How do you compare? If you know what OLAP is about, you’re among the 17% of Hyperion respondents who’ve latched on. For the rest of you, though, check out Online Analytical Processing – basically, the means of checking instantly how transactions, like sales, are faring using “corporate dashboards” or other decision support tools of the kind that, conveniently, Hyperion peddles. Mention that you hear the mighty Microsoft is now venturing into the waters of executive information systems, and that the cost of such tools might plummet before long, and your IT credibility could go up quite a few notches.
If Hyperion is to be believed most FDs already work a 50-hour week and suffer from stress. Thanks to the advent of IT, at least a fifth now believe they put more time in, reflecting a rise in personal or team productivity.
If you make the transition from being a mere user of IT to a boardroom guru on the topic, don’t expect too many holidays. If all this gets too much in your twilight years, consider retiring to Sweden. There, says Hyperion, a mere 3% of FDs report rising stress levels compared to 10% in the UK and nearly 28% in Belgium. Moreover, in Sweden nearly a third of finance chiefs are aged 51 or over compared to Britain where the highest percentage, 41%, are under 40. And don’t forget to invest in a Volvo, that icon of Swedish practicality. As everyone knows Volvos are built to withstand crashes so just make sure you have one when, if the Year 2000 doom merchants have got it right, Stockholm’s traffic lights go on the blink, literally.