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Summary and Comments

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Category: 

Government

Date: 

1998-05-29 14:29:08

Subject: 

The Euro: Government Mandates Will Backfire

  Link:

http://www.comlinks.com/mag/ddates.htm

Comment: 

Capers Jones discusses the problems with re-programming complex systems. We have come to a point where governments cannot mandate changes that are beyond the programmers' capabilities.

What he says here will apply if governments survive y2k. His insights will have to be integrated into political theory. This will take a generation or more, but he has made a significant conceptual breakthrough.

* * * * * * * * *

January 1, 1999 (The Beginning of the Euro Currency era)

The European Union is moving toward a unified currency (the Euro) which is scheduled to be introduced starting in January 1, 1999 and running through calendar year 2002. There are two significant date problems associated with the Euro:

The timing of the Euro introduction.

The impact of the Euro cutover on software and data mining.

The timing of the Euro is one of the worst public policy decisions in human history because it pits the world’s second largest software project (the Euro) against the world’s largest software project (the year 2000). There are not enough software personnel available to complete either one of these massive efforts in time, and the whole idea of trying to accomplish both of these on the approximately the same schedule is going to cause major economic problems. . . .

The timing of the Euro is going to teach politicians a very painful lesson: they are no longer in control of many national events. In the pre-computer era when political directives were implemented by human beings, politicians could set arbitrary dates and expect to have their decrees implemented more or less when they wished.

In the computer era, political decisions which trigger massive software updates can no longer be scheduled using arbitrary end points determined by political processes, treaties, or government decrees. If massive software updates are involved, then the timing must be derived from the ability to accomplish software and database updates. Thus the Euro will not be implemented as planned no matter what politicians say or think, because the necessary software updates will not be ready in time.

Over and above bad timing, the software implications of the Euro are horrendous and may cause unexpected problems with stock market trading, banking, and other financial software applications. In addition, the Euro may interfere with data mining, data warehousing, on-line analytical processing (OLAP) and all other forms of analysis which look for trends over time.

The harmful date implications of the Euro are due to the fact that thousands of commodities such as stocks, bonds, manufactured products, services, etc. will begin to switch from local currencies to the Euro when the Euro rolls out.

Many software applications can handle the appearance of new currencies, since they have occurred from time to time throughout history. The problem with the Euro is that no software applications were prepared to deal with the situation that products that have been on the market for many years will abruptly start being priced using the Euro rather than their present currencies in the same countries.

This means that any software application which does long-range trend analysis before and after the Euro introduction will have to include complex currency conversion algorithms. Either the older cost data will have to be converted to the Euro, or the newer Euro costs will have to be backfitted to the older currency. Sometimes it may be necessary to do both: show prices in terms of both the Euro and the old currency.

Suppose you have been following the long-range stock prices of a European company such as Siemens-Nixdorf. After the Euro is introduced, the stock values will be displayed in Euro’s rather than in Deutschmarks, so all of your long-range trend analysis must handle the currency conversion as of the date when the stock makes the transition to the Euro.

Suppose you are interested in long-range trends concerning the price of a basic commodity such as the cost of wheat in Germany. The introduction of the Euro will cause an abrupt discontinuity is historical data analysis, and all long-range trend analysis will have to bridge the pre-Euro and post-Euro changeover.

Thus many thousands of software applications must be modified to handle the change from older currencies to the Euro. Also, data bases and data warehouse and data mining operations must also deal with the currency changeover.

Making the situation still more difficult, the Euro is being introduced over a sliding time period that will vary by country, industry, and commodity. Thus the dates for the conversion of specific products and services from local currencies to the Euro will take place at almost random intervals between 1999 and 2002, or longer since it is obvious that the Euro is going to run late.

The changes needed to fully support all of the implications of the Euro are not trivial. It is easy enough to add a new currency to software applications, but to support historical analysis of products and services that have been marketed for 50 years in one currency and abruptly switch to being marketed in another currency is a very serious issue for long-range trend analysis.

As can be imagined, the Euro is going to cause major problems for data mining, on-line analytical processing (OLAP) and any other form of long-range trend analysis which spans the pre-Euro and post-Euro periods.

The politicians of the European Union appear to be blissfully unconcerned about the damages which the Euro will cause to software applications and business operations, and about the huge expenses needed to recover from the Euro introduction.

Indeed, as of 1998 many European politicians are still naively saying that the Euro will be introduced on schedule when it is painfully obvious that politicians have failed to estimate the schedules and costs of the necessary software updates. So far as can be determined, neither the European Union nor any of the national governments involved have produced a reasonable cost, schedule, quality, risk, and damage estimate for the Euro introduction. Indeed, the very real risks and damages have been ignored by most European political leaders.

European political leaders are willing to discuss the problems of the year 2000 because they did not create them. However, any admission that the Euro will cause software and economic problems points a finger directly at the European political leaders, so they usually will not admit to any problems. Therefore the Euro is plunging ahead without any form of risk analysis or contingency planning, since creating a contingency plan for the failure of software applications in response to the Euro’s introduction would be a de facto admission that the political leaders don’t really know what they are doing.

The Euro may commence on schedule in 1999, but it will not be completed by 2002 regardless of assurances by European politicians. As the Euro begins to enter circulation and financial software lurches into the Euro era, we can anticipate unexpected failures and delays in many business operations. We can also anticipate several forms of litigation, including but not limited to the following:

Lawsuits against the European Union for damages and cost recovery

Lawsuits against national governments for damages and cost recovery

Lawsuits against companies whose Euro updates are imperfect and damage clients

Lawsuits against corporate officers by shareholders

It is an interesting question to ask if anyone has performed a cost/value analysis of the Euro. There may be some substantial long-range economic benefits from a unified European currency, but the ROI [return on investment] from 1999 through about 2005 appear to be distressingly negative. Indeed, the Euro software update costs will be so high that it is possible that the long-range value of the Euro may not exceed the damage costs until perhaps the year 2020 or 2025 if even then.

Now that computers and software are the dominant tools of commerce, industry, and business arbitrary government decrees such as the Euro which trigger massive software updates can be viewed as a form of hidden taxation. At the very least, private business is being forced to act as an unpaid agent of national governments.

Link: 

http://www.comlinks.com/mag/ddates.htm

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