If you liked Y2K, you’ll love Brexit!
It was only a few days ago that I spoke to someone about Y2K and realised they were too young to remember the Millennium Bug. That’s a sobering moment, let me tell you. Most of the working population are old enough to have seen the stories, and those in IT and accounts departments will have the most to say about it. The total cost to fix or replace systems that used two-digit years came to around $300bn worldwide. Some people think it was a scam – used to sell new systems to companies that thought they would be without systems come 1st January 2000. I’ve no doubt that a lot of people used the situation to do some pretty unscrupulous deals. But as one of the programmers that spent a fair amount of time fixing non-compliant code in 1998/9 I can attest to the fact that it was a genuine problem, that I and thousands like me worked to mitigate.
Fast forward to 23rd June 2016 and the UK voted to leave the European Union – overturning 40 years of agreements and working practices. The details of how that is going to work are going to take 2 or 3 years to sort out, but it is entirely possible that the UK will, as part of the withdrawal, cease to be a participant in the EU Single Market. We will of course be able to sell into it – but not as a free trade member.
“So what?” I hear you cry. Well, this is going to cause some headaches. If as a UK company you sell products into the EU, or indeed anywhere in the world, new restrictions will come into place when we leave the EU. We won’t simply inherit the EU’s trading arrangements. If you want to send goods through EU countries they will need to go through customs, with whatever paperwork is relevant at that border. Nothing earth-shattering in that, trading with non-EU countries carries the same overhead, it can all be achieved.
When it comes to complex supply chain logic and configuration in ERP systems then things get a little more problematic. Most systems have been implemented during the time when the UK was a member of some kind of common market. Much of the logic is designed around this as a never-ending state of affairs – rather like the two-digit date architecture it was not seen as enough of a problem at the time of implementation to worry about alternatives. Those who have had the honour of working on an ERP implementation will know that in those early stages, when you’re typing the company name into the setup fields, and selecting base currencies etc, you make some decisions that are quite hard to unwind later in the process. We may find that the ‘regionality’, if that is a word of the UK / EU etc are not easy to change. I’d lay good money that there are thousands of ERP systems out there with bespoke modifications and modules with these things hard-coded or very restricted in their configuration.
Of course it’s fixable, given time. Just like the Y2K problem, it’s eminently do-able. And we do have time – the likelihood is that the UK will be in the EU well into 2019 (or beyond). But in order to fix these problems you first need to know what the new configuration will look like – and that won’t be clear for a long time either. International trade agreements rarely reach any major conclusions before midnight of the deadline date.
You can be sure that in the coming months there will be plenty of SAP (for example) consultancies selling you Brexit Impact Assessments and looking to coin it in just as they did with Y2K.
It would be negligent in the extreme to wait until Brexit is well under way to start thinking about this problem. In the meantime, we have to be mapping out our supply chain processes, finding all those modules and configurations that might need to be changed, so that when the time comes and the politicians shake hands, we know how to proceed. If we do that properly, we can mitigate and preempt just as we did with Y2K so that people can claim it was all a beat up afterwards and ignore the hard work.
The sad thing is of course that this work will be carried out, at significant cost, not only in cash terms but in opportunity too – whilst we’re fixing this we’re not doing more proactive, positive things and working to be more competitive. It will merely soak up budgets and resources that could be better applied elsewhere. But hey, that’s democracy!