When it comes to contract management, BGV plays it safe
Contract terms, durations, and responsibilities can easily get out of hand. If this leads to missed cancellation deadlines or the procurement of redundant services, it can end up costing a lot of money. Effective contract management, therefore, pays off. The example of the BGV in Karlsruhe illustrates how this works.
In the IT sector alone, the number of different contracts often runs into the hundreds: a software license here, a service agreement there, followed by an add-on, a term extension—all commissioned by different departments, approved in bulk, and filed away somewhere. In the end, hardly anyone knows exactly what was agreed upon in which context, whose signature is actually on the document, or whether it’s even still needed. Not to mention that other departments are now also entering into IT-related service contracts—as part of what is known as shadow IT.
Anyone who wants to keep track of this faces a Sisyphean task. “Time and again, invoices suddenly arrive without a corresponding order, which naturally makes them difficult to verify,” confirms Vladimir Steimer, head of IT Operations at Badische Versicherungen (BGV) in Karlsruhe. However, this situation has improved significantly at BGV, as the insurance company has implemented a tool-based contract management system.
Even just for the maintenance contracts with the major software providers, the effort would have been worth it, says Steimer: “Support for the software products we use costs a lot of money—and even more if you don’t keep a close eye on the contracts. Contract terms, proactive or automatic renewals, and varying billing cycles—monthly, quarterly, or annually—can no longer be managed manually.”
“And that’s why,” according to the department head, “we needed a platform that would allow us to manage active contracts and help us automate related processes, such as invoice verification.” With this in mind, BGV began addressing the issue of contract management about three years ago.
Clear goals
Within BGV’s User Services department, Jürgen Kilian is responsible not only for traditional IT support, but also for contract management, IT procurement, and invoice processing. He outlines the six goals that the project team has pursued from the very beginning:
- At the top of the list of priorities was transparency regarding the status of each contract—in terms of content, duration, and responsibilities.
- Contract management should therefore also serve as the basis for budget planning and invoice processing.
- In addition, the goal was to implement a company-wide process for initiating and concluding contracts.
- Approvals at the time of contract signing should be documented in such a way that a responsible party can always be identified afterward.
- To ensure even greater transparency, a complete history of contract changes was planned.
- And the central electronic repository for all contracts was identified as the linchpin of contract management.
As a result, this meant no more separate order folders for each individual department or for IT. No more redundant solutions, services, or software tools that ultimately didn’t fit into the infrastructure! No more contracts with signatures that had already faded and were barely legible.
But let’s also put an end to the artificial distinction between business services and IT services! In this regard, the differences between IT contracts and general maintenance contracts are so minor that administrative processes can be transferred from one area to the other without any major issues. “With contract management, we mapped general business processes into the IT service management solution for the first time,” recalls Steimer, “and these processes are equally suitable for both IT and non-IT equipment or services.”
Expectations and processes defined
In a multi-stage preliminary project, project members from both IT and facility management articulated their expectations and began designing the necessary processes. They asked themselves: What is causing us the most pain? Where do we want to go? And what do we need to get there?The next step was to define the conditions: procurement guidelines, purchasing terms, security requirements, signing rules, request for proposals, and compliance.
As a result, difficult decisions had to be made:
- What exactly is the definition of a contract?
- Which contracts should be included in the system?
- When does the system become involved in the process—as early as the initial stages, or only once the contract is signed?
- Who is authorized to sign contracts, and who is responsible for approving them?
- Which areas need to be included in the solution?
- And how can these processes be reconciled with, for example, BGV’s own procurement guidelines?
The decision on which tool to use was made in favor of the“Matrix42 Compliance Suite.” In addition to license and asset management, the product also includes a user-friendly contract management module. BGV had purchased the toolkit years ago—initially only for the service desk and asset management, but already with the option to use contract management later on.BGV’s IT components were already integrated with Matrix42’s own CMDB (Configuration Management Database). A new tool would therefore have required additional interfaces. This factor also contributed to the decision-making process.
Decision-making guide at a glance
“Linking hardware and software to active contracts is a major advantage in all planning processes,” explains Kilian: “When a lease agreement is about to expire, I receive a reminder well in advance. The devices to be picked up are directly linked to the contract via the integrated asset management system. You can simply print out a list of the current locations and hand it over to field service for pickup or replacement.” This end-to-end transparency makes the replacement process significantly easier.
All active contracts are now stored in the contract management system. The system also includes requirements management, featuring both internal and external questionnaires. This ensures that business and technical requirements can be integrated into the IT infrastructure.
With the integrated workflow management, processes such as contract creation, amendment, and termination can be automated from start to finish. Requests and contracts go through a multi-step review and approval process that involves not only the contract manager and a legal counsel, but also the security manager and employee representatives.
Users can then keep track of their contracts via self-service. When a contract is about to expire, the user automatically receives a notification from the system. They can then see at a glance what type of contract it is. At the same time, they also have the contact information for the relevant business partner on the screen. “So they don’t even have to open the contract; they can decide whether to renew it or not based on the header data in the screen,” says Steimer.
It was nothing less than the IT budget
The IT service provider Consulting4IT, based in Waldbronn near Karlsruhe and a Platinum Partner of Matrix42, provided assistance with the rollout. Among other things, it supported BGV with the complex and technically demanding implementation of the approval process.External consulting is also useful for bridging the gap between the work processes of those involved and how the tool functions, as Steimer acknowledges: “If you try to customize it too much and deviate too far from the standard, the tool becomes unmanageable.” According to Kilian, it wasn’t easy at first to convince the various business units of the solution’s benefits. The project team therefore brought the executive board on board early on. After all, it involved a portion of the company’s costs—namely, the IT budget.
“This has been calculated and approved based on the IT department’s detailed planning,” Steimer makes clear, “and we can’t have something brought in through the back door that undermines that planning.” The outcome of the discussion: All future procurements involving IT will be coordinated with the IT department.
The Personnel Movement Report
It has been relatively rare until now for a Matrix42-based solution to be used outside of IT for processing business transactions; BGV is playing a pioneering role in this area. For example, the facility management team has long been using the software’s incident management feature for reporting malfunctions.
Also based on Matrix42 and with support from Consulting4IT, the IT operations team is working on a related project: the “staff movement report.” The technical term “Joiners – Movers – Leavers” gives an idea of what this entails. Here, too, the focus is on contracts—new employment contracts, amendment agreements, or the termination of such contracts.
This also affects asset and configuration management: The IT department wants to be able to see at a glance which service requests each employee currently has, which ones are obsolete, and what the status of the associated contracts is. BGV, in collaboration with Consulting4IT, has mapped the processes associated with HR transactions in the “HR Movement Report.” As a system integrator with process expertise, Consulting4IT delivers far more than just technical consulting.
The motion detection feature is part of the “Digital Agenda” that BGV has established for itself. The solution was at the top of the HR department’s to-do list. The long-term goal is “background processing”—that is, the automatic handling of HR processes without users having to intervene or even give it a second thought.
Conclusion
The project team is currently working on implementing additional workflows to enable even more process automation based on self-service. “This is important because it helps us with internal IT optimization,” explains Steimer, “for example, when creating a new user, we want to eliminate the need to go through an administrator, which was previously required.”So there’s still a bit of work to be done. But even today, BGV is already deriving undeniable value from the contract management solution. Kilian calls it “transparency regarding the contractual arrangements with our partners.” The specific points of contact and the service level agreements for support cases are clearly defined and readily available when needed.
“This end-to-end transparency has also helped reduce operating costs,” Steimer concludes: “A maintenance contract for software that is no longer in use can be identified and terminated—that sounds obvious in theory, but every IT manager knows the difference between theory and practice.”
About BGV
Founded in 1923 as the Badischer Gemeinde-Versicherungs-Verband (BGV), the company has been insuring individuals, businesses, and municipal institutions—primarily in the Baden region—for 95 years. It hasn’t been sitting still: Through initiatives such as an “Innovation Circle” open to all employees, the “Future Workshop on Insurance,” and collaborations with the Fraunhofer Institute for Industrial Engineering, Pforzheim University, and renowned consulting firms, it is driving the digital transformation of the insurance business. The 80-person IT department is also part of this transformation—not only the customer-facing application areas, but also the 28 employees responsible for IT operations. After all, without a stable foundation, the digital superstructure begins to falter.