Questions for: Dr. Veronika Simons
on the meaning and purpose of benchmarking and the terms for outsourcing contracts
As chairperson of the Delta Lloyd Holding, Dr. Veronika Simons is, amongst other things, in charge of IT. Delta Lloyd is an integrated financial services group of companies focussing on life insurance.
“I now know exactly where
we stand and what
we can do better.”
Dr. Simons, your company outsourced its host computer centre to IBM years ago and appears to have done well overall in this respect. Nevertheless, you recently had the contract subjected to a fundamental review. Why?
Because the corporate world and world of IT change far too quickly for contracts to be established for years. Delta Lloyd concluded the contract with IBM in 1996 and revised it in 2001. In this respect, IBM committed itself to having the services and prices subjected to benchmarking at regular intervals. To that extent, this review was not an unusual process.
What questions had to be urgently answered with the help of benchmarking?
We wanted to know not only if the prices paid by us are in accordance with market prices, or if we are paying too much in one particular area. We wanted above all to find out if the processes were correct, if we had correctly defined the services and corresponding interfaces in the company, if the whole thing was sufficiently flexible and, ultimately, verifiable.
Were you unhappy with the status quo then?
The cooperation with IBM was and is good, some of the people have known each other for years and work with each other whenever needed. However, that depends a lot on individual people, a lot of our requirements were not formulated concretely enough and bakked up with corresponding processes. This involves a considerable risk for both parties and a dependency on individual people.
Why did you decide to put your trust in the Maturity project?
We had acquired detailed offers from two providers beforehand. We decided on Maturity because, from the very beginning, it offered not only a price comparison, but also fundamental analysis of services and processes, with the quality and the depth we wanted to have.
What were the most important results? Was IBM too expensive?
The service provided by IBM was indeed too expensive to a certain extent, but that was not the decisive factor. We learned above all that there was too much heavy technical detail in the contract, too little information concerning the individual services and not enough flexibility. Let us take the example of database availability, an elementary manual tool for customer consultant. However, we had not defined the corresponding service clearly enough. What is the measured quantity, how are the reaction times when a fault occurs? These questions still remain unanswered to a large extent. Furthermore, the optimisation-related measures we have to take in order to increase efficiency in relation to processes/procedures became clear.
How does IBM view this situation? Does your partner now have to make a huge amount of improvements?
IIBM has reacted in a very positive manner. In the end, this type of benchmarking creates transparency for both sides and gives an important impetus to a partnership. And Delta Lloyd is now being challenged for once. We have to define in a more specific manner what we really want, what services with what flexibility. The service levels must be clearly formulated. We cannot simply rely on our employees and IBM’s employees working well together without an explicit agreement.
What in your opinion was the main added value provided by the project?
I now know exactly where we stand and what we can do better. I have been with the company since 2001, the previous contractual review took place six months before I joined the company. For a long time I had such a subliminal feeling that something was not going as well as it should, but it was totally vague. Now we can see clearly what it was.
Would you repeat the benchmarking process?
By all means. Even if we have thought about all of the details in depth beforehand, which is something indispensable. Such a contract should be reviewed every two years. I would prefer not to have contractual terms of 3-5 years anymore if an outsourcing contract did not take a long time.
Dr. Simons, thank you very much for talking to us.
Download the interview IT benchmark at Delta Lloyd as a PDF file