In the April 2003 issue of Tech Decisions, Udo Shucar, an IT project manager for Munich Re, spoke about the global reinsurer's plan to consolidate all its systems into a single point of entry: "The diversity of systems around Munich Re Group caused parallel development and maintenance and would hinder Munich Re from achieving its objectives within an acceptable time." Now, however, time is on Munich Re's side. After four years of work, the reinsurer has consolidated "16 or 17 legacy systems," according to Shucar, and merged everything into "one system for the future"–the SAP Reinsurance Management system.
The project, which began in February 2002, was rolled out on May 15 of this year, followed by a stabilization stage, reports Shucar. "In the middle of June, the board of management decided to switch off the old systems because everything was stable," he says. "[The system] proved to be stable as we produced our first quarterly close, and it looks like it will remain stable through the third-quarter reports. It was without any serious problems, which even for us was a little surprising with all the major development that went into the system."
The SAP product purchased by Munich Re is the core administration system, explains Shucar, as it handles the reinsurer's treaties, claims management, technical accounting (including providing figures for the quarterly closing), and all the operational reports prepared by the business units.
For the reinsurer's IT department, Shucar indicates the main benefit came from being able to switch off all the legacy systems. "It means we can assign people who were working on the legacy systems to other projects," he says. "In the end, it will reduce our maintenance costs. We now have one system and do not need to [restrict] all these specialists for each system and application, which were based on different technologies." Another benefit, adds Shucar, is Munich Re, a global reinsurer with offices worldwide, has one central database for the entire company.
For the business units of Munich Re, Shucar believes the single platform has prepared the company for moving forward, fulfilled global business requirements–covering everything from regulators to capital markets to risk management–and provided more transparency and more quality. He expects a reduction of maintenance costs and uniform detailed reporting. "Due to the integrated and modular system, we have a better basis for the next set of projects," he says. "We don't have to build interfaces to connect the data; we have one system." The reinsurer's business users can drill down to the treaty level to check the performance of the treaties, Shucar notes, adding it now is easier to change responsibilities for employees anywhere in the global operations because there is one system for the entire group at every location.
The four-year project was a time-consuming process, Shucar acknowledges. In the beginning, Munich Re had to convince everyone in the organization how important this project was for the entire company in order to get the commitment needed to make it successful. "It took some time before people understood the impact of such a project," he says. Shucar believes the impact was underestimated by the business people who didn't realize how much they had to be involved in the planning. "We had a long blueprint stage," he says. "In building the business concepts we had to come together globally. It was a long phase."
Shucar has found business people don't always understand the problems involved for the IT department in maintaining multiple, diverse systems. "The Munich Re history was we had different departments," he says. "It was hard for business users to see from an overall perspective this was good for the entire company. It was an integral solution, and therefore there was a close relationship between IT and business. Now, we have one product that serves the entire company."
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