A Low-risk Path to the Cloud
By employing a 4-stage approach, insurers can mitigate some of the
risk of service-based computing. By Rich Carreau
The promises of increased agility, lower operational costs, flexible computing capacity and freedom from technical con-
straints are enticing more insurers to
accelerate their journeys to adopt
cloud services. As providers of an in-
tangible service, insurers are ideal
candidates to embrace cloud-based
deployment. An October 2010 study
conducted by Novarica found that
“cloud and software-as-a-service
(SaaS) solutions are more than just
the latest buzz. Carriers that have in-
vested [in these offerings] are seeing
real benefits.”
But many insurers are still on the
threshold, held back by questions such as:
Where do we start? Where can cloud pro-
vide the most impact? Can cloud comput-
ing meet our security, compliance and
performance standards? How do we pre-
pare our systems and integrate cloud with
our current environment?
Rather than consider the entire enterprise at once, it’s helpful for insurers to
take a step-by-step, “business-first” approach to cloud deployment that lets
them quickly realize the benefits of cloud
while minimizing risk. Any cloud strategy
should begin with an assessment that
analyzes and prioritizes workloads to develop a staged plan for migration. This
migration can be thought of as a 4-stage
path, beginning with cloud deployment
of low-risk, horizontal shared services,
followed by back-office support applications and then mission-critical applications—all in parallel with the introduction of unique functions that weren’t
possible before the availability of cloud.
LOW-HANGING FRUIT
In Stage 1, insurers can move low-risk,
horizontal shared services such as e-mail and collaboration software to the
cloud. E-mail is a natural starting point
for organizations looking for a fast,
low-risk way to immediately begin realizing the cost benefits of cloud. For
example, an Australian wealth management company is implementing a private cloud-based e-mail and collaboration solution as the first production
system along its road to cloud.
Another function typically moved to
the cloud is application testing and development. Systems development projects can account for a large portion of an
insurer’s overall capacity requirements,
requiring insurers to buy or set aside
hardware and software for what is essentially a transient purpose. Offloading
those requirements to the cloud reduces
total cost of ownership while ensuring
additional capacity is available for new
projects when required. And cloud solutions can actually transform the way development projects are done, eliminating
issues such as differences between run-time and test environments.
capacity and variable costs of cloud for
core applications such as policy administration, underwriting and claims.
Cloud can provide a fast path for modernizing homegrown and legacy applications, especially when business strategies such as geographic expansions are
being considered.
Some insurers may still be doubtful
about entrusting their mission-critical
“crown jewel” applications to a com-
mercial public cloud such as Amazon.
com or Google. However, private cloud
tions and services to transform areas such
as new business and customer service.
Competitive advantages can result from
eliminating barriers between the insurer
and its agents and customers.
For more about insurers’ cloud use, search “Clouds
Spring Internal” at www.insurancenetworking.com.
MOVING SYSTEMS TO THE CLOUD
In Stage 2, insurers can cloud-enable
support applications such as claims and
legal management software, printing,
image and archive, business intelligence
and credit scoring. Multiple options exist for implementing “as-a-service”
cloud solutions to better align IT resources with business requirements and
reduce the total cost of operation.
Stage 3 allows insurers to gain more
benefits by exploiting the on-demand
environments, on or off premise, can
ensure high levels of security and per-
formance for these enterprise-class ap-
plications, while helping insurers move
to a pay-as-you-go capacity model with
appropriate service-level agreements
needed for financial services transac-
tions.
RAPIDLY INTRODUCING
NEW CAPABILITIES
While the first three stages of this process
are evolutionary, Stage 4 is revolutionary
and can be implemented in parallel with
the other stages. This stage enables organi-
zations to rapidly introduce new applica-
administration systems, with every
stage completed electronically through
paperless processing.
