When I was learning about atoms and their components from my junior high school science teacher (I think it was Prof. Fossilus, or some other ancient Greek), we visualized the atom as a cluster of neutrons and protons around which orbited the negatively charged electron particles, sort of like a mini-solar system.

Alas, the passing eons and the advent of quantum physics have since revealed that the electrons, in particular, would most likely be observed as resembling a cloud, rather than a group of orbiting bodies—assuming they could be observed at all. The reasons for this are cloaked in the mysteries of quantum physics, which need not concern us here. The point, however, is that the most effective utilization of a technology is often predicated on our clear understanding of it.

And that brings us to the latest technology to excite the computing world, and the insurance technology space—“cloud computing.” In essence, this technology allows users to access software applications, store information, do software development, create virtual servers, draw on disparate IT resources, and more—all on the Internet, or as some would refer to it, “in the cloud.” If that sounds like an awful lot for a basic definition, that’s because this “cloud” leaves one just as hazy as the one surrounding most atoms.

I just finished recording a Videocast for INN with Microsoft’s Bill Hartnett on the subject of cloud computing, and one of the most salient points that emerged from his talk is that cloud computing may, indeed, be the next “service-oriented architecture” (SOA), in that grasping it is like, well, trying to grasp a cloud.

Doubtless many of you will remember the hubbub that grew up around SOA as it emerged into the consciousness of insurance technology. SOA was the latest and greatest, but when push came to shove, nobody could quite define what it was. Everyone knew it was good, that it had benefits, and that they needed to have it, because as sure as death and bail-outs, their competitors were going to have it.

Next, they wanted to know where they could buy it, little realizing that it didn’t reside on the shelf at Best Buy, or even on the Web at instantSOA.com. It has taken many years and much angst for insurers to understand that SOA was more of a strategy than a product, and I think it will be the same for cloud computing.

“If you ask 10 experts for a definition of cloud computing, you’ll get 11 answers,” quipped Hartnett during our talk. And yet, as he clearly pointed out, cloud computing does have benefits and it can make a difference in terms of being competitive. The key is that its definition lies not in a set of words, per se, but in a broad set of functionality that relies on the cloud, rather than the desktop. In fact, cloud computing will undoubtedly enable better SOA, but that notion needs to be sold and explained to a skeptical insurance sector that has seen the results of too quickly adopting a technology that is little understood (remember CRM?).

This is why it is especially important for vendors who offer cloud-computing products to be educators, not just providers. Yes, cloud computing has challenges that need to be overcome, notably in the area of data security, but these are solvable problems.

It would be a shame to see cloud initiatives fail in insurance due to lack of fundamental understanding. Microsoft is taking steps in the right direction by helping the industry to get its arms around this new technology paradigm, and others would do well to follow suit.

Ara C. Trembly is the founder of Ara Trembly, The Tech Consultant, and a noted speaker on and longtime observer of technology in insurance and financial services. He can be reached at ara@aratremblytechnology.com.

The opinions of bloggers on www.insurancenetworking.com do not necessarily reflect those of Insurance Networking News.

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