In a few years’ time cloud may simply become the way things are done and those insurers that move more quickly to embrace it will gain a competitive lead that others may struggle to match.
Also see: Benefits of Cloud Go Beyond Cost
Insurance companies already immersed in the cloud agree and cite a variety of benefits they are already seeing. Here are their suggestions to getting there.
1. Pinpoint the specific applications that can benefit from cloud, and whether the time is right for “cloudifying” those applications. “Create a prioritized list of what should go to the cloud and when,” says a report from Accenture. “Security and regulatory concerns undoubtedly will play a major role in determining which apps can move to the cloud and which likely will always have to remain in-house. However, another determinant is the lifecycle of the app. If an insurer knows that one of its apps is due for a major upgrade program, replacement or retirement within the next two years, that could be the trigger point to move to the cloud.”
2. Work closely with the business to set priorities. For example, disaster recovery and business continuity are important benefits to the cloud, and the business needs to decide what has to be continuously up and available in the event of an incident. “The ability to respond very quickly to an event has a higher cost,” says Paul Brissette, director of corporate accounting for National Life. “There’s a cost to cloud in general an insurance cost based on what could happen to your systems and the benefit cloud would provide.”
3. Form a close relationship with cloud vendors, just as you would with an on-premises software vendor. “You need to be able to trust your vendor, and make sure they’re knowledgeable about your business, not just their own,” says Marianne Petillo, president and CEO of ROM Reinsurance. In addition, she adds, it’s important to explore the vendor’s business model and its own IT strategy. “You want to know who are they using to maintain their systems are they doing it themselves, or is it a third party? If it’s a third party, what kind of protection will they agree to provide your data? Talk to them about their policy with respect to downtime and recovery.” In addition, the ability to handle a well-integrated mission-critical app requires “a well-thought-out, tighter relationship between organizations,” adds Gary Ramunni, senior project manager at Penn Mutual. This ensures “that the provider is fully in tune with the needs of the consumer, and that no gaps have been left or disconnects in service-level expectations exist.”
4. Establish a clear governance structure for cloud computing. Cloud policies and reporting lines should be the same as those established for on-premises arrangements. “Many organizations have rules and structures in place that govern how IT decisions are shared between departmental leaders and IT executives,” the Accenture report states. Use these to define who inside and outside IT should be engaged in cloud computing decisions.”
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