Still Cloudy on Cloud Computing?

Vendors have pushed it, media has covered it, insurers have discussed it—Is cloud computing all it’s cracked up to be? According to telecom and software consulting firm Ovum, although cloud-based services hold great promise for customers and the vendors that offer them, for the vast majority of enterprise customers there is still far too much hype surrounding what constitutes a cloud, the kind of services that can be delivered and how those will ultimately evolve.

Ovum released a report that offers a primer on how Ovum’s IT services team covers cloud computing. The firm says there are challenges and unresolved issues for cloud-based services:

• Automation, management and orchestration related to cloud-based services offered on public/private/hybrid clouds
• Security of data (particularly from private to public clouds), location of data and identifying what security levels are required
• Bandwidth issues when applications are moved to the cloud
• Software licensing and ISV support issues, and the potential impact on cost and delivery of services
• Cloud standards are still a work in progress.

In April, INN blogger Joe McKendrick wrote that Dilip Wagle, a partner with consulting firm McKinsey & Co., warned that cloud computing still required a great deal of integration work, and end users risk losing customization and flexibility.

Even with these challenges and issues, McKinsey & Co. reported that many companies may end up spending more on cloud-based services than on maintaining their own data centers.

So, how did we get here? Was cloud computing forced upon insurers? According to Ovum, services firms acknowledge that the cloud computing market has become cluttered and confusing; in a way, they have become victims of the over-hyped nature of the “cloud market” that they helped create. Service providers are trying to be smarter, more explicit and more proactive in how they explain and differentiate their cloud offerings, all of which are necessary if they are to fight off customer skepticism. How successful providers are in these efforts and whether these firms will actually make cloud services profitable is still to be determined.

One such vendor, Bluewolf Inc., took to the pages of INN to clear up some of the confusion.

“By leveraging cloud computing in conjunction with a knowledgeable cloud computing consulting partner, insurance companies can benefit from increased productivity and profitability—all with a more affordable approach,” Randy Rodriguez, managing director of Financial Services Innovation at Bluewolf, wrote. He also pointed to the importance of a supporting IT environment, which enables insurers to exponentially power their business platforms as new initiatives occur in a fraction of the time compared to a traditional IT approach.