Every couple hundred years or so, development takes a big jump. In the 20th century alone, we went from party lines to cell phones, Model Ts to smart cars and radio to plasma televisions. Technology and computing have come a long way since the days of the massive, centralized mainframes that took up whole rooms. Today, we've moved through terminals, distributed personal computing and client-server technology to intelligent Web-based solutions. And now it's time for the next big jump. Cloud computing is ready to take the world, and even the insurance industry, by storm.

Essentially, cloud computing is an offsite network hosted by one, and used by all, where you can select applications and services for use, and store data securely without the hassle and expense of a room full of mainframes, servers and computer equipment. Tim O'Reilly, one of the brains behind Web 2.0, has called cloud computing "the platform for all computing," which could potentially change the face of computing. Also called grid computing or utility computing by some, cloud computing is the ultimate equalizer. Now companies of all sizes need simply to get connected to the cloud. Mom and pop can have the same computing abilities as SalesForce.com, eBay and even Amazon.

Cloud computing is not like regular computing, it involves the use of multiple languages, data, storage, user interfaces and communication through the use of such things as SQL, Java, XML, HTML and PHP-all behind the scenes. Instead of having your IT team patching together systems and writing code, why not let someone else do the heavy lifting? Cloud computing enables companies to essentially "rent" processing power and applications through a subscription to the cloud, thereby lowering the cost of entry into once unaffordable assets. With cloud computing, IT management can rethink how to utilize and optimize their resources, and dismiss the apprehensions of the past around data security and control. Cloud computing enables vendors to develop, deliver and deploy services in an on-demand, pay-as-you-go model.

WHAT IT MEANS TO INSURANCE

This shift to a new way of computing enables access for any insurer to the same technology, functionality and options that were once only available to larger IT shops through global cloud services. There are so many benefits for so many different types of insurers with the concept of cloud computing. It is a new way of thinking about not only how things are handled, but where they are handled. No longer do you have to worry about the tangible aspects of IT-servers, PCs and technology infrastructure all can be accessed in the cloud without having to have them physically in the basement of your building.

Vendors can enable specialized services for insurers on infinitely scalable clouds for subscriber uses just like they were hosted inside the company on internal equipment services. Business services can be built by combining individual cloud services with proven functionality. In a cloud computing scenario, your company administrators could find services in the cloud that specifically handle what the company needs, and use them. Maybe they find a service that can be called that handles the process of ACH or credit cards. Better yet, the company may find an existing service which processes all types of payments by including the type in the service request. Alternately, perhaps a service is found that handles the entire billing process from start to finish, thereby eliminating the need for a system.

Whether you are a start-up or a small or large insurer, there is a way to leverage the cloud. The cloud allows for managed IT, scalability on demand, flexible bandwidth and access to core applications and hardware by anyone in an inexpensive and flexible manner. No matter where your employees are, in your building, their homes or anywhere in the world, they can simply request the application or service they need through the cloud.

Start-up insurers can be nimble and operate on proven applications and resources rapidly, providing a lower cost of entry into the insurance marketplace. Small insurers that need to watch costs closely can rely on networked storage and hardware without the worries of local servers going down or disaster recovery. IT staff will no longer have to manually set up systems and install software, simplifying management.

Many large insurers have invested considerable capital in multiple, complex and outdated systems. Especially in these uncertain economic times, most cannot rip and replace existing systems. Cloud computing can help update systems and technology in ways that limit risk, but provide value and do not involve a huge outlay of capital.

Clouds being built today are capable of containing thousands of services, doing everything from simple functions to complete systems. And the evidence that this trend is building is all around you. You can now be connected in ways we never dreamed of before. Now that it is here, how are you going to use the power of the cloud?

Andy Scurto is president of ISCS Inc., San Jose, Calif.

(c) 2008 Insurance Networking News and SourceMedia, Inc. All Rights Reserved.

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