If you read forecasts or listen to pundits, it appears that we'll be running 100 percent of everything in the cloud within the next decade. However, not everything can, or should, be moved to the cloud — there are certain applications, tied to certain processes, that need to remain proprietary to the business. This is particularly the case with many core insurance applications, such as policy administration, underwriting systems and fraud detection software, many of which aren't quite ready to be relocated in the cloud — and actually may never go there.

In a recent article at Forbes, Frank Grillo also spelled out the types of applications and systems that likely aren’t candidates for cloud anytime soon, mainly because they are legacy systems heavily tied into business processes or need faster response times than cloud can enable. Such systems include:

  • File servers: “On-premises servers that include large-capacity file shares, of at least 50GB, or operations that would be bandwidth-prohibitive in a cloud scenario.”
  • Older legacy applications: “Legacy applications that weren’t written for portability or virtualization and are tied to specific environments that can’t be duplicated in the cloud, such as systems that run on older operating systems, require out-of-date drivers, or lack proper security.”
  • Database or performance-intensive applications: These include applications “such as financial services trading applications, where revenue is directly tied to transaction speed.”
  • Complex enterprise resource planning: “Very complex enterprise resource planning systems that are now thought of as legacy systems, particularly for companies like manufacturing and finance that deal in products and assets.”

Of course, there are a range of application types that probably should be moved to the cloud simply because they are commoditized, routine functions that are best handled by someone else. Such applications may include email, collaboration, online meetings and even application development environments.
The bottom line is that cloud is a great tool for many insurers to extend their range of capabilities, but some things are just better off left on the mainframe for now.

Joe McKendrick is an author, consultant, blogger and frequent INN contributor specializing in information technology.

Readers are encouraged to respond to Joe using the “Add Your Comments” box below. He can also be reached at joe@mckendrickresearch.com.

This blog was exclusively written for Insurance Networking News. It may not be reposted or reused without permission from Insurance Networking News.

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

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