The public cloud service market is expected to reach US $206.2 billion in 2019 worldwide (Forbes). While 83% of enterprise workloads will be in the cloud by 2020 (Forbes), 94% of enterprises already use a cloud service (Flexera). Insurance carriers lead the way in cloud adoption. For every 10 Insurance carriers, 7 are using cloud in business today as an integral part of their technology environment and business platform strategies (Deloitte). While adoption in the insurance industry has traditionally been driven by cost-savings and pay-as-you-consume contracts, the next round of adoption is expected to be driven by flexibility, speed and scalability. Apart from these, evolving technologies like advanced analytics, internet of things (IoT) and telematics monitoring, demand technological capabilities that are scalable and flexible. Cloud provides insurance carriers with the opportunity to gain a competitive advantage through timely insights from data while keeping costs under control. With 30% of all IT budgets being allocated to cloud computing (Forbes) (and given that this number is only set to increase), IT departments must seriously take note of some of the technical, ground-level considerations to make their organization’s transition to cloud more efficient and cost-effective.
- Federated single sign-on: This is a system in which a user’s single authentication ticket is trusted across multiple IT systems or even organizations. This will help secure cloud access into the existing internal enterprise systems.
- Assessment of existing integrations: The integration patterns that depend on file transfers or integration databases may not be compatible with cloud-based solutions. This may necessitate some re-engineering to facilitate better compatibility between both.
- Network modernization: Many customers go through the cloud journey in order to provide 24/7 access for the customer. This can lead to increased traffic between cloud and on-premise systems. This increases the strain on the network capacity of the current legacy-based systems that do not conform to this model. To mitigate this, IT upgrades of existing switches, reverse proxy servers and network capabilities will become inadvertent.
- Elastic scaling: Adopting the cloud will allow on-demand based cluster scaling, which can be rapidly deployed in the event of a catastrophe. In order to accurately project financial costs, IT departments should be aware of the surge-based costing that is usually a consequence of this kind of elastic scaling of cloud-based systems.
- Implications for enterprise data warehouse (EDW): Moving existing platforms such as Guidewire into the cloud can often create challenges in allowing the existing EDW systems to continue receiving data from the cloud. Technological solutions need to be explored to satisfy the large data transfer requirements between cloud and on-premise systems.
These are some key elements that technology leaders in insurance organizations must consider to ensure a smooth transition to the cloud, coupled with a sound strategy for tailormade cloud migration. Read more about key strategic level considerations.