The Cloud has become a commodity. According to a recent report from Novarica1, over 50 percent of study participants from across the insurance industry indicated that they have either implemented a Software-as-a-Service (Saas)-based core system running in the Cloud, or are considering it for 2016.
The Cloud’s growing popularity has generated a multitude of claims and buzz words, yet it’s still aimed primarily at one thing: lowering cost. It's not about providing the lowest cost since that often requires that fundamental needs are sacrificed. No, lowering cost implies that you get all the fundamentals for the best value.
Providers may present various features as advantages in one cloud implementation or the other; some are relevant and some are not. How do you know which features you need and which are just marketing fluff? You should focus on the fundamentals. These are the same four essential characteristics you would expect of an on-premises installation:
It just so happens that the Cloud can effectively address the first three attributes more efficiently than most other environments, while functionality is really a characteristic of the software system itself, and is (mostly) independent of the cloud hosting environment.
Let's break these attributes down a little further.
Performance that scales
When you see marketing material that expounds upon “clustering management” or the ability to quickly add nodes, servers, or hybrid/public/private offerings, ask yourself why these details are being emphasized. The Cloud is a commodity, and all offerings should already include these features. Without these items, it's not really a cloud offering, is it? These are the items that allow the Cloud to offer the nearly unlimited scalability in the first place.
All the leading cloud providers deliver a level of security (both physical and virtual) that is way beyond what mere mortals can comprehend, let alone recreate themselves. This is their business and they are really good at it. Good thing, too, because 70 percent of CIOs surveyed by Novarica cited security as their top priority.
Reliability you can count on
Reliability features should be a given, too. Redundant compute servers that can fail over automatically, real-time replication of data, point-in-time-restore, and 99.99% uptime are all capabilities that are common in an enterprise environment, and should be assumed to be there in the Commodity Cloud.
Evolving with the Cloud
Although the four fundamental features may define the core characteristics of a cloud offering, the means by which a provider accomplishes them will vary. Moreover, cloud hosting environments (and the corresponding SaaS system built on top of them) may change drastically over a period of months or years, based on the experience gained by the host provider. SaaS providers that take advantage of these Cloud offerings have the responsibility to continually adapt their systems to take advantage of the latest features.
At Instec, we chose to build our cloud offering on the Microsoft Azure Cloud. We find that the amazing speed at which Microsoft is innovating provides our customers with an ever-evolving, state-of-the-art environment that gives them the best value for their dollar. This is not to say that it isn't a challenge to keep pace with these innovations, and leverage them when appropriate, but as a vendor with a SaaS offering, we feel this is expected, and it should be as transparent as possible to our customers.
Looking beyond the Cloud
While cloud technology is finally making inroads into insurance, it’s nothing new. Other industries have been experiencing cloud-enabled disruption for some time, and the top innovators in Silicon Valley and elsewhere are taking advantage of the Cloud’s computing power and flexibility to create valuable SaaS systems for the insurance industry.
So, if the Cloud has become a commodity, providing a continually evolving set of infrastructure capabilities, it’s time to shift our focus to the applications that run in it. These are the systems upon which insurers and MGAs will depend to create innovative new products. If you are looking for growth through innovation, is your system as fast and flexible as the cloud?
1 Ruzicka, Chuck, and Tom Benton. Cloud/SaaS in Insurance Core Applications. Novarica, Research Council Study. April 2016.
Mark Strelau has worked with technology since 1985 for companies such as Rockwell International Telecommunications, Argonne National Laboratory and at TRW in the Space and Technology Group (now part of Northrop Grumman). He joined Instec in 1993 to establish the architecture and led the development of Quicksolver, an object technology that provides a development platform and a distributed networked execution platform for Instec software products. He received an MS in Electrical Engineering from the University of Southern California, and a BS in Electrical Engineering from Valparaiso University.