Succeeding with Core Systems in the Cloud

Insurance CIOs almost unanimously recognize that cloud computing can provide real benefits for their companies, including better economies of scale, elastic scalability, more flexible sourcing options and more efficient use of financial and human resources. A full 90% of those surveyed in Celent’s 2011 CIO Survey said cloud computing was already in limited use or they were investigating or piloting it in 2011. At the same time, some remain full of trepidation, concerned about the potential risks of depending on external sources to provide computing infrastructure and technology platforms, as well as application software and services. This limbo is no place to be. Mercifully, if CIOs follow some logical steps, many the same they have trod before, they can find the best strategy for their companies.

Here’s a pertinent fact: The Internet is an open network that has demonstrated incredible resilience and scalability beyond its original design and intent. It is already arguably the most successful distribution model for commerce, as evidenced by its growth in usage and the level of B2B and B2C commerce. But, because of its openness and the fact that it is shared by everyone, using it does pose challenges and risks regarding security and privacy and possibly availability and performance. However, there is no reason to doubt that the Internet is a safe and even prudent place to run core applications, such as policy administration, billing and claims.  As one example, client implementations of Exigen Suite solutions are successfully running as software-as-a-service delivering high performance and high security.  

Potential users have to see beyond the hype and fear surrounding core applications in the cloud. Any thoughtful examination of software-as-a-service (SaaS) sees it for what it really is: an operations and implementation alternative. Like all initiatives of its type, it requires careful assessment of current and future states of operations, and a deliberate transformation roadmap and comprehensive execution plan. Proper solution design can leverage the strengths of cloud computing, such as its boundless reach and built-in redundancy, and address its risks through smart design, proven technology, good practices and methodology.  

When considering SaaS core systems solutions, I recommend that the CIO requires a higher level of diligence in verifying the SaaS solution provider’s capabilities, capacity and methodology in delivering the level of services and support required by business. The design of the network, where the servers are located and how they are connected to the network, the (physical and digital) security infrastructure and design, redundancy and recoverability, utilization and scalability profile, business processes, support and problem resolution, etc., should all be transparent to the CIO while kept hidden from unauthorized view (no less than they should be for an on-premise solution). As should the service level agreements, and the legal and contractual framework to govern performance and provision of services.

Download the white paper Evaluating Core Systems in the Cloud, which is an excellent resource for those considering the cloud and trying to find their comfort level.